Economist who called the 2008 crash says the AI bubble has "less than a year to go"

Steve Keen, an economist who accurately predicted the 2008 financial crisis, believes the current AI bubble has less than a year before it bursts. He estimates that the revenue generated from actual users of AI technologies is only about one-fifth of the companies' current spending, leading him to anticipate significant future losses. Keen clarified that he is not forecasting a banking crisis similar to 2008, as current credit demand is relatively low. Instead, he foresees a crisis stemming from the inability of companies to service their debts due to disruptions in the physical supply chain and the productive system. He compares the current situation to the railway bubbles of the 19th century, noting that companies have invested heavily in data centers and AI. Keen highlighted the rapid obsolescence of AI hardware, such as GPUs, which require continuous investment, unlike assets like houses. He suggested that many data centers might end up being repurposed, perhaps even as pickleball courts, if they cannot generate sufficient revenue to justify ongoing investment. Despite these concerns, recent market data shows record investment-grade issuance, indicating that the market has not yet priced in these potential risks.