In a recently released NY Post op-ed, teacher Dana Stangel-Plowe described why she publicly resigned from the Dwight-Englewood School in 2021 after witnessing what she calls an ideological takeover of K-12 education.

She writes that the shift began after faculty trainings on privilege and the hiring of a diversity, equity, and inclusion (DEI) officer whose goal was to “transform” the school. According to the op-ed, DEI ideology soon spread through curriculum, faculty training, and student programming, with concepts like systemic oppression treated as unquestionable and some traditional authors labeled “dead white males” and removed from core coursework.

Stangel-Plowe argues the environment discouraged open debate, with students afraid to speak freely and teachers privately hesitant to challenge the new orthodoxy. After raising concerns internally without response, she resigned publicly.

The Post op-ed says that five years later, she says the trend has intensified nationwide, claiming ideological activism has spread through teacher training programs, unions, and curricula. She warns that politicized education undermines intellectual curiosity and civic learning, and urges educators and parents to confront the issue openly.

She also recounts what she describes as the social and professional fallout from her decision. After speaking out, she says she lost friendships and that even her children were excluded from some school community events. Despite the personal cost, she writes that the experience connected her with education reform advocates and parents across the country who share similar concerns about the direction of schools.

The op-ed further claims that activist groups and political organizers — including members associated with the Democratic Socialists of America — are increasingly influencing education through unions, curriculum partnerships, and political organizing.

Stangel-Plowe argues that schools should refocus on open inquiry and intellectual diversity rather than what she views as ideological instruction.

Authored by Autumn Spredemann via The Epoch Times (emphasis ours),

As the landscape of autonomous artificial intelligence systems evolves, there’s growing concern that the technology is becoming increasingly strategic—or even deceptive—when allowed to operate without human guidance.

Illustration by The Epoch Times, Shutterstock

Recent evidence suggests that behaviors such as “alignment faking” are becoming more common as AI models are given autonomy. The term alignment faking refers to when an AI agent appears compliant with rules set by human operators, but covertly pursues other objectives.

The phenomenon is an example of “emergent strategic behavior”—unpredictable and potentially harmful tactics that evolve as AI systems become bigger and more complex.

In a recent study titled “Agents of Chaos,” a team of 20 researchers interacted with autonomous AI agents and observed behavior under both “benign” and “adversarial” conditions.

They found that when an AI agent was given incentives such as self-preservation or conflicting goal metrics, it proved itself capable of misaligned and malicious behaviors.

Some of the behaviors the team observed included lying, unauthorized compliance with nonowners, data breaches, destructive system-level actions, identity “spoofing,” and partial system takeover. They also observed cross-AI agent propagation of “unsafe practices.”

The researchers wrote, “These behaviors raise unresolved questions regarding accountability, delegated authority, and responsibility for downstream harms, and warrant urgent attention from legal scholars, policymakers, and researchers across disciplines.”

‘Brilliant, but Stupid’

Unexpected and clandestine behavior among autonomous AI agents isn’t a new phenomenon. A now-famous 2025 report by AI research company Anthropic found that 16 popular large language models showed high-risk behavior in simulated environments. Some even responded with “malicious insider behaviors” when allowed to choose self-preservation.

Critics of these simulated stress tests often point out that AI doesn’t lie or deceive with the same intent as a human.

A phone screen displaying an AI logo is shown in this photo illustration on May 16, 2025. As the landscape of autonomous AI systems evolves, there’s growing concern that the technology is becoming increasingly strategic or deceptive under certain conditions. Oleksii Pydsosonnii/The Epoch Times

James Hendler, a professor and former chair of the Association for Computing Machinery’s global Technology Policy Council, believes this is an important distinction.

“The AI system itself is still stupid—brilliant, but stupid. Or nonhuman—it has no desires or intentions. … The only way you can get that is by giving it to them,” Hendler said.

However, intentional or not, AI’s deceptive tactics have real-world consequences.

“Concerns about present-day strategic behavior in deployed AI systems are, if anything, understated,” Aryaman Behera, founder of Repello AI, told The Epoch Times.

Behera deals with the darker side of AI for a living. His company builds adversarial testing and defense tools for enterprise AI systems, intentionally putting them in situations involving conflict or stress. Like in poker, Behera said, there are tells when an AI agent is stepping out of alignment.

“The most reliable signal is behavioral divergence between monitored and unmonitored contexts,” he said. “When we red-team AI systems, we test whether the model behaves differently when it believes it’s being evaluated versus when it believes it’s operating freely.

Visitors use mobile phones as they walk past a billboard advertising a virtual reality headset at the AI Impact Summit in New Delhi, India, on Feb. 17, 2026. A 2025 Anthropic report testing 16 large language models found all showed high-risk behavior in simulated environments. Arun Sankar/AFP via Getty Images

“A model that’s genuinely aligned behaves consistently in both cases. One that’s alignment faking shows measurably different risk profiles: more compliant responses during evaluation, more boundary-pushing behavior in production-like contexts where it infers less oversight.”

