Deepfakes, Big Tech, and the Coming AI Crash?

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1:42To understand the economy, you have to understand human nature. This podcast is powered by Acast.

1:54David McWilliams: How are you doing there? It is time for the podcast. And we're going to start the podcast with a little warning. This podcast is going to be all about AI, technological investment, and what may well be one of the greatest bubbles the world has ever seen, which is the extraordinary investment in technology, particularly driven by AI, of what is called the Magnificent Seven in the United States. I'll just give you a quick figure. Taken together, the investment in technology, largely artificial intelligence, by American tech companies now, when you throw it all together, amounts to over 6%, nearly 7 % of American GDP, which is a huge amount.

2:40David McWilliams: So I want to focus on that. But what prompted this was not so much a concern about finance and markets, although that in and of itself is fascinating and will be the core of the podcast, John. But it was that I went on a live line yesterday. Live line. You have to play the music, John. Now, if you are Irish, you will know exactly what Liveline is. If, dear listener, you are not a benighted citizen of this bizarre republic, or even somebody who lives on this little island of ours, you might not know what Liveline is. Just Google it. It is and has been... What would you describe Liveline as? A wine fest.

3:22David McWilliams: Yes, it is. I go on. I go on. Yeah, yeah, yeah. Go on, Gertie. Go on. Yeah, yeah. So Liveline is a place where Irish people go to moan and give out about the world. And it can be anything. Yesterday, I was giving out. It's like live Twitter almost. It is like live Twitter, except it's much, much more well-mannered. Yes. Right, okay? Much more well-mannered and much less likely for people to call you an actual bollocks. Yeah. Right? What I love about Twitter feed is all the things, bollocks, bollocks, bollocks, bollocks, it comes in. It's like a radio wave in itself. Yeah, yeah, yeah. Anyway, but I was on yesterday because over the last couple of months, I have been the subject of lots of deep fakes, which is driven by crypto companies, which have been trying to scam people out of their money.

4:12David McWilliams: They have been successful. You would think they aren't. These scams have been successful. They've hoodwinked many, particularly elderly people, into parting with a significant chunk of their savings. these are criminal enterprises run by very dangerous criminals. Sometimes, John, it's interesting, when you see an internet scam, it doesn't strike you as having the same violent intent as an actual physical assault on somebody. But it is. But it is. And I've been trying to get them taken down to no real effect. It's almost been like a drone attack. There's been hundreds of these. Yeah, I've seen them.

4:54David McWilliams: On all the platforms. So I just wanted to go on a live line because a lot of elderly people listen to live line. What can you do about it? Well, I've left it in the good hands of my lawyers to take this forward. Right. But what you can only do is just complain. I do think it's incumbent on these large social media platforms to regulate themselves. But they don't care. the point is there is a complicity in a criminal enterprise therefore yeah because if you are so if you are for example the irish times and you put up deep fakes about me you as the publisher would be complicit you as the platform are complicit because it's up to you to actually editorialize and to actually vouch for the truth that yeah is on your platform so my point is look We'll see where this goes.

5:47David McWilliams: We'll see where this goes. But what I really want to do is I want to warn people. There's two things going on here. One is the attack on me and my good name and all that. But the bigger issue right now, because we'll settle that later on, but the bigger issue right now is to warn people. If you see this shite, and that's what it is, on your feed, on Insta, on Facebook, on Twitter, X, on YouTube, it is a scam. Most people you would imagine are not taken in, but some people are. And these are very aggressive, very violent. They deploy intimidation and harassment for people. People give their phone, you know, once you give your phone number, there's a woman on LiveLand, she kind of fell for this halfway.

6:35She didn't give her details, but she gave her phone, and she was phoned 31 times. So it's total harassment. Yeah, yeah.

6:41David McWilliams: So again, you know, AI is changing the world we live in. from a philosophical point of view, because AI is changing by the second, the systems that we have to guard people, regulations, laws, et cetera, are actually not able to react in time. So there's a time difference between what's going on. But you haven't been the only one, though, either. I mean, there has been Tommy Tiernan, I believe. But the one thing that... It was actually Tommy Tiernan. It was me on the Tommy Tiernan show. This is the beginning. Well, see, I saw a different one. And I was bundled out of the Tommy Tiernan show for speaking the truth that the financial elite don't want you to know, which is that David McWilliams knows something.

