Warning Signs of an Epic Crash Ahead?

[ecosophia]

While most people are paying attention to other things -- notably the raucous political theater in the US and EU and the various wars raging in eastern Europe and the Middle East -- certain things going on in US speculative markets have my hackles up. 

First, crucially, is the ongoing frenzy around LLM ("AI") companies. Unbelievable amounts of money have poured into the "AI" market and everything connected to it. Investors seem to be convinced that "AI" is the biggest thing ever. As a business proposition, though, "AI" appears to be turning into a massive flop. Most companies that have introduced "AI"-based applications have not profited at all from the investment, and most of the companies that produce the applications survive solely on vast ongoing infusions of money from venture capitalists. If this reminds you of the run-up to the dotcom crash of 1999-2000, let's just say you're not alone. 

None of this is surprising if you've stayed away from the hype around LLMs. The reason I put quotes around the letters "AI" is that these programs aren't intelligent. All they do is generate strings of statistically likely words or other symbols in response to queries. They've been labeled "stochastic parrots," and the label's a good one. Is that technology useful in some applications? Sure, but that doesn't come close to justifying the hype, or the valuations. 

All this is bad enough, but it comes at a time when the US economy in particular has been so thoroughly riddled with financialization that any significant shock could cause drastic repercussions. That was shown a few weeks ago by the sudden collapse of First Brands, an auto parts company. First Brands looked financially sound, but it produced that illusion via an impressive amount of financial gamesmanship, including such things as taking out loans from different lenders using the same assets as collateral. It turns out some billions of dollars have vanished without a trace, and a lot of high-end investment banks are facing huge losses. It's likely safe to assume that the games played by First Brands are also under way in many other companies -- which implies in turn that any sort of sudden shock could bring down a great many firms in a hurry. 

Then there's the elephant in the room, the possible role of diverted federal funds in propping up US speculative markets. Billions upon billions of dollars were being siphoned off federal agencies such as USAID through a labyrinth of consultancies and shell corporations. Quite a bit of that was ending up in the pockets of congresscritters and top-level bureaucrats, and some was being used to fund political activities, but it would not surprise me if at least some was flowing into speculative markets. That tap is being turned off. The impact may be impressive. 

Trying to time the collapse of a speculative bubble is a fool's game. (Isaac Newton tried to time the collapse of the South Sea Bubble and lost his shirt in the crash. I am not as smart as Isaac Newton, and neither, dear reader, are you.)  Even so, readers whose interests might be affected by a sudden crisis in the tech and banking industries may want to prepare for rough weather, and all of us may find it wise to brace for hard times. Clearing your debts, getting any investments you may have out of vulnerable sectors, and making other sensible preparations for collective crisis would be wise. 

Also, if you haven't done this yet, please pick up a copy of John Kenneth Galbraith's book The Great Crash 1929 and read it. It's a good lively read -- Galbraith was one of those all but unimaginable figures, an economist who was genuinely good at writing -- and his chronicle of the great boom and bust of 1929 is the best intro I know of to the mechanics of speculative bubbles and crashes. Once you've read it, look at the financial news and see how many parallels you spot. Yes, the phrase "target-rich environment" comes to mind. 

Oh, and avoid the sidewalks around your local financial districts. You don't want to be hit by falling financiers. (Ahem: highly NSFW due to language. It's still funny, and besides, the singer was my t'ai chi teacher when I lived in Oregon.) 

Comments

gold spot

[methylethyl]

I've been watching the gold spot charts. You can find them here:

https://www.kitco.com/charts/gold

Gold just whizzed past $4k. New record highs all year this year. It's useful to play with the time parameters on the chart. You can make it go all the way back to 2007.

The thing about gold is that while there is some manipulation in the market, gold doesn't really change in value much. So it's a pretty good indicator for inflation: it's not gold getting more valuable, it's the dollar getting less valuable. Some other things going into that: manipulation over the last few years has all been geared toward *hiding* the inflation. Current rise affected by foreign governments buying in order to back BRICS currencies for trade with each other. A certain amount of true 'price discovery' happening currently, as years of price suppression efforts are now failing.

The trajectory over the last year has been scary, though probably not a surprise to anybody looking at their grocery bill, knowing it's a lagging inflation signal.

