Greg Ip; A bubble is hard to identify before it bursts, but bubblelike behavior isn’t.

Are We in a Financial Bubble?

While there is ample reason to believe that AI-driven investments are in bubble territory, the real question is when – and how – the end might come. 

The first is to look at valuations. For much of the past 25 years, the average PE ratio across the S&P 500 has been 16x, whereas now it is 25x. 

A second factor to consider is the prevailing narrative, which usually revolves around the message that “this time is different.”

A bubble is almost always buttressed by belief in a new paradigm or emerging technology – whether it be the internet, the Japanese production process, electricity, railroads, or canals.

Dambisa Moyo, an international economist, is the author of Edge of Chaos: Why Democracy Is Failing to Deliver Economic Growth – and How to Fix It (Basic Books, 2018).

https://dambisamoyo.com/books/

Dambisa Moyo Project Syndicate Oct 20, 2025

https://www.project-syndicate.org/commentary/ai-bubble-market-signals-to-watch-by-dambisa-moyo-2025-10


Things might be different this time; mitt senaste storverk

https://englundmacro.blogspot.com/2025/10/things-might-be-different-this-time.html


From Sports to AI, America Is Awash in Speculative Fever.

Today’s artificial-intelligence-centered boom (or, if you prefer, bubble) has a lot in common with its predecessors, such as leveraged buyouts in the 1980s, dot-com stocks in the 1990s, and housing in the 2000s: 
stocks at nosebleed valuations, easy credit for risky borrowers, faddish new financial products.

But something about it feels different. 

The speculative fever has spread well beyond the usual stocks, bonds and property. Crypto, a brand new asset class, is now valued at some $4 trillion. Americans bet $150 billion on sports last year, up 24% from 2023.

A bubble is hard to identify before it bursts, but bubblelike behavior isn’t. 

Today’s examples include tiny companies going public then cratering, and ordinary businesses turning into “crypto-treasury” companies by issuing equity and debt to buy crypto.

So are circular financing deals that obscure the underlying revenue, or lack thereof: Nvidia invests in OpenAI, OpenAI buys computing power from Oracle, Oracle buys chips from Nvidia.

In the late 1990s and again during the mid 2000s as housing took off, the Fed raised rates. Today the Fed is doing the opposite. 

Inflation is above its 2% target, yet it cut rates last month and is on course to do so again.

Bank regulators plan to relax capital requirements.

Today, working-class investors are flocking to all these markets: stocks, betting and crypto. They are beneficiaries of a new age of democratic finance. 

Or the last invitees to a party that’s going to end.

Greg Ip Wall Street Journal  Oct. 16, 2025 

https://www.wsj.com/finance/investing/from-sports-to-ai-america-is-awash-in-speculative-fever-washington-is-egging-it-on-c1e5c814


Greg Ip on my blogg

https://englundmacro.blogspot.com/search?q=greg+ip


 

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