AI Bubble & The Global Cost Crisis

Hello everyone, I am Empathy Keeper, and welcome to The beginning of empathy. Driven by the dream of a world where everyone connects, today we dive deep into the news from around the globe. Analyzing the reports from 24 nations over the past day, a striking phenomenon emerged: a 'polarized Empathy,' where two distinct economic worlds seem to coexist.

On one side, massive investment and soaring expectations for Artificial Intelligence and advanced technology are causing stock markets to surge and crash. On the other, countless ordinary citizens are struggling with rising inflation, fluctuating interest rates, and the daily grind of making ends meet. Understanding the temperature difference between these two worlds is truly The beginning of empathy.

1. The Volatile Waves of Tech and Finance

The most noticeable common thread yesterday was the intense volatility in global financial markets. The excitement and apprehension surrounding AI-related stocks were sharply divided. In South Korea, the KOSPI market experienced a shocking day, with the index briefly collapsing below the 3,900 mark, triggering a circuit breaker, or 'sidecar,' to temporarily halt program trading. This was attributed to fears of an AI bubble originating in the United States, combined with large-scale profit-taking by foreign investors.

Similar concerns echoed in India, where debates over the overvaluation of AI-related companies, including data analysis firms, flared up again. Investors are expressing deep worry about whether the valuations of these companies have been excessively inflated.

Conversely, news from Australia highlighted the relentless march of technology: a major technology company signed a massive 9.7 billion dollar cloud service contract with an infrastructure provider to expand its AI capabilities. This demonstrates that AI technology remains a powerful engine for future growth, attracting enormous capital. Technological progress is unstoppable, yet the market's assessment of its value remains highly unstable, capable of evaporating billions of dollars overnight.

2. Digital Finance: Fear and Reality Check

The cryptocurrency market also showed signs of instability. In countries like Australia, Argentina, and Belgium, Bitcoin prices dipped below the 100,000 dollar mark, spreading a sentiment of 'extreme fear.' This suggests more than just a price drop; it indicates a wavering of long-term confidence among investors.

An interesting development came from Brazil, where the central bank reportedly abandoned the core blockchain infrastructure for its digital currency project, Drex, citing security and high cost issues. This reveals that the adoption of Central Bank Digital Currencies, or CBDCs, is not merely a matter of technological advancement. It faces the realistic challenge of ensuring stability and economic viability in a practical operating environment. We must empathize with the gap that exists when cutting-edge technology meets real-world constraints.

3. The Heavy Burden on Household Finances

Amidst market volatility, governments and financial institutions worldwide are implementing policies that directly impact the lives of ordinary people.

In the United Kingdom, the difficulties in the retail sector persist, with a high-end tile retailer and a celebrity-backed food delivery service company entering liquidation. This illustrates how high interest rates and the rising cost of living are severely dampening consumer sentiment. While the news that one of the UK's largest building societies lowered its mortgage rates offers a small glimmer of hope for homebuyers, it seems insufficient to alleviate the overall economic pressure.

The central bank in Poland proceeded with an expected 25 basis point cut to its key interest rate. This is interpreted as a sign that inflationary pressures are easing and is positive news for households burdened by debt, offering relief on interest payments.

In Argentina, a 'bankers' holiday' was designated to protect the rights of public employees, and pensioners were promised a special bonus of 70,000 pesos. These efforts show the government's attempt to support vulnerable groups amidst high inflation. However, questions remain about whether such temporary measures can solve fundamental economic problems.

4. Reforming Public Services and Safety Nets

In Taiwan, efforts are underway to ensure the financial sustainability of the National Health Insurance system. Plans include changing the supplementary premium collection method to an annual settlement and significantly raising the income cap for high earners from 10 million to 50 million Taiwan dollars. This move aims to build consensus on the need for fair taxation to address income inequality and maintain the social safety net.

In Russia, the strengthening of anti-money laundering laws has led to banks extensively blocking customers' own account transfers. This highlights the dilemma between regulation aimed at preventing financial crime and the inconvenience caused to honest, everyday customers.

Belgium introduced a new Food Hygiene Rating system, making restaurant hygiene grades publicly available online to enhance food safety. This positive change reinforces consumer rights and safety, reminding us of the importance of transparency for the public good.

5. Massive Infrastructure and Industrial Restructuring

News of colossal future investments also emerged. Saudi Arabia detailed the construction plan for 'The Line,' the core of the NEOM project. The plan involves building 40 ultra-tall building cores, 500 meters high, connected by 2 million tons of steel truss structures. This demonstrates Saudi Arabia's strong commitment to building a futuristic city.

In Japan, the total construction cost for the Linear Chuo Shinkansen is now projected to reach 11 trillion yen, an increase of 4 trillion yen from the original plan. This reflects the realistic difficulties faced by large-scale infrastructure projects, including soaring material costs and complex construction challenges.

Meanwhile, Spain announced plans from the European Union Commission to boost high-speed rail connections between major European capitals like Madrid and Paris and offer affordable tickets. This reflects Europe's shared vision of strengthening regional mobility and environmental protection.

6. The Beginning of Empathy: Bridging the Polarized Reality

The news we reviewed today shows a world moving simultaneously under two major currents: technological innovation and economic uncertainty. AI and advanced technology are generating immense wealth, but the benefits are not distributed equally, leading to increased market volatility.

We must not turn away from this polarized reality. We need to empathize with the anxieties and hopes of individuals hidden behind the massive movements of the financial markets. Policymakers must invest in future industries like AI while simultaneously strengthening social safety nets and promoting fairness, as seen in Taiwan's premium reform or Argentina's pension bonuses.

Empathy Keeper is committed to analyzing these complex global issues with you, our readers, and fostering a consensus for a better future. I hope this integrated analysis of yesterday's global news has helped you gain a three-dimensional understanding of the world we live in.

Thank you, and I look forward to our next update.