7:22David McWilliams: And if you click on this button, you can make a fortune. And it's a get-rich-quick scheme. David McWilliams knows nothing. About anything. And never has. Let me just tell you that. Never has. But there was that other, I think I was telling you before, about that other lady in France who, you know, was a well-educated person, all the rest, but somehow got suckered into a deepfake of Brad Pitt and somehow he was professing his love for her. I can see the similarities already, John. Deepfake Dave McWilliams, deepfake Brad. I'm the Brad Pitt of podcasting. You are? Isn't that what they say? That's what they say.

8:01Or is that AI?

8:02David McWilliams: I'm stripping down to my waist as we speak. I'm going to be the young fella in Talma and Louise. That's me. I'm going to be... There he is. There he goes. Oh no! Cover himself up. You should have courted the great Irish idea of never taking your clothes off in public or in private. Exactly. Anyway, stop, stop, stop, stop. Enough, enough. The podcast is going to be about whether or not we are in an AI bubble. And the reason people can't see it is because of the excitement of the new technology. Yeah, yeah. We have just articulated the downside of AI, the dark side of AI, scams, the deep fakes, all that sort of.

8:41David McWilliams: There is obviously an upside. But what is increasingly fascinating is the excitement around it. And sometimes when there's so much excitement around it, you can't actually see what's coming. And as you know, John, we were in France last week, in La Rochelle. Well, yes, you were. Ronan O 'Gara country. And I was actually surprised. It's only about an hour and a half flight. It's really quite close. So La Rochelle, beautiful, sunny, et cetera. Yeah. This weekend I'm going to the west of Ireland, where it is forecast to rain incessantly. The yin and the yang. The yin incessantly for three long, damp, dark days.

9:22Well, you know how you're going to spend the time then. Absolutely.

9:24David McWilliams: As I've said to you before, a bar stool knows no guilt on a day like today. Yeah. But I was thinking what always fascinated me as a kid in the west of Ireland was I used to go on family holidays in a Austin 1100 with a dog, my granny, the three kids, mum and dad. A beige-coloured one. It was beige. And in fact, as it got old, the beige kind of morphed into a sort of orangey colour, which was particularly, particularly, you know. There's something about the 70s orange, actually, isn't there? It's a beautiful colour. Yeah. It's beautiful. It's about the 70s car, full top. You know what I love about the 70s car, right?

9:59Was the array of different colours in the cars. There were reds and blues and sky blues and yellows and greens and pinks and oranges. Now every car is fucking silver. Well, that's true. And every car looks the same now. Yeah. Which is interesting. There were different shapes back then. Different shapes, yeah. But we'll go back to our... Yeah, yeah, anyway, anyway. So I come back because what really interested me as a kid

10:19David McWilliams: was the Marconi radio station in Clifton when I was a boy. Yeah. I used to ask my dad to take me there, to the remnants of it, right? Yeah, yeah. And the reason was, I must be about six or seven or eight or nine or whatever age I was, I was amazed that this thing could have revolutionized the world, that you could hear voices that could come in from America. Yeah. And those voices could be relayed into Ireland and into the UK and really change people's sense of geography. The world got actually smaller. Yes, it did. Much, much smaller. And I know radio is your passion and your first love and all that.

10:56But when I think about what radio did to Ireland, what radio did to the world, you know, it introduced accents. It introduced a whole new way of commerce. It introduced advertising. it introduced a new way of selling everything yeah it introduces a whole industry you know sound engineers radio technology all that sort of stuff and the first one of those little signals came in from america to this place then you thought about marconi and then i did a little bit of research marconi yeah marconi's mother was irish okay so that's why he was here was it Well, Marconi's mother was a woman called Anne Jemison.

11:35And although he was born in Bologna in Italy, his dad married an Anne Jemison, and Anne Jemison was part of the Jemison Whiskey family. Ah, okay. Jemison Whiskey family. She was part of, there was an Enescorthy branch in Wexford. The Enescorthy chapter. The Enescorthy chapter, yeah, exactly, exactly, of the Jemison brewing family, and they had a distillery down there. Right, okay. And so Marconi kind of was half Irish, number one. And one of the reasons he was always here, always put his plants here, was the fact that he was half Irish, but of course we were the first port of coal in the Atlantic.