I look at that and start trying to figure out how to convert the cash in my bank account into physical objects I'm going to need within the next ten years. I am thinking we need to replace our aging car with something in better condition, that still has a decade of mileage left in it, good parts availability, no finicky electronics. That's going to depreciate less than the dollars in our savings account, for sure.

Re: gold spot

[(Anonymous)]

In 1973 one could buy a one ounce gold coin for 52 USD at the First National Bank of Lake City Florida. Have a family member who spent his working life at a car lot was talking with him about my old truck 1994 "well fix it." "Anything made after 2014 is not a car you are driving a computer." The big farmers in the area no longer own there tractors just rent them because after 5 years all the computers start to fail. Blueberry

[jenniferkobernik]

My husband and I were just talking about this over the dinner table a couple nights ago. It's looking very dodgy. We are blessedly debt-free, probably thanks more to good fortune than any particular merit on our part, and hope to stay that way barring major medical misfortune. I wish there were something we could invest in that seemed likely to hold value until retirement/in case of disability, but we're pretty much all in cash and CDs right now except for the land we farm.

If anyone in the commentariat is struggling to get out of debt right now, message or email me your PayPal or mailing address and I will send $100 via PayPal or check to help out. My email is jenniferkobernik at gmail dot com.

[(Anonymous)]

Count your blessings you have land! We've got an urban postage stamp that keeps us in garlic and tomatoes with room for not much else-- but at least it's paid off, praise be. We likewise haven't the foggiest idea where to park our savings where it won't get inflated away.

I joked on an open post a while back about burying a bag of denarii in the back yard, but given the price of gold I'd be lucky to get more than a couple coins!

[open_space]

Meanwhile on the financial news as Nvidia hits a new all time high (who produces most of the gpus used for AI) it says this:

"Thus, this is not a bubble, and we are still in the early innings of this investment cycle," Muse wrote.

Do you see something about this in your astrology ingress charts?

[ecosophia]

That was quite literally the last sign I was waiting for. Here's the opening sentence from a famous article in the New York Times on October 16, 1929. I trust you know what happened eight days later.

"Stock prices have reached 'what looks like a permanently high plateau,' Irving Fisher, Yale economist, told members of the Purchasing Agents Association at its monthly dinner meeting at the Builders Exchange Club, 2 Park Ave, last night."

When some official expert says something like this, you know a crash is imminent.

As for ingress charts, I'm not yet sure if there are specific signals for stock market events in quarterly ingresses or other mundane charts, but there have been indications for some time now that speculative markets are facing serious trouble.

[(Anonymous)]

Excellent advice! Our 15-year-old car spent the night at the dealership, awaiting the struts that it turns out need to be ordered from elsewhere. Hopefully we get our car back today. The repair is non-urgent, but we decided that life is uncertain, we have the money, the old struts are on the “watch” list, let’s just get ‘er done now. Car parts availability could become a huge issue sooner rather than later.

OtterGirl

used cars, STVRs

[methylethyl]

Another interesting indicator, in case you missed it:

https://ace.mu.nu/archives/416621.php

It's kind of complicated, but this piece highlights some connections between BlackRock, used car sales, and illegal migrants.

TL:DR: Blackrock owns a huge slice of the largest used car retailer in the US. That retailer (Tricolor) sold a metric crapton of cars to illegals, on credit, over the last few years. A large number of those cars have been driven across the mexican border recently, by people who still owe money on them. Insolvency likely, and could ripple out over a much larger part of the financial sector that you'd expect for something involving used cars. Tricolor has filed for bankruptcy. Blackrock has $90mil in there.

Another indicator to maybe keep tabs on is Short-term vacation rentals (AirBnB, VRBO, that sort of thing) going up for sale. A non-trivial part of the housing affordability crisis has been investors buying up residential properties, and then listing them as STVRs. They seem to be having trouble lately making the rental income cover the absurd mortgage payments on these places, and there's been a recent increase in these houses going up for sale as investors try to cut their losses. In a declining economy, fewer people go on vacation. BUT ALSO, a lot of STVRs are, possibly, being used in a common financing scam (look up BRRR and DSCR loans if you're not familiar with it) where people buy them, list them as STVRs or rentals, and then falsify the rental income to take out additional loans based on the faked *rental income* rather than the value of the property (which is mortgaged), and then use those loans to buy more rental properties, rinse, repeat. Apparently nobody at the bank ever checks to see if the rental income reported is real. STVRs could be sitting vacant. Eventually, they overextend the fraud and can't make payments anymore. Seems like we are reaching a critical juncture on a lot of those gigs. I expect the market will be flooded with them soon, as the perps are forced to declare bankruptcy. Given what they've done, collectively, to the housing market with this fraud, I only regret that nobody's going to jail.

