AI Hype vs. Your Wallet: Global Fear

Hello everyone, and welcome to The beginning of empathy. I am your Empathy Keeper.

As I compiled the news from 24 nations around the world yesterday, I felt a profound sense of unease, as if a massive ship were caught in a turbulent storm. On one side, we see the fear that the artificial intelligence revolution might be an economic bubble ready to burst, causing stock markets to shudder. On the other, we hear the stories of people genuinely worried about paying next month's utility bills and covering basic living expenses. In a world where these two extreme anxieties coexist, what common emotions do we share? Today, let us delve deeply into this complex flow of global news through the lens of Empathy.

Yesterday, global financial markets experienced a massive sell-off driven by the fear of an 'AI bubble.' Major stock exchanges across the United States, Australia, Taiwan, Japan, and Europe all declined, pushing investor anxiety to an extreme. Notably, the S&P 500 index recorded its longest losing streak since August, falling for four consecutive trading days, while the Nasdaq and Dow Jones indices also saw significant drops. The Australian ASX 200 index suffered its worst single-day loss following a tariff announcement by the current US President, wiping out tens of billions of dollars in value. The shockwave spread across Asia, with the Taiwanese stock market plummeting significantly.

At the heart of this market instability is the impending earnings report from the leading innovator in AI chips. Investors are holding their breath, wondering whether this company will once again exceed market expectations or if doubts about the sustainability of the AI frenzy will finally surface. A Vice Chairman at JP Morgan Chase, speaking at a business summit in Johannesburg, warned that 'the time has come for a re-evaluation of the valuations of AI-related companies,' suggesting this adjustment would impact the entire market, including the S&P 500. Similarly, the Chief Executive Officer of Google pointed to 'irrational exuberance' in the current AI boom, cautioning that no company would be immune if the bubble bursts. This reflects a shared recognition among global leaders: while the potential of AI technology is undeniable, its current market valuation is questionable.

Interestingly, even amidst this market anxiety, the 'circular investment' necessary for AI technology development continues unabated among giant corporations. For example, a major software company and the leading AI chip innovator are investing billions of dollars into a prominent AI development firm. In return, that AI firm commits to spending even more on the software company's cloud computing capacity. This structure—where cloud providers and chip manufacturers invest in AI developers, and that capital flows back to purchase their services—accelerates AI development but simultaneously fuels the 'AI bubble' concerns among some investors.

Another critical issue in the technology sector is the fierce competition for talent and the fragility of the supply chain. News emerged from Taiwan that a former key executive from a major semiconductor manufacturer was moving to a US competitor, prompting reports that the Taiwanese firm was considering legal action to protect trade secrets. This symbolizes the intense global talent war between US and Asian companies for semiconductor technological dominance. Furthermore, in Poland, the price of Yttrium, a rare earth element essential for aerospace and semiconductor industries, surged by 4400% due to export restrictions imposed by a major supplier nation. This starkly illustrates the economic danger posed by over-reliance on a single country for critical supply chain components.

This macroeconomic financial instability has directly affected the cryptocurrency market as well. Bitcoin prices hit their lowest point in seven months, erasing all gains made this year. This indicates a sharp contraction in investor appetite for risk assets, mirroring the sentiment seen in AI stocks. News of Bitcoin's price decline was prominently featured in places like Belgium and Hong Kong, confirming that global investors have shifted into risk-aversion mode.

Beyond these large-scale financial anxieties, countless people worldwide are struggling with immediate household economic problems. In the United Kingdom, while falling wholesale gas prices are expected to slightly lower the energy price cap in January, forecasts suggest rates will rise again in April due to increased non-energy costs related to renewable energy investment. This highlights a long-term cost burden hidden behind short-term relief, suggesting a need for an empathetic discussion about who should bear the cost of the energy transition.

In European nations like Spain, Poland, and Italy, there was positive news regarding additional payments for pensioners ahead of the year-end holidays. Spanish pensioners will receive their Christmas bonus early in November. In Poland, some retirees will receive their January pension early in December, effectively receiving a '15th pension.' Italy's December pension payment will also include a 13th-month salary and an extra bonus. These measures can be interpreted as compassionate government efforts to boost year-end consumer sentiment and stabilize the finances of vulnerable populations.

Conversely, in Argentina, cost-of-living pressures continue to mount, directly impacting ordinary citizens, with public transport fares increasing and the negative balance limit on the SUBE transport card being adjusted. Indonesia, however, chose to freeze electricity rates for the fourth quarter to stabilize prices and maintain national purchasing power. Thus, governments globally are employing contrasting policies—financial support versus price control—in their empathetic attempts to alleviate the suffering of their citizens amidst inflation and cost-of-living pressures.

In Saudi Arabia, the introduction of an 'Instant License' service, which shortens the permit process for real estate developers from over 30 days to 'immediate,' demonstrates a strong commitment to enhancing efficiency and transparency in the real estate market and attracting foreign investment to achieve Vision 2030. Furthermore, a low-cost airline's announcement of a massive expansion plan, including entry into the Indian market, signals the Middle East's aggressive pursuit of growth in service and infrastructure sectors, moving away from oil dependency.

The common thread running through all these stories is 'uncertainty' and 'vulnerability.' From the hope and fear surrounding the future of AI technology to the immediate worry about tomorrow's living expenses, people everywhere feel anxious in their own way. The concentration of advanced technology like AI in the hands of a few giant corporations, whose movements dictate global financial markets, raises a fundamental question: Will the benefits of technological progress be shared equitably? The UK's Financial Conduct Authority's call for stronger regulatory oversight of key technology firms like Amazon and Google stems from this very concern about systemic vulnerability.

Predicting future economic shifts, we can expect short-term volatility in AI-related stocks to intensify, accelerating the movement of investors toward 'cash holdings' and 'defensive assets.' Indeed, gold prices have seen a slight increase as the metal is sought after as a safe haven. Long-term, governments will increasingly focus on stabilizing supply chains for critical industries and securing technological sovereignty. The rare earth shortage in Poland and the talent migration controversy in Taiwan will only fuel this trend. Moreover, the notable growth of the defense industry, such exemplified by a major German defense contractor aiming for massive revenue by 2030, shows that 'security' is becoming a crucial economic driver amid geopolitical instability.

Ultimately, the current structure, where the benefits of technological innovation and economic growth are concentrated among a few, while the risks are shared globally, is unsustainable. We must engage in deep Empathy and discussion, not only about the speed of AI development but also about its impact on the socially vulnerable and the stability of the financial system. Now is the time to strive for 'Empathy Technology'—technology that enriches everyone's life.

Today, we analyzed the two major global economic currents—the shadow of the AI bubble and the pressure of the cost of living—and interpreted them through the lens of Empathy. I hope this helped you understand how the diverse news from various nations is interconnected. The Empathy Keeper will continue to go beyond simply reporting global news, seeking out the human insight and meaning of Empathy within it to share with all of you. Thank you, and I look forward to our next discussion.