Key Points
- WEF President Borge Brende warned of three potential financial bubbles: AI, crypto, and debt.
- The warning comes as global tech stocks are experiencing sharp falls after reaching record highs.
- Brende noted that government debt is at its highest level since 1945.
- He said AI could threaten many white-collar jobs, potentially creating a new “Rust Belt” in cities.
The head of the World Economic Forum warned on Wednesday that the world should watch out for three potential bubbles in financial markets: artificial intelligence, cryptocurrency, and debt. His comments came as global technology stocks have been declining sharply.
While brokers and analysts say the recent stock market drops warrant caution, not panic, WEF president Borge Brende was more direct. “We could possibly see bubbles moving forward. One is a crypto bubble, the second an AI bubble, and the third would be a debt bubble,” Brende told reporters during a visit to São Paolo, Brazil. He also noted that governments haven’t been this deep in debt since 1945.
For months, markets have largely ignored concerns about high interest rates and trade problems, pushing higher with the expectation that AI could transform the global economy.
Brende explained that while AI offers the chance for big gains in productivity, it could also threaten many white-collar jobs. In a worst-case scenario, he said, we could see a new “Rust Belt” in big cities where AI easily replaces back-office workers. He pointed to recent job-cut announcements from companies like Amazon and Nestle as examples.
However, Brende also looked at the positive side, adding, “We also know from history that technological changes over time lead to increased productivity, and productivity is the only way over time to increase prosperity.” He explained that this ultimately enables companies to pay higher salaries and create more wealth for society.