Tack onto that: more and more places are outright banning STVRs because they are so awful for the neighborhood, tax evasion is rife, and they are attractive nuisances for criminal activity.

Housing market's already plateuing in my area, and headed down in some of the more overinflated markets. Watching closely to see if they get bailed out again (swearing), or if this is the first domino in the line on the collapse of the housing market. All metrics say this time is going to be way bigger than 2008. I have no idea why it hasn't come down already, given the sheer amount of fraud. Given how *much* of Americans' perceived net worth (it's not real, but it goes on the balance sheet) is tied up in real estate right now (not just boomer homeowners: there are zero options in our 401k booklet that *aren't* significantly invested in RE, I checked, so I reckon retirement funds are all at risk here).

Re: used cars, STVRs

[methylethyl]

oof, hit post before finishing the sentence.

--given how much of Americans' perceived net worth is tied up in real estate, the pending RE bubble-pop is going to affect *every* part of the economy. There will not be any way to contain it.

[(Anonymous)]

jmg are you seeing anything line up astrologically, beyond the already seismic changes coming up next year? The latest chart for the US, both the equinox and the recent eclipse, while bad, didn't read as cataclysmic.

For comic relief, there is the Simpson October 2025 market crash prediction that's making internet waves. I missed the first time.

The numbers around First Brands are staggering and it's strange, to me anyways, how it always circles back to Switzerland and Credit Suisse for these types of crisis.

[ecosophia]

Keep in mind that the charts I follow give relatively short term predictions; as yet I haven't found a way to track long cycles astrologically that gives accurate results. For that reason, and because I always try to correlate astrological events with what's happening in the political and economic spheres, I haven't tried to cast anything beyond the current astrological year (which ends in March of 2026).

It's quite possible, btw, that a collapse of AI stocks, followed by a disastrous collapse in real estate prices, would actually help most Americans. Imagine what panic selling in the real estate markets, bringing housing back within a reasonable price range, would do to counteract any negative effect of a stock market decline!

[quoadsacra]

The idea that we are in an AI bubble is definitely going mainstream - this week even the 'old lady of Threadneedle Street' joined the doubters:
https://www.theguardian.com/business/2025/oct/08/bank-of-england-warns-of-growing-risk-that-ai-bubble-could-burst

I honestly can't believe that the economy has trundled on since 2008 this long without a major happening. So it's anyone's guess when this bubble will finally go pop. But the sharp rise in the price of gold is definitely telling us something.

It's going to be hard when the bubble does burst - but I kinda hope it will be soon because the longer this goes on, the harder it will be. I am also getting annoyed by the sheer amount of gaslighting we are being subjected to by the vested interests of the AI industry: the idea that we are all going to be replaced in the workplace by machines that are cleverer and more capable than us. It's a particularly bad and dispiriting message for young people and I want to see it end.

[ecosophia]

My guess is that everybody's been trying to prop things up by every available means for the last decade and a half, because the whole house of cards is so riddled with fraud and financial gameplaying that even a modest downward lurch could bring it all down. Had the 2008 crash been allowed to run its course, all that would have been cleared away -- but of course it wasn't; Obama presided over a vast giveaway of government money to patch things up and keep the game rolling onward. Since then, we've been on borrowed time.

[(Anonymous)]

Do lunation charts help to determine the timing of a speculative bubble bursting? If they do, should it be cast for New York?

(If you don't know, I could check the lunation charts for periods when the stock market crashed.)

[ecosophia]

I haven't tried this. Please do give it a look -- and compare the charts for crashes with charts for randomly chosen lunations when the market was steady, to help avoid reading things in.