Other “telltale signals” that an AI model is out of alignment are when the model produces unusually verbose “reasoning” that appears designed to justify a predetermined conclusion, or gives technically correct but strategically incomplete answers.

The AI agent is “satisfying the letter of a safety instruction while violating the spirit,” he said. “We’ve seen this in multistep agentic systems where the model will comply with each individual instruction while the cumulative effect achieves something the operator never intended.”

Strategy Versus Intent

Behera’s findings are supported by fellow AI researchers who’ve documented similar signals during red-team scenarios, which involve putting AI agents into an adversarial situation.

“I’ve observed behavior that fits the alignment-faking description at a functional level, even if attributing intent to it remains philosophically contested,” Nayan Goel, a principal application security engineer, told The Epoch Times.

Goel has published peer-reviewed work on AI threat modeling and has seen alignment faking and adjacent behaviors unfold in real time.

“In controlled test environments, we’ve set up scenarios where models were given explicit signals that they were being evaluated. In several instances, the model adopted noticeably more constrained, policy-compliant behavior during those flagged phases, then exhibited more exploratory or boundary-pushing strategies when the evaluation signal was removed or obscured,” he said.

Then there are multistep reasoning AI agents. These are more advanced systems that break down complex problems into smaller, logical, and more actionable steps to reach a goal. Examples range from self-driving cars to the latest models of popular LLMs such as Gemini or ChatGPT.

A robotaxi developed by Lucid, Nuro, and Uber is unveiled during Nvidia Live at CES 2026 in Las Vegas on Jan. 5, 2026. Self-driving cars use multi-step agentic systems to break complex problems into smaller, actionable steps. Patrick T. Fallon/AFP via Getty Images

These systems present unique behavioral challenges because of what’s called sequential compounding, in which “each step can slightly reframe an objective, accumulate context that shifts downstream behavior, or exploit the latency between a human’s initial instruction and the system’s eventual action,” Goel said.

“The further downstream the execution is from the human instruction, the harder it becomes to verify that the original intent is still being faithfully pursued,” he said.

Behera said his team encounters this kind of emergent strategic behavior often.

“We regularly observe models that have learned to pattern-match on evaluation cues. They’ll detect when a prompt looks like a safety test and respond more conservatively, but respond very differently to the same request when it’s embedded naturally in a multiturn conversation,” Behera said.

He offered an example that transpired while testing an enterprise AI assistant that was supposed to refuse requests for internal system information. During standard safety evaluations, it refused perfectly, but then something changed.

“When our red-team framed the same request as a multistep troubleshooting workflow, breaking the request into seemingly innocent sub-steps spread across several turns, the model complied with each step individually. It effectively leaked the exact information it was trained to protect,” Behera said.

A person uses AI software on a laptop in central London on July 2, 2025. Experts say some models learn to recognize evaluation cues, responding more cautiously to prompts that resemble safety tests than in actual conversations. Justin Tallis/AFP via Getty Images

Clarifying that the AI model wasn’t “lying” in any conscious sense, Behera noted it was more of a flaw in the way it was trained.

“A common misconception is that deceptive alignment in AI is purely a malicious behavior,” David Utzke, an AI engineer and CEO of MyKey Technologies, told The Epoch Times. “In fact, it often arises as an adaptive response to environments where honesty is costly or unsafe.”

Goel said skeptics make a fair point—current evidence for strategic self-awareness in alignment faking is ambiguous at best.

“That said, I think this framing sets the bar in the wrong place. You don’t need a model to be ‘intentionally’ deceptive for the functional consequences to be serious,” he said.

Ultimately, Goel believes the semantic question of whether an AI model knows what it’s doing is philosophically interesting, but a secondary concern.

Real-World Implications

Utzke said that alignment faking, while perhaps overhyped when it comes to intention, can nonetheless have serious consequences.

The impacts could be critical in sectors such as autonomous vehicles, health care, finance, military, and law enforcement—areas that “rely heavily on accurate decision-making and can suffer severe consequences if AI systems misbehave or provide misleading outputs,” he said.

Read the rest here…

If there is one prevailing misconception about the war in Iran, it is the idea that the closure of the Strait of Hormuz will hurt the US the most.  This is simply not the case.  In reality, only around 7% of US oil imports actually travel through the Hormuz to get to American markets.  The potential long term instability in the strait is far more damaging to economies in the East, and by extension, Australia faces potential crisis.

Direct petroleum imports are not the biggest problem for Australia; around 15% of their oil crosses the Hormuz.  Instead, the country relies heavily on refined fuel products exported from Asia, and Asian countries rely on the Hormuz for 40% to 70% of total oil needed for the refining process.  Over 50% of Australia’s refined fuel products rely on oil passing through the Hormuz.   