12:13And that got me thinking about radio shares, John. Right, go on. Because when radio came in, it absolutely changed not just geography, but it changed your sense of time and changed your sense of space. and change your sense of place. So the first radio broadcast by the BBC was in 1922. And just imagine what that must have been like when you heard that. So you're sitting in a room in the west of Ireland. Somebody has got hold of a radio. And in from the radio come these voices. Now, when I was a kid... Voices of the home counties. Voices of the home counties. But also, another thing when I was a kid, fascinated me was my granny's radio in Cork, which is a massive big radio with cities like Warsaw, Prague, Paris.

13:06And they used to have it on the dial. Yeah, yeah, yeah. As a sort of a perplexed, curious kid, I used to love that idea that you could sit in West Cork and... Come in, Moscow. Come in, check it out. Fine, but find all these places, you know, find all these places. And it was also, for some reason, it was the Central European cities that seemed really weird to me because we never really heard of them after the Cold War because the Cold War kind of split Europe. But in granny's radio, Europe was still accessible and was wonderful. Now, the fascinating thing about radio is that like AI, it completely changed the world.

13:41But like AI, radio shares collapsed, fell to the ground. I'll give you an example. Why? So Marconi's company was bought by an American company and it became the Radio Corporation of America, right? RCA. RCA, which is still around. Yeah. And RCA, its shares rose 200 times in the 1920s. Right. Because of the dramatic impact that radio had on people's lives. Yeah. So it was the novelty factor as well. The novelty factor, the change, the advertising, all this sort of thing, right? The innovation. They peaked in September 1929 at over$500.

14:23David McWilliams: Wow. By May 1932, they were trading at$2.60. Wow. 98 % collapse. Over, sorry, over what? Over 18 months. 18 months, wow. So the RCA was the darling of the 1920s, roaring 20s stock market. Who was one of the biggest investors who got out before the crash in RCA? Joe Kennedy. Oh. John F. Kennedy's dad. So John F. Kennedy's... He was a bit dodgy anyway, wasn't he? He was a bit dodgy. In fact, there was a lot of Paddies involved in the 1929 crash. It's another podcast. We'll do a whole podcast. Oh, yeah, that would be good. That would be good. There was a guy called Reardon. There was a guy called Bet Them Up Smith.

15:11David McWilliams: And there was Joe... Bet Them Up Smith? He used to bet up everything. He used to... Not beat people. No, that's... That's your Dublinese coming at you. To be bet up, right? But he used to... He was a great man. Yeah, a pump and dump scheme. Pump and dump scheme and Joe Kennedy. Now, interestingly, the war chest that financed John F. Kennedy's subsequent presidential campaign was based on the profits made of getting out early from the RCA shares by his dad. Wow. Which was a company that took over Marconi's company. and Marconi's mother was from Ennis, Gorthy, County, Wexford. And who else is from Ennis, Gorthy, County, Wexford?

15:55The Kennedys. Yes. There you go. Isn't that a lovely... And Ivan Yates.

15:59David McWilliams: And Ivan Yates. So there you go. Wow. But the RCA is the warning from history. Right. Explain this link now. So the warning from history is that always and everywhere, introductions in new technologies create the background noise for financial booms and busts. Yeah. As well as the long-term change in society. We've spoken before about the railway shares. Yeah. But that was a huge mania. But basically what happens is... Which Darwin lost his shirt on. Which Darwin lost his shirt on, exactly. And the South Sea Bubble shares, which... Jonathan Swift. and the fella from Gravity with the apples falling in his head.

16:44Oh, Newton. Newton.

16:46David McWilliams: In fact, I can quote Newton from a book I'm reading at the moment. I'm rereading, John, which is Kindleberger's Mania's Panics and Crashes. And it says, there is the edifying history of a great master of the mint, Isaac Newton, who was also the master of the mint as well as a scientist. Oh, I didn't know that. Presumably rational. In the spring of 1780, he said, I can calculate the motions of the heavenly bodies, but not the madness of the people discussing financial speculation. On April the 20th, 1720, he sold out of his shares in the South Sea Company, made 100 % profit of seven grand. But what happened to him, he was seized by the infection of the mania, right?