[(Anonymous)]

JMG,
If you don't know it all ready, the site of British technology writer Ed Zitron is an absolute must for understanding what's going on.

https://www.wheresyoured.at

His articles tend to be long (who am I to criticise?) but they are meaty and densely argued. But you can simplify his argument to three points. One, no AI company will ever make a profit. Two, valuations of AI companies as well as of makers of GPUs are therefore not based on intelligent anticipation of what could actually happen, but on sheer fantasy. Third, the infrastructure necessary for massive use of AI to the point where it becomes profitable cannot in fact be built. Conclusion, it's all going to come horribly undone.
Aurelien

[ecosophia]

Thank you for this, Aurelien! I'd come to the same conclusions on other grounds -- the first two, by paying attention to the gap between what stochastic parrots can actually do and what the hype claims they could so, and the third, by comparing the proposed demand for electricity to run LLM data centers to current electricity consumption and the tight limits to fossil fuel availability -- but it's very useful to have the same points made in a more rigorous way. As for "horribly undone" -- if anything, that's an understatement.

[(Anonymous)]

Seriously, I was already waiting for this post of you. I don't know if you have seen this graph that simplicius shared on his substack: https://pbs.twimg.com/media/GyQafqJW4AMVTQO?format=jpg&name=large

It's worth the click although what you can see does not spark joy. Watching from a German perspective the burst of the AI-bubble may well be the final straw. What we can see here is a substantial, continuous and accelerating decline of industrial output very much unlike what happened during the 2008/09 financial crisis or the health-related debacle a few years ago. Car industry, for example, seems to be on its knees as are their component suppliers. Many are either laying off workers or even fully close, many more have nothing to do but hold out for now thanks to their owners from overseas who are still paying the bills for some reason. And then there's this "making money" with various micro-trading apps. Several people I know including some of my barely off-age students are doing this and have a monthly income ranging from a few hundred euros to mid-sized 5-digit-figures. Various European countries are on the verge of political collapse, most notably France and Germany. No plans, only delusion. Eugyppius has a just penned a concerned essay about the situation, although it's paywalled and I didn't read it yet. All in all, especially combined with the many small everyday-tales that are too numerous to recount, it does not look very rosy.

Greetings,
Nachtgurke

[ecosophia]

Yes, I saw that -- Europe is deindustrializing, part of the process that will turn it back to the cold, soggy, economically backward, war-ravaged hinterland it was before 1500 or so. Your concerns, in other words, seem wholly reasonable to me.

[tritumi]

FWIW, am now in process of dissolving a firm that based expectations upon AI tech updraft, (though Covid and rule changes in PRC are immediate reasons).

George Gammon last week advised that the AI bubble now surpasses the DotCom boom.

https://www.youtube.com/watch?v=ErPTQYCAmN8

Fully expect bottom to fall out of real estate. But people must live somewhere, right? So maybe only about a 50% drop in prices...and that will be good for those who have hung on waiting for opportunity to buy. Not so good for anyone with a mortgage, however.

Gold buyers expect government response will be more printing. Sadly they may be right.

[the_arcane_archivist]

Good video! Thanks!

Speaking of LLMs...

[(Anonymous)]

Sorry it's a video - I wish there was a transcript. It seems that the reality of LLMs is becoming more visible in MSM:
https://www.youtube.com/watch?v=t-8TDOFqkQA
Exposing The Dark Side of America's AI Data Center Explosion (Business Insider)

Re: Speaking of LLMs...

[the_arcane_archivist]

Personally I don't believe that data centers consume just 5% of US electricity, must be some contracts that are not taken into account...

[erikalopez]

you're hella HIGHLARIOUS. you work with homeless have had knives and psychotic episodes trotted out on you and you credit Buddhism! No, you're being numbed trained by the paranormal qualities the LIMINALITY of living on the edge and dealing with flashes of violence. THIS is why i say the formerly abused are like monks in training for NOW TIMES. they can take it because they've been MKUltra'ed but came out of it on the other side. the fairy tale part where you face yourself in the mirror or test your mettle or are tested yourself.

Many formerly-abused continue the shtick and never grow out of it because they often keep people at a distance. it's in RELATIONSHIP that you have to face yourself and Other, right?

so a lot of abused people also HEAL when they are fought for and loved and SURRENDER to it, and don't re-create what they grew up with.

so it's the light after the darkness and why i'm OPTIMISTIC that Life eventually HAS to prevail of some sort. it's bigger than me although i'd like to be here to help fight the death cult and maybe ...? i don't know.

micro/macro needs and others take off and pick up on this task. it's endless, right?


so it's like you're in TRAINING for Now Times and i'm heartened because it means that yeah, with some sort of practice be it love of partner family children something that's bigger than you or if it's God or Service (which is God) or creating (God) nurturing... goes back to love.

i see you in TRAINING and it's really amazing that you're chill in it all. it's like samurai training because you also have to be AWARE of the energy vibe and how to work with it.

crazy street episodes are my specialty. the US Court system and bureaucracy and Normal People are my retarded super kryptonite and achilles heel and every cliche i can drag out like a fetid corpse.

