'Gold is flashing a warning signal': Sridhar Vembu says debt, leverage could spark 2008-style crash
Gita Gopinath recently wrote that global exposure to U.S. equities is at record highs, and that a sharp correction now would inflict more severe global damage than even the dot‑com crash.
- Oct 18, 2025,
- Updated Oct 18, 2025 9:10 AM IST
Zoho founder Sridhar Vembu has sounded the alarm over a looming financial contagion, echoing warnings from economist Gita Gopinath that the U.S. stock market is in a “clear and massive bubble” and that a correction could trigger systemic fallout.
Vembu posted on X that the degree of leverage in the U.S. financial system is so extreme that “we cannot rule out a systemic event like the global financial crisis of 2008–09.”
He argued gold’s rally isn’t about investment gains—it’s “insurance against systemic financial risk.” He added: “Ultimately finance is all about trust—and when debt levels reach this high, trust breaks down.”
While acknowledging AI’s potential, Vembu took a skeptical tack: “I am sure AI will work hard to repay all the debt in the system.” Yet, he also warned that the current frenzy around AI investments — inflated valuations and round‑tripping — betrays bubble dynamics.
Gopinath recently wrote that global exposure to U.S. equities is at record highs, and that a sharp correction now would inflict more severe global damage than even the dot‑com crash. She underscored structural risks: tariff wars, compressed fiscal space, and “unbalanced growth” concentrated in the U.S.
Gopinath estimates that a crash on par with the early 2000s could wipe out $20 trillion in U.S. household wealth and $15 trillion in losses abroad. She insists the path forward requires growth and returns to be more widely distributed beyond the U.S.
Together, their warnings challenge the narrative that markets are “fully justified” by expected productivity gains, especially from AI.
Zoho founder Sridhar Vembu has sounded the alarm over a looming financial contagion, echoing warnings from economist Gita Gopinath that the U.S. stock market is in a “clear and massive bubble” and that a correction could trigger systemic fallout.
Vembu posted on X that the degree of leverage in the U.S. financial system is so extreme that “we cannot rule out a systemic event like the global financial crisis of 2008–09.”
He argued gold’s rally isn’t about investment gains—it’s “insurance against systemic financial risk.” He added: “Ultimately finance is all about trust—and when debt levels reach this high, trust breaks down.”
While acknowledging AI’s potential, Vembu took a skeptical tack: “I am sure AI will work hard to repay all the debt in the system.” Yet, he also warned that the current frenzy around AI investments — inflated valuations and round‑tripping — betrays bubble dynamics.
Gopinath recently wrote that global exposure to U.S. equities is at record highs, and that a sharp correction now would inflict more severe global damage than even the dot‑com crash. She underscored structural risks: tariff wars, compressed fiscal space, and “unbalanced growth” concentrated in the U.S.
Gopinath estimates that a crash on par with the early 2000s could wipe out $20 trillion in U.S. household wealth and $15 trillion in losses abroad. She insists the path forward requires growth and returns to be more widely distributed beyond the U.S.
Together, their warnings challenge the narrative that markets are “fully justified” by expected productivity gains, especially from AI.