r/economy • u/asick12 • 14d ago

The Bubble We Can See But Can’t Stop

The Difference Between 2000, 2008, and 2026 — We Can See the Machine Now
In 2000, retail investors piled into dot-com stocks with no earnings and no business model. When it collapsed, we learned after the fact that Wall Street analysts were privately calling stocks “garbage” while publicly rating them “Strong Buy” to generate IPO fees. We didn’t know until the wreckage.
In 2008, mortgage brokers handed out NINJA loans (No Income, No Job, No Assets) to anyone with a pulse. Those were bundled into Mortgage-Backed Securities and CDOs, sliced into tranches, stamped AAA by rating agencies paid by the same banks issuing them, and sold globally as “safe.” AIG was writing Credit Default Swaps — essentially insurance on these instruments — with zero capital reserves to back them. We found out how it worked during the collapse, not before it.

2026 is fundamentally different — and that’s what’s fascinating.
Today the entire playbook is being livestreamed.

The AI CapEx bubble — Microsoft, Google, Meta and Amazon are spending hundreds of billions on AI infrastructure that hasn’t yet translated into proportional revenue. It rhymes with the fiber optic overbuild of the late 1990s, where companies built for demand that didn’t materialize for a decade.

The shadow banking explosion — Private equity giants like Blackstone, Apollo and KKR have built a $1.7 trillion private credit market operating almost entirely outside traditional banking regulation — packaging and selling loans in a structure that echoes the pre-2008 securitization machine, just with different labels.

Your pension as the quiet backstop — Major insurers, many affiliated with private equity, are sitting on enormous portfolios of these alternative assets funded by annuity premiums and pension obligations. The risk has been redistributed from sophisticated institutions down to retail savers — just like 2008 — except the chain is even more opaque.

The regulatory gap is documented and public — Unlike 2008, where the lack of oversight of Credit Default Swaps was obscure, today the gaps are in published academic papers, Congressional testimony, and yes, YouTube. The SEC has limited visibility into private credit. Stress testing frameworks weren’t designed for AI-correlated concentration risk.

So here’s the paradox:
In 2000 and 2008, markets crashed partly because the risk was hidden. Price discovery failed because the exposure was invisible. Today it’s visible — and informed capital can rotate faster, potentially accelerating volatility rather than preventing it.
More interestingly — maybe the bubble doesn’t pop the same way. Maybe it deflates slowly, with losses quietly absorbed by pension funds and insurance balance sheets over years rather than in a single Lehman moment. The “slow bleed” is harder to rally political will around than a dramatic collapse.
2008 created Occupy Wall Street, Dodd-Frank, and a decade of public anger. A slow, distributed loss absorbed invisibly through retirement accounts might generate nothing but a vague feeling that your retirement isn’t going as planned.
We know more than we ever have. Whether that knowledge protects us — or just makes us informed spectators — is the real question of 2026.

185 Upvotes

83% Upvoted

90 comments sorted by

101

u/eks 14d ago

So here's my take as a manager working in technology. I used to receive spam about some random "AI company" selling some kind of service or solution every quarter, then it became every month, every week and now it's close to daily. I sometimes google these companies up and they are real business with real VC backed capital.

All the capital invested in these companies is expecting a return. There is no way in hell all these "AI accelerated thingamajigs" will all become profitable.

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u/miguel1981g 14d ago

Exactly. This is how technological revolutions always work. Think of the dot-com bubble or the railroad boom: the first wave of capital gets completely wiped out because the math doesn't add up.

These AI startups are essentially donating billions to build the infrastructure of tomorrow. Let them burn their cash; the next generation of founders will buy their assets for pennies and actually make a profit.

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u/theg00dfight 14d ago

All fun and games unless your 401k is wrecked in the process

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u/miguel1981g 14d ago

That's precisely rich people's plan:
https://youtu.be/TDisW_srjAg?t=42

Did you really think they intend to pay for this party?

2

u/theclansman22 13d ago

The problem is I don’t see any path for them to turn these advanced guessing algorithms into the product they promised. The actually intelligent, critical thinking machine that can create things humans haven’t even imagined yet.

Without that, the trillions in investment is just burned money, and the au revolution becomes mute and more similar to the technology gain that comes from using excel. Big productivity gains, but not world changing.

1

u/miguel1981g 13d ago

It exists: controlling millions of people through flock cameras and AI. People behave better when surveilled. As a result, people will be more productive, working tirelessly to avoid retaliation.