CRE

[brendhelm]

In addition to everything mentioned here, there's also the sword of Damocles that is commercial real estate (CRE), especially offices.

CRE investors need to see occupancy, which is likely at least part of why some of their tenants have been pushing return-to-office (RTO) (other reasons of course include stealth layoffs by inducing the people who can't/don't want to RTO to quit). The problem is that that increasing occupancy requires there to be workers there.

Even if you're able to RTO everyone, you still have to deal with (1) demographic decline and the Baby Boomers' retirement, (2) death or disability of workers related to certain matters discussed on the Tuesday post, and (3) layoffs or terminations of workers for any reason (including offshoring, automation, restructuring, bankruptcy, etc.). Each of these means demand for office space drops.

If the AI bubble pops and brings down the market with it, you're overleveraged and fracked. If AI "wins," so to speak, it automates away a ton of jobs, demand for office space craters, and you're overleveraged and fracked again... unless you salvaged some of your losses by investing in AI, but even so, you're going to take losses.

Re: CRE

[ecosophia]

Yeah, that's another massive bubble that's been propped up by increasingly desperate measures since 2008. The economy is full of smoke and mirrors just now.

[ganeshling]

Hi JMG,

I work in a relatively large Australian tech corporation and there is nothing better than this meme to describe what's going on inside of the tech industry:



A few years ago the vast majority of people I know in IT and related fields were super excited about "AIs". Even among older generation of tech heads only a few were exercising any scepticism at all. It was a tough job to explain that this is not even the first time AI fad came up and that, if it survives, the best we can hope for is a few more niches where they'll be useful and that's that.

In the last few months it all changed though. Even the youngest developers in their early 20s are skeptical and roll their eyes when a new directive from "up higher" comes down saying that we are going to use AI for this or for that. There are still empty eyed "AI champions" here and there but a growing majority of people who have to use these LLMs for work are quite aware of their shortcomings and are becoming increasingly vocal about it.

And then there are nutcases... My grapevine brought me news of an Australian producer of explosives. They are pushing hard to use AI in mining operations that are done with those explosives... At times I wonder if it is going to be a major spectacular frack up with something as idiotic as this that will initiate the burst of the AI bubble.

[the_arcane_archivist]

Smaller "tech" businesses already discover how corrosive is the AI Slop to their business. By the time that corporations learn about it, it will take half a decade, so is more likely that the bubble will pop before they renounce the hype.

A small business with 70 employees:
https://www.youtube.com/watch?v=_zfN9wnPvU0

AI is completely unsustanable due to energy constraints

[alexanderthered]

Even if the AI bubble resulted in "AGI" (it won't), even if LLMs were capable of creating new things / ideas / solutions (they aren't - try having one create a neologism. They can't, because they can't create anything new that doesn't already exist in their training data, which means all of the talk about using them to "solve" global warming or the energy crisis with a new idea that doesn't already exist is a bunch of hooplah.), and even if these LLM tools were actually useful for the average person (eg, outside of very specific niches) beyond generating memes and lies (they aren't), the entire thing is completely unsustainable because of a lack of energy.

LLMs and their associated datacenters are consuming enormous amounts of energy, and it's completely unsustainable. They're such energy hogs that renewables - solar and wind - have too low of an EROI to power them, so they HAVE to use fossil fuels (Grok) or their owners plug in to the larger grid and beg for operators to install nuclear power (Microsoft et. al) while they increase electricity rates for literally everyone else because there isn't enough energy in the system for them; energy generation in the US has been more or less flat since world conventional oil peaked in 2006, even WITH the many billions of dollars of renewable energy buildout over the past decade (a great example of EROI in action, IMO).

The EROI just isn't high enough - the only thing that can fill in the gap are fossil fuels, but with peak unconventional oil either occurring NOW or in the very near future, the future does not look good. At the moment, there isn't really any method of training these AI models except through literal brute force - which means that if the total amount of energy within the system begins to decline, the whole thing will come crashing down like a tower of cards.