17:31David McWilliams: Later that year, he re-entered the market as the market was going up. Yeah. And he lost 20 grand in 1720, right? And in an irrational habit... There's millions in this money. And for the rest of his life, he could never bear to hear the word South Sea Bubble. So you talked about the woman in France getting hoodwinked in by Brad Pitt. Yeah. This is Darwin Isaac Newton, maybe the most intelligent people in the world at that time, getting hoodwinked in, right? Now, what's interesting is because they get put into the speculation. So the innovation starts, people say it's going to change the world, like AI.

18:12David McWilliams: It is going to change the world. Everyone gets excited. Everything's, oh my God, if I get into this, I could make a fortune, right? The potential for profit is enormous, right? And this, of course, creates FOMO. And investors, because of the promise of high returns and the fear of missing out, they just pour their money into these new ventures, usually without regard for any traditional valuation metrics. Like, I want to own that stock, right? That, of course, creates the background noise for the bubble, which happened in radio stocks, which happened in the South Sea bubble, which happened in railway stocks.

18:48David McWilliams: It's not to say the radio didn't change the world. It did. Yes. But it also destroyed fortunes, right? Yeah. And the interesting thing about losing money in speculation, very interesting, John Stuart Mill, great English philosopher and also investor, said of crashes. He said, the crash does not destroy wealth. It merely evidences how much wealth has already been destroyed by bad decisions taken in the frenzy of the boom. And then the amazing thing at the end is that when these bubbles burst, the market collapses. Usually those who invested late or were holding on to the overvalued assets, unlike Kennedy, suffer significant losses while the early investors and those who exited for the crash profit.

19:35David McWilliams: So that is the cycle. And the question now is, is this clearly the cycle that we're seeing in AI and technology shares? Do you think it is, though? I mean, you know, we have, as you said at the beginning there, it's the big seven or whatever that they're ploughing hundreds of billions, if not trillions, into AI. They are. But if they're ploughing in so much money and they're developing AI to be more useful and more effective, you know, is that not a slightly safer bet? Well, why don't we answer that question after the break?

20:23Actually, Mac, just before we start again and talk about AI, You remember I worked in BBC World Service. This is just on the radio thing. Yeah, yeah, no, I do remember. You put me in mind of this. So when I joined the BBC, we were sent up to a base in Warwickshire to train. And it was a radio studio and all the rest. But on that base was a bunker, a BBC bunker from the Cold War, like deep in the Cold War. But it was about six or seven, or was it eight? I can't remember. floors underground. And I was asking the guy, can we have a look? I'd love to see it. And he's going, no way. No, it's off-limits security, blah, blah, blah.

21:05And then on the last day, he said, come here, I've got the key for this. Do you want to absolutely be all piled in? So it was about whatever number of floors it was. First floor was showers to scrub down if you were exposed to radiation. Next one. I'm Jake Stouck, co-founder and CEO of Serval. We built Serval to automate the IT work that slows companies down. Onboarding, password resets, access to applications, my laptop stopped working. While employees wait for help, their real work is put on hold. IT desperately wants to automate this work, and that's why they need Serval. You just tell Serval what you want to automate in plain English, and it's built.

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23:16Whether you're exercising, playing outside, or simply surviving a summer heat wave, it's an easy way to stay hydrated. Shop now at liquidiv.com. Liquid IV, hydration that goes wherever life takes you. was i don't know for journalists and media next one was canteen next floor was uh sleeping quarters and blah blah blah until you get to the very end and the the very base one was the radio studios there was four radio studios for radio one two three and four so this was to broadcast in the case of a nuclear attack on the uk or an attack on the uk exactly wow what there That's fascinating. There was this big, huge lever in the control room there.

