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@cstross @Azuaron @Jennifer @ewen
It's a bit more than that. A load of real estate funds were sitting on what was about to become negative equity because COVID reduced the demand for office space. A lot of loans came due this summer, but the new data centre leases let them refinance them and hide other losses. But that depends on their tenants not invoking early break clauses. Rather than the bubble bursting, it was propped up by another one. And that means they are likely to pop together.
The consensus at the end of the Second World War was that trade was a good disincentive for war. If all of your supply chains are threaded through potential enemy countries, it's very hard for you to go to war with them because it will break your economy. Asimov referenced this in the Foundation series.
It's been quite successful. The down side is that it assumes rationality on the part of leadership. Putin is not acting rationally, but that's a relatively minor problem because Russia's economy is tiny and propped up by fossil fuel reserves that are rapidly dropping in value as alternatives price them out of the market.
In contrast, the USA was a major advocate of free trade for most of the last century. This means a lot of supply chains are threaded through the USA. I think the statistic when Trump announced tariffs on Canada and Mexico was that cars made in North America enter and leave the USA seven times before they're finished.
Nothing the USA does is irreplaceable, but moving to alternatives will take a while. Spinning up factory capacity and rerouting distribution takes a long time. And the drop in efficiency when this happens can easily cause recessions. The only way of avoiding that is a lot of government investment (which will likely cause inflation and so needs to be part of a broader stimulus package) and the UK government is completely incapable of that and I think most EU governments will also struggle.
In the near term, the AI bubble is currently propping up the commercial real-estate bubble in the USA. When these pop together, it's going to wipe out almost a third of the value of the stock market, which will make a large number of pension funds insolvent. Trump is completely incapable of participating in the kind of multinational cooperation that followed the 2008 financial crisis, so the most urgent priority for other world leaders should be ensuring that they have a mechanism in place to instantly firewall the US financial system from the rest of the world. That probably takes at least a few years of preparation and I don't think the people who need to do it have started yet (I hope they have. And, for obvious reasons, if they did, they wouldn't be talking about it publicly).
Longer term, a large part of the problem in the USA is caused of the concentration of wealth in the hands of a few. Incompetent politicians in the UK and EU want to recreate US big tech locally. What they should be aiming to do is create an ecosystem that is bigger and more valuable than the US big tech ecosystems, but where each individual participant is much smaller and where the failure of any company has limited impact. And that requires a lot more changes, starting with electing people able to think through the consequences of their actions more than one step.
Wow, that thread is horrendous. Shows a big difference between the Fediverse's moderation (with overworked and mostly unpaid, yet amazing, volunteers) compared to those of a for-profit data-mining company.