A British chartered accountant, academic, and political economist, Richard J Murphy, argues that the global stock market is in a dangerous bubble, mostly driven by hype around Artificial Intelligence (AI). He says this bubble is based on profits that don’t yet exist, and compares it to past crashes in 1987, 2000, and 2008 — warning that this time isn’t different.
Murphy states that:
1. AI Bubble is Real: The current boom is based on hype, not solid profits.
2. Systemic Danger: The real risk is how deeply AI and tech are tied into the financial system.
3. Real Economy Continues: When markets crash, only paper wealth disappears — jobs and real assets remain.
4. Chance for Reform: Murphy sees the crash as a chance to fix the system so it serves people, not just finance.
Murphy warns that:
1. Pensions: People with defined contribution pensions could lose a lot of money, especially those near retirement. They might have to work longer or live on less.
2. Banks & Finance: Hedge funds and private equity firms have borrowed heavily to buy shares. If the market drops by 30–50%, they may not be able to repay those loans, risking collapse.
3. Systemic Risk: The financial system is more connected than in 2008. A crash could trigger a full-blown financial crisis.
So, what can we do about it? That's the real question. Here are suggestions:
1. Emergency Fund: Save 6–12 months of expenses.
2. Pay Off High-Interest Debt: Credit cards and loans.
3. Keep Investing: Use dollar-cost averaging in index funds.
4. Upskill: Make sure your career is resilient.
5. Check Pension Risk: Understand how your pension is invested.
Source: What will happen when the stock market bubble bursts? (https://www.youtube.com/watch?v=Ff4gvI1fr_M)
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