The European Central Bank published a report warning that AI valuations will crash regardless of whether AI actually works. Read that again. They looked at historical bubbles and concluded markets collapse even when the underlying technology transforms society.
This is their job. Economists at a central bank spent months researching whether things that go up also come down. They cracked the code. Valuations rise, then valuations fall. Groundbreaking stuff from the continent that brought you negative interest rates and a currency held together by prayers and German productivity.
The report uses history as a guide, which is technical analysis with a doctorate. They're drawing lines on century-old charts and calling it monetary policy. At least when retail traders do this with Fibonacci retracements, they don't pretend it's economics. They just lose money and move on.
Here's what the ECB won't tell you: their warning means nothing. If AI valuations are justified, they'll correct anyway. If they're not justified, they'll correct anyway. This is the analytical equivalent of predicting it will rain sometime in the next six months. You're right either way and useless both times.
The funniest part? Calling a future correction "worrisome." Markets correct. They did it before electricity. They did it after. The wheel was probably overvalued at some point. Some Sumerian central banker likely warned that wooden transportation devices were due for a pullback.
But sure, this time the Europeans have it figured out. The same institutions that needed a bailout fund for their bailout fund now see the future clearly. They've identified that AI stocks might be expensive. Revolutionary. Someone get these guys a whiteboard and let them discover support and resistance levels next.
The report will change nothing. Tech stocks will do whatever they were going to do anyway. Retail traders will buy the top, economists will publish papers, and everyone will pretend analysis matters more than luck.
At least central bankers get paid whether they're right or wrong, which is more than you can say for the guy who bought Nvidia calls based on a Frankfurt research note.
Photo by Christian Lue on Unsplash
Leave a Comment