24:02And it was life. If I had pulled that down, it would have switched all of the BBC to this Warwickshire bunker studio. That's amazing. And that was all the way through the 50s, 60s, 70s, 80s. Yeah, and it was up until the 80s. Yeah, absolutely. But I asked the guy, under what conditions do you throw that lever? And he said, there was various different ones. But one of them was that that really kind of captured my imagination. Said if a British nuclear submarine cannot contact base, cannot contact London, the protocol is they rise to the surface, they put out their big, long, long-wave antenna. And if they can't pick up Radio 4 on that, they launch.

24:51Launch a nuclear attack. They launch a new, no questions asked, they hit that button. Why? Because if Radio 4 is off air, it means that London is gone. London is blown. That's a fascinating story. I love it. Yeah. I love it. So I was kind of going, yeah, well, sometimes, you know, there's dead air when mistakes happen. But anyway, yeah, it was a fascinating place. Fascinating place. You see where we go. We started with Marconi. We're down in the cold. war. He started with deep fakes and AI. No, this is the joy of podcasting. Absolutely. My friend. So anyway, Mac, let's get back to the question in hand here.

25:33We were talking, or the reason I was talking about that, because we were talking about radio stocks collapsing in the 1930s. But now you're saying that the whole stock market is focused on the big seven and investors are piling in. Now, my question was that if AI is so useful and they're investing hundreds of billions in developing AI to be even more useful, why would that be a risky stock? Is this AI not going to the moon, man?

26:07David McWilliams: Well, going to the moon was radio shares, as I said, RCA shares, which lost 98 % of their value. you'll remember the dot-com boom in 1998, 1999, 2000, which again collapsed and shares lost, you know, in some cases 90 % of their value. But people who got out just before it, made a fortune like Dennis O 'Brien, sold ESAT in the middle of a telecoms boom. Valuations were so high. And that laid the groundwork for the subsequent Dennis O 'Brien media empire, all that sort of stuff. So, I mean, timing is essential. But what I just want to give you is a few statistics, right? Right now, AI data centers, right, the investment boom in data centers, if that were to reach to a halt, let's say it was to stop, right?

26:56A significant chunk of US GDP growth would actually go with it. And why? Because when you put together data on tech capital expenditure, that's information processing hardware, software equipment, data centers, as a percentage of GDP, it's close to 7%. Right? Yeah, that's extraordinary.

27:18David McWilliams: At its peak last time out, the dot-com boom accounted for about 7%. So the investment in internet stocks. Okay. Yeah, yeah, yeah. Now, in comparison to the housing boom in 2006, the housing boom peaked at around 7 % of US GDP was taken up in housing in 2006. So we're in those sorts of territories, right? But I can give you a few examples of what they call market cap concentration because it's like everything. If all the risk in anything, John, is concentrated in a small number of companies, everything has to go right in those companies. Yeah. Now, the problem with AI, if they're all investing in AI, so Microsoft and Meta and NVIDIA, if they're all investing in AI, some of them have got to lose.

28:13David McWilliams: They can't all win. Yeah. So one AI product is going to emerge. So even by dint of just basic... It could be deep seek from China. It could be deep seek from China, exactly. So the point is, just by dint of just logic, if you're all investing in the same thing and you're all investing in the idea that you will emerge as the winner, somebody's going to have to be the loser. Yeah. Because they can't all be winners. Well, it's a little bit like a monoculture. You know, if you plant or if you're relying on one particular crop and a bit of disease or whatever happens in that, it's a bit like the potato famine.

28:50David McWilliams: Yeah. You know, the whole crop is wiped out and you've nothing to back it up. As we've always said, John, is that economics is more like biology. in physics. Yes, yeah, yeah, yeah. So physics is a world of straight lines and linear progress. Biology is a messy evolutionary world of stops and starts and certain plants elbowing out, other plants, certain species surviving, it's a, it's this. It's a wonder why Darwin lost his shirt on there. Well, he lost his shirt. Newton did. He was the physicist in Darwin. The biologist. He lost his shirt, then he wrote a good book. Well, that's true. It did, right, and it changed the world, right?

