The Next Michael Burry (EP. 480)

The AI capital expenditure bubble is the defining market story of this era, and everyone wants to be the person who calls its collapse. As Ben Carlson put it, "Someone wants to be the next Michael Burry. You have to plant your flag." But the hosts of Animal Spirits argue that the most likely outcome isn't the dramatic crash the bears predict or the productivity nirvana the bulls promise—it's something far more boring in the middle.

The AI Spending Paradox

The numbers are staggering. According to Robin Wigglesworth in the New York Times, AI companies tapped debt markets for $217 billion last year. By mid-August of this year, that figure had already reached nearly $450 billion, and projections suggest it could hit $600 billion for 2026. Future capital expenditures are planned to account for roughly 3% of GDP from 2027 to 2029—almost a trillion dollars a year. As one host noted, "We've never seen anything like this."

But here's the paradox that makes calling the top so difficult: if companies keep spending this much money, there's no way the economy will slow down. The hosts pointed out that unless AI itself causes a crash, we might not see a recession for the rest of this decade. "If AI doesn't sink us, it's a higher probability event that we don't have a recession the rest of this decade than we do," one said.