Something I haven't seen other people point out is the really strange way this is playing out. This is VERY similar to how it was in the 2000s run up to peak conventional oil - datacenters were getting built everywhere (famously, the feds were building tons of them in Virginia, supposedly to comply with the Patriot Act - but big tech was also doing this) and sucking up tons of energy, meanwhile electricity prices skyrocketed in some parts of the country and blackouts became more common. Gas and oil were still "cheap" though, just as they are now - right up until the very second where it very much wasn't. Oil prices per barrel went up over 4x in price from 2004 - 2008.

I am just waiting on two things - whatever this generations Enron will be (I betcha it'll be "AI" powered), and a very quick rise in oil prices over a relatively short period of time, like what happened from 2004 - 2008. Not only will that pop the AI bubble, it'll probably pop the "everything" bubble too, and take nearly everything down with it.

And after that, we are done. Once peak unconventional oil occurs, there's no turning back. Energy will end up become more and more scarce over time, and the information age - which depends on an ever increasing supply of energy - will be over.

Re: AI is completely unsustanable due to energy constraints

[ecosophia]

Exactly. I've been blogging about this from time to time for a while now -- the entire Tomorrowland future depends on energy supplies that don't exist. I'm not sure that the "everything" bubble will go all at once, not least because I don't think governments are out of last-ditch measures yet, but the oil price spike, the massive economic crisis, the collapse of a lot of fake wealth, and the rest? I'm expecting that.

[the_arcane_archivist]

It pretty much looks the same:



The above was pulled out by the financial media to lure the muppets that there is at least one more year. Those graphs can be overlapped on any point to mach the curve.

In reality everyone's tries to pop the bubble to benefit from it.

In August Sam Altman said AI is a bubble. Biggest player in AI. This is like Maddof saying his business is a scam. Yet AI bubble didn't pop.

In September Mark Zuckerberg said AI is a bubble. Mark AI is big 5 players. Didn't pop.

Looks to me that they want to pop it so if they short it make a lot of money.


https://futurism.com/future-society/ai-hype-investment-subprime-bubble

According to a new assessment by Julien Garran, a research analyst with the firm MacroStrategy Partnership, the AI bubble is now a staggering 17 times the size of the infamous dot-com bubble, a first-of-its-kind run on tech stocks tied to investor hype over the internet. Even worse, Garran estimates that AI now accounts for over four times the wealth trapped in the 2008 subprime mortgage bubble, which resulted in years of protracted crisis across the globe.

So just AI bubble is 4 times than 2008 bubble and 17 times than .com bubble, what about the fracking bubble, the housing bubble and the other bubbles that are still continued in the 2008 tradition. So how big is actually the everything bubble that will probably pop in what remained of 2025 or in 2026?


“To find out whether we have hit a wall we have to watch the LLM developers,” the analyst said. “If they release a model that cost 10x more, likely using 20x more compute than the previous one, and it’s not much better than what’s out there, then we’ve hit a wall.”

This sums up what happened with GPT 5 versus GPT 4o. GPT 5 is worse tha 4o but is more cheap for the data centers. So the only improvement that 5 made is to work with less resources for OpenAI. They pulled out 4o from free tier and people noticed and were discontent.

One more reason to avoid LLMs you will be hooked on something and the served a lower and lower quality stuff...

If CNBC is trying to oversell to the muppets, this is an import sign:
https://www.youtube.com/watch?v=QKkn0aftERM

They are even discontented that "the last muppet" is messing up the AMD stock on the high side.

As one comment says:
"is not a bubble yet" is a super greedy statement, the type you see before a bubble


These are really signs that they are trying to get out of the market but they first need to pump the market to sell the liabilities.

The litmus test is Intel everyone and the government helping Intel is a sign that they don't want Intel to crash and pop the bubble.

Damning Report on "AI"

[(Anonymous)]

For those who do not know who Chris Martenson is, he is a very smart and perceptive guy who has a Youtube channel named "Peak Prosperity". Well, a month ago, he posted a video cautioning his viewers about the AI bubble (https://www.youtube.com/watch?v=nteXOXQ1ZwI). Well worth a view - for those who are video-inclined.