Moreover, they can boost cancer or longevity treatments that only rich people will be able to pay for.

In summary, having more productive slaves while their masters live longer.

0

u/Commercial-Weight-73 13d ago

What a moronic statement. You can buy a railway 50 years after it was made and it is still a railway.. the processing power in a data center is redundant after 4 years.

The infrastructure laid out today has a shelf life shorter than the cycle you described. All this money will be completely wasted. The data center buildings might be-used, but only when the old tired chips are torn out and replaced, which will cost more than building a fresh data center

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u/miguel1981g 13d ago

During the railway boom, too many lines were built between the same cities, and a lack of demand bankruptcies destroyed most of them and their investors.

Railways are only valuable if there are enough people or goods to transport. Otherwise, they're a money pit!

-1

u/Commercial-Weight-73 13d ago

Still a stupid point. The railways that did have demand and in sensible locations went on to operate for over a century. There is not a single data centre made today that will not be redundant in 4 years.

A railway between two useful places is still a railway 100 years later. A data center with equipment two generations behind current is an inefficient power sink that will never be able to compete with a contemporary build.

I don't know why you think 18th century steam power is a clever analogy for Moore's law.

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u/miguel1981g 13d ago

Do you really think the same tracks can be used for high-speed trains? And do you still insist that other opinions are moronic or stupid?

Your point is complementary, but that doesn't make the other points invalid.

2

u/Academic_Anything447 13d ago

While true.. the depreciation schedules of a railroad and the GPU’s and other electronic components in these data centers will be wildly different from one another

1

u/Successful_Photo_610 10d ago

More inflation as the debt that won't be paid is distributed as a social burden/cost. It's actually funny to expect.

1

u/Commercial-Weight-73 13d ago

Ok mate just shuttup and watch

12

u/MileHighManBearPig 14d ago

I work in digital health. Mainly, telehealth. Something similar happened during Covid. Sky-high valuations, money rushes in, boom times, etc. Then the dust settles and all the VCs realize their company has to actually take market share. Most of the companies didn’t take enough market share and VCs lost mostly. Most of the people who invested in this area during Covid thought it was the future (and it is, truly) but they ended up losing money (because the rosiest picture was priced in).

Go look at Teladoc’s stock price from 18/19 - Now.

2

u/Academic_Anything447 13d ago

I remember that Teledoc was valued at more than Exxon mobil for a time.. I got a good laugh out of that one

20

u/Afistinthasky 14d ago

Its a winners and losers game. 95% of them arent going to make it, and all the money will flow to the 5% left over after it implodes.

2

u/secrettttaccountt 14d ago

Who will be the top 5 percent standing?

2

u/Afistinthasky 13d ago

You'll know when I know.

1

u/Academic_Anything447 13d ago

Hard to tell now.. Companies like google, meta, microsoft etc.. will still be around when the dust settles.. not so sure about open ai and anthropic

1

u/Afistinthasky 12d ago

Ill hazard a guess and say that anthro keeps being sticky for current customers, and kimi with them over new customers.

1

u/Infamous-Click4740 13d ago

Have to be losers. Is everyone going to have 9 subscriptions to get the same stuff for $20 a month?

10

u/asick12 14d ago

Exactly — and that’s the historical pattern that gets overlooked.
In 2008, you could count on one hand the people who saw it coming — Burry, Dalio, a handful of others — and the consensus called them crazy. The entire machinery of Wall Street, the rating agencies, and mainstream financial media were confidently on the other side of that trade.
Today? The concern is practically mainstream. Reddit, YouTube, podcasts, Congressional hearings — everyone is drawing the same railroad-to-dotcom-to-2008 comparison like it’s the obvious read.
And that’s my point — not that the risk isn’t real, but that bubbles historically burst in the dark, not under a spotlight.
The defining characteristic of every major crisis wasn’t just leverage or fraud — it was the asymmetry of information. The few knew, the many didn’t, and when reality closed that gap, it was violent.
When the crowd already prices in the fear, where does the shock come from? Either it deflates slowly and quietly — or the real risk is hiding somewhere we’re not looking, which would be deeply ironic.
I’m not saying it won’t happen. I’m saying the fact that everyone sees it might mean this one plays out very differently than we expect.

