that has not happened yet, and I am sure it never will. Memories are short, and prudence and natural risk aversion are no match for the dream of getting rich on the back of a revolutionary technology that 'everyone knows' will change the world.

"bubbles are what happen when enthusiasm reaches irrational proportions."

I haven’t met anyone who doesn’t believe AI has the potential to be one of the biggest technological developments of all time, reshaping both daily life and the global economy.

We also know that in recent years, markets and economies have become increasingly dependent on it, with AI stocks driving most of the S&P 500’s gains and capital expenditure on industry capacity propping up US GDP growth. 

While the parallels with past bubbles are inescapable, believers in the technology will argue that “this time it’s different”. Those four words are heard in virtually every bubble, claiming that the current situation isn’t a bubble, unlike the analogous earlier ones.

Debt is neither a good thing nor a bad thing per se. It all comes down to the proportion of debt in the capital structure, the quality of the assets or cash flows you’re lending against, borrowers’ alternative sources of liquidity for repayment, and the adequacy of the safety margin obtained by lenders.