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James. Yes it is… the lifespan of the data centres probably isn’t. That could be the kind of capacity that finds a new use if it gets written down - but I will probably be writing on this soon for our clients.

Yes. The lessons tend to show the larger players may well survive - but they are not able to escape a pretty harrowing time if this cycle follows those of the past. Thank you for the question. Ian H

@tonytassell.bsky.social and @raydouglas.bsky.social many thanks again for your help with this article. These pieces are always improved by your efforts - I am always very grateful. Ian H

Thank you for the kind words. I suspect that price action wi come quite quickly once the process brings to peak - but I think we will see the pre-cursor in falling cashflows of potential buyers of the AI services.

Please read the full Financial Times article. It would be great to have your comments in the FT article itself, or feedback here, my views, especially on what I might have got wrong! It’s important for all to investors to fully appreciate both sides of the argument

www.ft.com/content/c7b9...

The key point is that the long run adoption of new General Purpose Technologies nearly always see these kinds of capex bubbles - but that over expansion leads to a bust which triggers a process of creative destruction to occur (Schumpeterian Waste), where cheap assets can be broadly accessed.

While society gains from these bubbles in the long run - it is equity holders that pay - often with declines of 70%-80% in the value of their equity holdings.

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However, we highligh that this capex excess is essential to the eventual success of these new technologies.

The reduced cost of capital that these new GPTS see in their ‘bubble’ phases and rapid build out of excess capex. This ‘schumpterian waste’ that is essential to their eventual ubiquity.

The Nixon tariffs were much smaller in size and only in place for four months - making them a poor starting point for thinking about what ‘might’ happen when the full impact of tariffs hit home…

Thank you for sharing. I had not see this paper. Ian H

Michael - I think that the answer has to be 'not a lot'.... 😉

Tony - could not agree more - David Bowers and I were in the US last week suggesting to ASR clients exactly the same things - this is a coherent philosophical shift in regime and that tariffs are a prelude to capital controls and the end of globally portable capital. This as the chart shows why!

@adamtooze.bsky.social - even more impressive is that you can replace that pre-GFC trend line with actual US productivity! This chart shows the impact of persistent UK policy failures. We use this chart with the ASR clients to highlight the degree to which the UK deserves its low equity valuation.

This was a recent #ASRchartoftheday a week or two back - available to Absolute Strategy Research Ltd clients via their client relationship manager. If you would like to know more contact us here www.absolute-strategy.com/blog. Or you can follow both ASR and me on LinkedIn for additional insights.