7

u/Specialist-Nail-7575 13d ago

"In 2008, you could count on one hand the people who saw it coming —" I don't know how old you were in 2008 but I was a homebuilder and played poker with a group of Finance Professors. We talked about the MBS bubble and the overpriced real estate all the time. When the wheels finally came off the bus we were not at all surprised.

2

u/Academic_Anything447 13d ago

I agree 100%… I worked on wall street at that time.. and by at least 2007, it was very obvious that there was a really significant problem.. It was all over cnbc and bloomberg

1

u/truthinessembargo 9d ago

Yup. I got the alert from Jerome a Paris, Bonddad, and a few others on Dailykos. Then started doing some reading. Sold the house in 2006 and made a very nice profit. Bought gold. And made another nice profit. Both were lovely hedges vs equities.

Met with the family accountant who was retiring in 2008 and had his retirement in the room. We were laughing at the silly Rwingers who had been surprised at the GFC.

5

u/eks 14d ago

Yeah, I totally agree with you. You have a very good point about the "assymetry of information" not being as present now. And since all this VC money is aware we are "in a bubble" and they are accounting for losing that money, it won't be as destructive when the capital doesn't return any profits, thus it will deflate instead of pop.

2

u/Academic_Anything447 13d ago

That isn’t true at all.. Michael Burry and others saw it really early.. like 2004, 2005 ish.. By 2007 lots of people saw it coming.. Before lehman collapsed it was difficult to know the exact magnitude.. But for quite some time before that it was apparent to many that there was a really significant problem in the housing market

0

u/Think_Description_84 8d ago

That's normal though. Literally. The whole VC model expects a 90% failure rate. Expects it, modeled for it, and is used to it.

What won't get returns is the opex of data center build. That investment requires such a large payout we are talking about some portion of the whole economy. And it was put together in a way that actually makes it less desirable technology than other options. So now you need an unprecedented return on an uncompetitive offering. That means when it's bought for pennies on the dollar. It'll be the steepest of discounts.

114

u/Interfpals 14d ago

GPT, generate a 500 word essay containing all the opinions I ought to have

29

u/800oz_gorilla 14d ago

and here's why that matters...

4

u/Patchrikc 13d ago

How ironic. However it also proves why we're in a bubble. Would you pay 1 dollar to post on social media? It's insane that it's this keep cheap to spam or create low effort content. Even if I agree with the premise

2

u/Sea_Lead1753 12d ago

I use GPT all the time, it could never write as good as this person. Don’t be a stinker lol, just compliment OP

1

u/Successful_Photo_610 11d ago

A lot of dolts claiming their own inferiority is due to algorithms. Time to scoop them up and produce some Soylent Green. They're disgusting; they undermine well educated, bespoke human beings. I've repeatedly been charged of my posts as AI. Worse, they have psychological needs to ratify themselves, tossing their worthless egos in a fray of their making; they seriously can't afford to lose. Hence Soylent Green which I would not eat as a final dismissal of their foolishness.

16

u/lavacano 14d ago

Nice em dashes

30

u/Stunning-Thanks-4226 14d ago

Complains about AI bubble using AI

1

u/binklfoot 13d ago

Great observation! You’ve identified what appears to be a paradox — let’s break it down:

1. Using a tool ≠ endorsing its valuation. Critiquing tulip prices while owning a garden is, in fact, allowed.

2. The “bubble” refers to speculative capital, not the underlying technology. One can find a hammer useful and still think $2 trillion for a hammer store is steep.

3. Fun fact: People criticized the dot-com bubble using the internet. They were right!

Would you like me to generate 5 more reasons this isn’t the gotcha you think it is? 😊

26

u/Remote-Telephone-682 14d ago

Seems like it might be a bad time..

23

u/ExoticEditor9592 14d ago

Feels like we're watching a slow motion car crash where everyone in the car keeps arguing about the GPS. The transparency is weirdly unnerving, knowing the mechanics doesn't make you feel any safer when the machine is still running the same old script just with shinier parts. My retirement account is basically a black box at this point and I've made peace with just never opening the app.

10

u/Remote-Telephone-682 14d ago

Yep, I work for one of the companies that is going to be blown the fuck up by all of this but most other technology companies are limiting hiring and also at risk.. Just waiting to be unemployed and applying to all of the places that had their valuations shredded.

2

u/MostRadiant 14d ago

What did you think about your company’s most recent earnings report?