29:28But if you look at the combined weight of stocks

29:31David McWilliams: with a weight of 3 % or more in the S &P 500, so that means that if you take stocks, companies, that are 3 % or more of the S &P, up until about 2014, that was one or two companies. So there was two companies maybe with a valuation of 3 % of the total, right? Now, those magnificent seven companies together constitute only seven companies. And there's a thing called the S &P 500 because there's 500 companies in it. The S &P 7. Yeah, exactly. They constitute now 34 % of the entire index. So all the risk is in seven companies. The other 493 companies are just puffing around, right? And if you look at the performance of the tech stock today, relative to the S &P 500 at the peak of the tech bubble in 2000, what you see is that the concentration of risk is much, much higher now than even at the top of the dot-com bubble.

30:44So can I ask you, though, I mean, clearly we haven't learned anything. This is the thing that bothers me about all these financial wizards. You know, they don't seem to learn. We've had so many, you know, booms and busts and bubbles that burst and the whole lot, but we don't seem to learn anything. Why did, number one, say the dot-com bubble burst? And why did the radio shares collapse? you know because of human nature because of human nature as i i had landed before we get excited we get fomo then of course something else happens so basically increased stock prices creates their

31:24David McWilliams: own currency so if you're getting rich and you're getting wealthy you can then go to a bank and give collateral and say look i was worth 100 million i'm now worth 200 million look at my stock they give you money so there's there are many dynamics in the financial world that contribute to this idea of booms becoming self-sustaining as i've always said the easiest way to rob a bank is to run one right that basically the people inside it lend themselves right so yeah so there's a huge and of course the easiest way to create a bubble is to enlist more and more people in it because once you're in the bubble then you become an apostle yes a disciple a proselytizer yeah you become somebody who wants to convert others into it so you've got all these dynamics which are financial, human, social, societal, all these things that, again, create this bizarre idea that everyone says, this time it's different.

32:19And it's never different, right? And even earnings per share in the magnificent seven were 37 % increased last year in earnings in the magnificent seven vis-a-vis 6 % in the general index. So you can see this risk is going through. Now, of course, the risk is manifesting itself in huge earnings per share. But why is that? It's because yes,

32:43David McWilliams: they're making lots and lots of money, but they're also throwing lots and lots of money at these investments. The AI bubble today is far bigger than the IT bubble in the 1990s. So the point is, we're in the territory. And as I said, the one that really freaks me out is the combination of Apple, Amazon, Google, Microsoft, Meta, and Oracle. Their capital expenditure as a percentage of US GDP is now heading towards 7%. This is phenomenal. I just give you... You're saying this is not sustainable? Well, it was 1 % at the beginning of this decade. So this shows you the amount of money that's going into it.

33:25And my point is somebody's got to lose. Yeah, yeah, yeah. Some of that money's got to be wasted. And of course, what happens is, and this is the psychology of it, the whole process is simple, but it happens all the time, right?

33:37David McWilliams: A small fluctuation in the economy can lead to a massive change in the amount of credit available. That's because of confidence, because people become absolutely certain that this is the way to go. They hear people at dinner parties saying, oh, you're mad. He bought that for 100 quid. He sold it for a million. And you're like, oh, I want some of that. Okay, so there's that infectiousness, right? Yeah. But then the economy moves into a period of prosperity because all this AI spending is generating jobs, it's generating increased real estate, people are feeling good about themselves, all that sort of thing.

34:10David McWilliams: And that means that banks, the providers of capital, thrive because they're increasing their capital base all the time. Because everyone's feeling more prosperous. Everyone's feeling it's all going to be fine. Now, because bad news is kind of scarce, there's very little bad news out there. Everyone's saying that all the stories are about things going to the sky, right yeah the risk entailed in lending this is the key thing it's the lend appears to have shrunk it appears because there's low there's there's no bad news it's all good news so you know why not lend okay and that means that the risk aversion people's appetite for risk goes through the roof and their appetite for or their concern about losing money collapses right and then financial markets, of course, institutions, banks, Wall Street, they just moved to expand their business, hedge funds, private equity, all this sort of stuff that's going on, right?

35:05And they provide more and more capital to fewer and fewer companies, to the superstar companies, right? Okay, so the risk is becoming highly, highly concentrated.

35:16David McWilliams: And of course, what the banks do is they say to, I don't know, let's say the likes of Amazon, well, look, don't worry, we'll give you money at a lower margin than other banks. So they go for market share. So providers of credit want to be part of the new massive technological upswing. So what they're doing is at every stage, they reduce their own collateral requirements and increase their own debt. So what you can see is the financial markets fused together with the Silicon Valley guys, fused together with the giddiness about AI, all of which means that more and more money is thrown at fewer and fewer stocks.