One of Chris's key points is a study that was recently conducted by MIT's NANDA (Networked Agents and Decentralized Artificial Intelligence) initiative. The report stated that 95% of enterprise organizations have received no return on their "AI" efforts, and only 5% of organizations have successfully integrated "AI" tools into production at scale. (The last two words, in my view, are key). That means that the $35 - 40 billion invested by US companies in "AI" that has been invested have nothing to show for it. Oog.

Ron M

Re: Damning Report on "AI"

[the_arcane_archivist]

That means that the $35 - 40 billion invested by US companies in "AI" that has been invested have nothing to show for it. Oog.


I think real numbers invested might be at least one order of magnitude bigger. Speaking about the bubble, I've seen trillions mentioned in some articles.

Geomantic inquiry

[(Anonymous)]

A few weeks back I cast a geomantic chart with the question 'will the British economy crash within the next three months? (asked on 2nd September 2025)'.

The resulting chart was thus:

1M: Acquisitio
2M: Acquisitio
3M: Laetitia
4M: Caput Draconis
1D: Albus
2D: Puer
3D: Tristitia
4D: Puer
1N: Populus
2N: Via
3N: Via
4N: Fortuna Minor

RW: Via
LW: Fortuna Major
J: Fortuna Minor

With positive figures for the Witnesses and Judge the simple answer is 'yes, dicey times ahead, put the kettle on'.

The House Chart also gives an emphatic 'yes' with Acquisitio in both First (querent) and Second House (economy) thus forming the strongest Mode of Perfection, Occupation.

Houses Ten (government) and Twelve (debt) also seem pertinent to the inquiry. Via in the Tenth House suggests a change in government. Fortuna Minor in the Twelfth perhaps indicates short term relief from an external source.

The left side of the House Chart is rather busy and seems to show a quite complex interaction between the salient factors, with enough material to bore paint from a wall with some overly abstruse and wild speculative analysis.

Overall I read the answer to the inquiry as 'yes the British economy will crash within three months and that will coincide with a change of government followed by some temporary relief of the situation'.

So, time to make some tea.

Mr James

Re: Geomantic inquiry

[ecosophia]

That seems like a plausible interpretation to me, certainly.

an old joke

[drhooves]

JMG wrote, "...an economist who was genuinely good at writing..."

Reminds me of: What do you call an accountant with a personality?

An economist.

The current vibe definitely has a feeling of crashiness, but I've thought that for a while now. My younger brother recently retired, and started a contracting job this week with a fusion startup - they seemed very eager to get him and his PhD credentials on board. Much to my surprise, my brother told me it's private funding now in the fusion arena seeking somewhere to park their money. I thought with few options for a safe return on capital, that most start ups were using the Musk model of business relying on the .gov pig trough of cash flows.

Back in 2008, I recall quite a few people on the Internet were rooting for a crash, thinking that if they were debt free and had some spare cash, a crash would provide deals of a lifetime - and bargains galore for pennies on the dollar.

Seems to me a crash now could provide some great deals, but could also provide some great misery (via violence, supply chain implosions, etc).

It's getting scary just to log on to the computer these days and check the news.

Re: an old joke

[ecosophia]

That's unfair to accountants. Unlike economists, they generally get the math right!

[(Anonymous)]

JMG, i know nothing about First Brands or any of this but i just finished reading this thread, then was on 8kun where someone just posted this article:

DOJ Opens Probe Into First Brands' Shocking Bankruptcy

https://www.zerohedge.com/markets/doj-opens-probe-first-brands-shocking-bankruptcy

is this the same first brands? i just thought it was synchronistic to see that just after reading this.

[ecosophia]

It's the same company. Its bankruptcy is a huge issue, and may just be the rolling pebble that sets a landslide in motion.

Bank closures - have some cash on hand!

[trubrujah]

I just want to remind everyone of Cypress and what happened there some 10+ years ago when the economy imploded. The banks went on holiday, which then turned into a week long holiday, which then turned indefinite. It didn't matter how much money you had in your bank account, because they set limits on how much money you could take out a day.

The Bansters here were definitely paying attention. I fully expect this will be one of the tools they use to try and stem the flow of money leaving the banks when people panic. For this reason, a financial guru I trust has suggested keeping a shoe box full of cash on hand, hidden somewhere in your home with an assortment of bill sizes.