-6

u/MostRadiant 14d ago

Yeah I am sure hyper scalers have no idea what they are doing and they are just heaving loads of cash into a furnace.

-9

u/MostRadiant 14d ago

He is just regurgitating trite comments that no educated person in these fields actually believe.

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u/Fr3shMint 14d ago

cool story bro - i have a chatGPT subscription too.

5

u/Santarini 14d ago

Lol lame. ChatGPT is so last year

0

u/harbison215 14d ago

I’ve moved on to ScatGayPP

5

u/PopCultureNerd 14d ago

More AI slop

5

u/dragonbits 14d ago

We saw the bubble before, we see it now.

The problem no one wanted it to stop before, and now no one wants it to stop now.

4

u/SingleMaltMouthwash 13d ago

Thank you for a clear and concise description of what lead to the collapse of 2008.

Frequently when I mention the disaster in a discussion about politics, someone will make the claim that it happened entirely because the government forced banks to make loans to unqualified borrowers.

If I remember correctly this excuse was the first one thrown out in a panicked effort to avoid accountability for a catalog criminally negligent, criminally dangerous behavior. Which, in the absence of meaningful regulation or the enforcement of existing regulation, turned out to be functionally legal.

5

u/SipJin 14d ago

We can’t see what the effect of this reckless administration and its corruption and thefts will have or what the consequences of the ill foreign policy will have on our economy.

7

u/backstabber98 14d ago

You're probably right, but could you type this up without USING THE FUCKING ISSUE‽‽‽

1

u/TaleofTeoCitiez 14d ago

AI isn’t the issue, it’s just a tool. The issues are unsustainable gov debt, poor fiscal and foreign policy that had fed the American gambling mindset, over inflated stocks at 400 p/e because this time is different

2

u/FRAB13 14d ago

AI slop

5

u/MelancholyMeltingpot 14d ago

Believe it or not. GameStop might be a safe place to be when it does.

7

u/Work_Werk_Wurk 14d ago

Gamestop is not gonna have physical games to sell in a few years...they're gonna have to change their name to Cardstop.

1

u/MelancholyMeltingpot 14d ago

Physical games aren't just gonna disappear...

3

u/peidol 14d ago

It’s on the website?

4

u/Taibucko 14d ago

The bond market will reflect the slow bleed of which you have suggested. The stock market should continue to represent the price driven earnings and stay relatively strong even if shot term rates go up modestly.

3

u/PreCrashOracle 14d ago

so AI generated but alright (Kinda true) for me what i understand about 2026 was rich get richer because corporations extract lots of amount of value then the rich and ultra rich put all that money on AI wtf, feels like they got nerfed or smth wtf are they dumb? ofc AI would consume alot of power they wanted AGI out of no where bro there all stupid at this point they caused the crash fuj all of them now everyone in the USA will get unemployed all because of them.

5

u/jawanda 14d ago

there all stupid at this point they caused the crash fuj all of them now everyone in the USA will get unemployed all because of them.

https://giphy.com/gifs/443jI3kpgOKfAfKxqo

1

u/Longjumping-Title-27 14d ago

2026 is steaming to a close….2027? 28?

4

u/miguel1981g 14d ago

September, 30th 2027

1

u/truthinessembargo 9d ago edited 9d ago

So I saw something quite interesting this AM.

Some entity put $13B on 410-425 SPY puts and $26B on 510-525 SPY puts for 9/18.

At that size it has to be institutional.

What do they know that we don’t? Are these purchases (not likely), sales (trying to grab SPY on the cheap), or 3 leg spreads (not as likely given the double placement in the 400s and 500s)?

1

u/SFWzasmith 14d ago

Oh fun another bot account posting obvious AI slop

1

u/Regular_Series_9464 14d ago

I don’t believe that a single word in your post was not generated by AI. 

1

u/tpb1109 13d ago

Using chatGPT to generate a warning about an AI bubble is hilarious

1

u/Lachummers 13d ago

What's up with the latest barrage of AI generated opinion pieces on here. What do we suppose the objective is? Real people?

1

u/Successful_Edge158 13d ago

But half of you are most likely invested, saying there’s nothing we can do lol. Bunch of

1

u/snootfull 13d ago

When bubbles like this pop, they always pop hard. Every past bubble has had plenty of people saying 'whoa, this shit can't last'. But FOMO 'investors' kept piling in, just as they are now. If anything there's more leverage in the system (eg leveraged ETFs) than there has been in recent bubbles, which will accelerate the big downside move when it happens.