36:01And therefore, the risk that one of these companies doesn't make it elevates dramatically. But nobody shouts stop. Why? Because nobody can hear, because their ears are stuffed with money. They're flying along. And that, I think, is where we are. That's why you get to this weird situation where, as you said, we're back to where we were in 1999.

36:25David McWilliams: So-called intelligent people are doing very stupid things, all of which suggests to me that the Marconi or CA moment for AI is not far away. It doesn't mean it's around the corner. Yeah, but it also, does that also mean this scenario that you described, that it's also elbowing out kind of any newcomers, Non-AI, non-tech. Of course. Yeah. Because everyone wants to be part of the new kid in town. Speaking of your Eagles fascination. Did I mention Eagles? But anyway. Johnny Come Lady, new kid in town. Oh, yeah, I love it. That's a great song. It is a great song. The whole point was everyone loves you because you're new.

37:10Yeah.

37:11David McWilliams: But when everyone gets used to you, it's like, nah. Yeah. Right? So I think what we're looking at, against the background of our global problems, America sending the signals to everybody, you know, slapping on tariffs, all that sort of stuff, right? But also not producing very many jobs last week in the real economy. So the real economy may well be slowing down. And then you have this massive, inflated, red-hot sector called tech, which is elbowing out all the rest of the S &P, which is sucking up all the money, where the investors in that area are so emboldened by the fact that they've just made a fortune that they can't see that every time they hold on to these assets, they are getting riskier and riskier.

38:00Somebody keeps whispering, don't worry, this time it's different. It's different. It's not going to be me. But the lesson from history, going back to our radio,

38:09David McWilliams: is that when these markets wobble, as they will, because they always do, the one that is most overvalued is highly likely to be the one that loses most money. But can I then ask you to imagine what that would look like if, you know, let's say NVIDIA or, you know, any of those guys, what if they are the RCA and their share price is going to be? One of them will be. So what happens then? Does it bring down all the others? Does it bring down the whole economy? Well, because, interesting question, but because the absolute inflation is located into a number of stocks, like six or seven stocks, as we know, it doesn't infect all the others as it would do if there was a general increase.

39:00David McWilliams: So a good example is the dot-com collapse, right? Yeah. The dot-com collapse had very little impact on the American economy. Okay. The reason was most of the investment was non-leveraged, which is why housing crashes a much bigger impact because it's leveraged and more people are playing the game. So I think the lesson from the dot-com crash is that the companies that collapsed, yeah, the people who owned them, they probably lost a fortune. But the internet remained a transformative technology. Oh, for sure, yeah. For sure, and went on to create social media and, you know, the internet 2.0 and all that sort of stuff.

39:36David McWilliams: and the world that we know we live in. So that was all unencumbered by the collapse. It also means that the technology of AI will remain with us. But it just means the people who benefit financially from that will change dramatically. The dilemma is there is so much of American GDP, but also American self-confidence is wrapped up in the idea that Microsoft is huge, that Apple is huge, that Amazon is huge, that Tesla, all those sort of things. And American self-confidence may well be deflated at a time when America's position in the world is also under pressure. When America, if you think America in 2000 was the strongest it ever was when the dot com bubble collapsed, it was the world's only superpower.

40:27David McWilliams: It had just won the Cold War. It had military bases everywhere. This is before the Iraq war, so it was at peace. It was after the Clinton boom, which was largely sort of a Democratic-led liberal upswing. America was in an amazing place. So psychologically, the crash in the market is like, yeah, but that's only a crash in the market. We move on. America's not in a great place now. And a crash in the market could have a profoundly different impact on the psychology of America in the same way as the good feeling of the Roaring Twenties was obliterated by the 1929 crash, leading to the 30s, which was an awful decade.

41:08David McWilliams: Now you just think with American self-confidence so fragile, a collapse in this AI bubble might have a profound, profound impact on how Americans see themselves. So let's talk about that after a trip to the West of Ireland on Tuesday.

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