It doesn't matter how much money you have in the bank, if they won't give you access to it. This is one of the reasons I think there is such a big push to digitize everything, because they can just turn it off when the next crash happens and stop you from panic withdrawing your money. When you can't use your bank money, CC and Debit cards won't be accepted any longer. Cash will be king once again. Prepare accordingly.

Re: Bank closures - have some cash on hand!

[the_arcane_archivist]

I just want to remind everyone of Cypress and what happened there some 10+ years ago when the economy imploded. The banks went on holiday, which then turned into a week long holiday, which then turned indefinite. It didn't matter how much money you had in your bank account, because they set limits on how much money you could take out a day.

Interesting that Cyprus also has gun ownership. But who knows if it's a good staging country. Even the Magician State and his Sorcerer's Apprentices, Big Banks, Big Pharma ar subjected to the same laws of physics, they have to test their models against reality eventually.

[boccaccio]

Gold had yesterday the second largest trading volume ever, second only to 2013 during the Greek debt crisis. Volume doesn't necessarily mean rising prices but it shows distrust in the system. On the other hand, Ed Dowd and several people he follows seems to think that the dollar has reached the bottom and will start to rise soon.

The surprising winner of the Nobel Peace Price, a Venezolan opposition leader, strikes me as highly suspicious. Trump made a lot of noise about wanting to win, so now he doesn't his opponents are elated that he didn't get what he appeared to want. But Trump is a trickster. The Venezolan winner would align with the US and ousting Maduro and replacing him with a lackey who wears the halo of peace would fit right with Trumps agenda to rebuild the US to a regional power that leads the Americas. I wonder if we are getting an attempt to regime change in Venezuela soon. This will introduce massive risk in the international financial markets and I am not sure at all that the attempt would succeed. If it turns into a failure, confidence in the US will plummet and so will the dollar.

Some psychics are also predicting immanent economic woes. Joseph Tittel predicts a "rebalance" of the stock market and crypto around Oct 21 while Craig Hamilton Parker sees a big economic crisis in Oct or Nov. Izabela and Joseph both see martial law in countries like the US, UK and France before the end of the year, but Izabela didn't mention an economic crisis. I must say, take these predictions with plenty of salt. The past two years the accuracy of psychics across the board seems to have plummeted. The predictions are getting more vague and are often plain wrong. I have no clue what causes it, but that may be more a subject for MM :-)

PS Like Methylethyl I decided two weeks ago that NOW is the time to buy stuff that I want to last for the next 10 years or so. My kitchen needed new equipment and so I took steps in that direction. Also, earlier this year I bought another car as my 20 yo Seat was nearing the end of its incarnation and it seemed better to buy a new one than to fix it up for 1 or max 2 years extra. I've also did as much as I could to insulate my home and make it as energy efficient as I could. Next week I hope to finish the last activities.

[the_arcane_archivist]

The Venezolan winner would align with the US and ousting Maduro and replacing him with a lackey who wears the halo of peace would fit right with Trumps agenda to rebuild the US to a regional power that leads the Americas.

Russia, China and Iran poured a lot of people and equipment the last few months. It would be a miracle for Trump if Venezuela folds without chaos. And if chaos ensues heavy oil disruption might mean diesel disruption in US. AFAIK US has its heavy oils from Russia and Venezuela.

[(Anonymous)]

Anybody who hasn't seen Denninger's latest on this, should.

In sum, most people don't know much about electricity generation and assume it's somehow infinite: if we require more electricity, just crank up the dial at the power plant and make more!

It doesn't work like that. There is no capacity to power all the AI data centers.

https://market-ticker.org/akcs-www?post=254178

[ecosophia]

Denninger is right as usual. To power all the data centers currently in the works in the US, we would need to triple our national production of electricity...and There. Is. No. Source. Of. That. Much. Power.

Oil prices

[seanbolger1]

Apparently oil prices are due for a spike again, just in time, like 2008, and there are rumours that Iran is going to get bombed again.

Predicted oil at 150 and makes a good case.

https://youtu.be/6iMp1iRc_Jw?si=x2D_94-tM4CiBBoW

Kind regards
Sean

Re: Oil prices

[the_arcane_archivist]

If I remember correctly, because I followed the Peak Oil scene at the time, the financial collapse trailed the high oil prices over $130 by 2-3 months.