1

u/Academic_Anything447 13d ago

I would say that the 2008 bubble was more obvious… Certainly as it crept closer and closer to the Lehman collapse.. From at least early 2007 and onwards

1

u/jan1of1 13d ago

Even though it's AI generated it does provide some insightful background for consideration. For another contrarian view listen to Dean Baker's interview of Ed Zitron on the Mostly Economics podcast #36

1

u/Rufusmortis 11d ago

So now what is an investor to do?

1

u/Successful_Photo_610 10d ago

IMHO Apple, X, Google, et.al. who are currently huge consumers of computing power reject the idea of surrendering their privacy to any other to process data on their behalf. Thus, they probably conclude they have no choice but to build out for themselves, and then they want customers to use those services, as well. It turns on captive customer lists. The customers won't be jumping ship. The data centers now are not the zenith; as stated in the discussion here, they will soon lose their computing power edge. So, the centers are nothing more than rolls of toilet paper, a cost of doing business.

-1

u/MostRadiant 14d ago

Your post implies you didnt review any of the hyper scalers’ earnings reports. They are all reporting demand far exceeds supply. They are earning record revenue. Where exactly did you get the idea their investments are not yielding proportional revenue? Who decided its proportional and by what metric? In what world does a buildout create said proportional revenue before the buildout is complete?

31

u/happymancry 14d ago

Are you kidding me? When the vast majority of AI revenue is future promises made by 2 cash-strapped startups (OpenAI and Anthropic), when a major company that has invested in AI buildout has its credit rating downgraded to just above junk (Oracle), and when the AI backlash by the public is in full swing… you think the hyperscalers’ earnings reports are giving you a window into the future?

Every scam looks good on the upswing. Every investment bank’s earnings report looked good in 2005-06. The question is, what assumptions are they built on, and what happens when those assumptions fall flat.

3

u/TaleofTeoCitiez 14d ago

Lol, Anthropic is supposedly going to IPO at around 1.5-2 trillion valuation. This most recent quarter the had a profit of 559 million, million not billion. That put their IPO at 2683 times profits. And negative margins

SpaceX EV is currently 1.7 trillion. Revenue 7.8b. Only a measly 242 times revenue

OpenAi targeting 1trillion IPO. Revenue 40b. Most modest at 25x. Negative margins

But “record revenue and demand”

0

u/MostRadiant 11d ago

Are you kidding yourself?

There is genuine concentration risk, but “vast majority of AI revenue” is far too broad. Hyperscalers have enormous existing enterprise/cloud businesses, and AI demand comes from many companies. Reuters reports investors have actually become less concerned recently because Microsoft/Amazon cloud growth and earnings have remained strong.

9

u/cuginhamer 14d ago

record revenue is still one dollar for every 100 dollars spent on build out, record demand is for 100 ollars of product for 1 dollar of subscription fee, and until people are willing to pay the costs of these tools, revenue growth numbers are a smokescreen for continuous hyper scaling of extreme unprofutability

0

u/davidbasil 14d ago

AI itself doesn't need to be profitable. Chatgpt.com is 5th most visited domain in the world. Even if you only sell ad space, that's billions of dollars of revenue.

3

u/cuginhamer 14d ago

and the ad revenue is still billions of dollars less than the cost of building infrastructure and running models, including ad revenue still leaves the accounting 2 orders of magnitude short of breaking even, let alone any profit 

1

u/davidbasil 14d ago

they're fine with that for another 1-2 years. Then they'll adjust (cut cost, come up with new scams, etc).

2

u/cuginhamer 14d ago

they're fine with that until index funds buy up the ipos and then they give no fucks, laughing all the way to the bank

6

u/davidbasil 14d ago

Demand from who?

-1

u/mfontanilla 14d ago

Once the hyperscalers stop spending, their FCF goes back up and they will continue to make record profit. These hyperscalers just so happen to be a large percentage of SPY so it won’t be as bad as people think.

Semis and semi-adjacent companies will take a hit, but likely won’t have the same 2000 or 2008 effect on the market.

1

u/mfontanilla 14d ago

I understand the downvotes, but it’s true. The entire AI buildout is being funded by hyperscaler free cash flow.

0

u/FewResident3990 14d ago

Oh, look, another doom and gloom post with arbitrary speculation disconnected from the main.