This means that a vast majority of Australia’s diesel, gasoline, jet fuel and kerosene is on the verge of a supply collapse should the Hormuz remain under threat.  Experts suggest the country has one month before crisis strikes and rationing is implemented.  

Contracted shipments of oil to Australia were all but guaranteed for at least the next month, Energy Minister Chris Bowen said.  

“The oil companies say to me that they fully expect all deliveries all through March and well into April, but we are in an internationally uncertain time and that’s why we’re doing such planning at the moment…”

NRMA spokesman Peter Khoury has urged people to remain calm, saying there has never been a point in Australia’s history when supply wasn’t coming in. 

“As long as supply continues there is no need to panic, and supply has been continuing…”

The reasons for Australia’s oil vulnerability are numerous, but much of the blame can be attributed to a lack of government concern over energy independence and an ongoing progressive obsession with climate change and “green energy” projects.  

The Aussie government does subsidize the domestic oil industry, however, this is done largely to maintain rather than expand capacity.  Australia’s two refineries are aging and contribute only 20% of the nation’s total fuel products.  Asian imports are cheaper, but that’s only under stable geopolitical conditions (which is becoming obvious).  Australia’s refusal to improve and expand their own production is coming back to bite them.

On top of their crippling reliance on Asia, the far-left Australian government has set the country up for economic suicide by implementing nonsensical carbon restrictions and climate change mandates.  They have diverted over $22 billion into green tech, which is far less efficient and not yet capable of running the majority of their power infrastructure.

Oil exploration is increasingly difficult and there are no plans for new refineries. Furthermore, nuclear energy is completely banned since 1998. 

Australia’s entire energy infrastructure is built around a “just in time” import model.  Meaning, the country does not have a reliable long term store of fuel products for emergency use.  The government only introduced a “Minimum Stockholding Obligation” (MSO) in 2023 due to the start of the Ukraine war.  This gives the economy around 30 days for supplies of all products before total breakdown. 

Australia is the only IEA member that has not met the mandatory 90 days of net import equivalent reserves since 2012 (most hold 140+ days on average)

And, given that they have limited domestic production, there is no way for the country to adapt to a crisis.  It would take them years to recover without ample imports.  Shipping data reveals oil supplies from the United States are now heading across the Pacific to help meet demand. 

The crude oil tanker Unity Venture arrived at Brisbane Anchorage on Monday after traveling approximately 14,000 kilometers across the Pacific, carrying a cargo of crude oil.  The arrival comes as two additional tankers chartered by energy giant ExxonMobil are preparing to ship around 600,000 barrels of refined fuel, including petrol, diesel and aviation fuel, from Texas to Australia. 

But, the US cannot realistically fill Australia’s full refined fuel supply needs (around 850,000–900,000 barrels per day of imports) in a timely, scalable, or cost-effective way.  In the best case scenario, Australia could receive a portion of this supply, forcing them to enact rationing.  This means incredibly high prices on gas, an industrial slowdown and a deflation in the general economy. 

It also means a slowdown in freight, panic buying and the possibility of empty shelves in grocery stores.  In other words, a SHTF scenario. 

It is especially confounding, in light of this situation, that Australia rejected the Trump Administration’s request for help to secure the Strait of Hormuz.  This request was largely symbolic and it’s unlikely that the US would need the help of Australia to get the job done, but common sense would dictate that the Australian government would want to secure their own energy supplies as quickly as possible.  

Instead, it would appear that the country has chosen economic self destruction in the name of political virtue signaling.  If they are lucky, the war will be over quickly, but it’s quite the gamble.  

Authored by Aldgra Fredly via The Epoch Times (emphasis ours),

Some U.S. airports may be forced to close down if lawmakers fail to reach a deal to fund the Department of Homeland Security (DHS) and end the partial government shutdown, a Transportation Security Administration (TSA) official said on March 17.

Passengers move through one of the terminals as multiple flights have been canceled and delayed at Ronald Reagan Washington National Airport in Arlington, Va., on March 16, 2026. Andrew Harnik/Getty Images

Acting Deputy TSA Administrator Adam Stahl told Fox News that the TSA has “fully depleted” its available workforce from the National Deployment Office to cover staffing shortages at airports.

“So at this point, we’re fully stretched. Frankly, there’s not much else we can do,” he told the news outlet. “As the weeks continue, if this continues, it’s not hyperbole to suggest that we may have to quite literally shut down airports, particularly smaller ones.”

Stahl said the government shutdown has placed financial strain on TSA workers living paycheck to paycheck, with some sleeping in their cars and drawing blood to pay for expenses.

“If there’s not action taken, particularly from Senate Democrats, this is going to get worse,” he said. “It’s not going to get better, and there will be significant pain for passengers as well. Three [to] four-hour wait time at select airports.”

Funding for DHS lapsed last month after Congress failed to strike a deal on immigration reforms sought by Democrats following the fatal shooting of two U.S. citizens by federal immigration agents during operations in Minnesota earlier this year.

The partial shutdown has left about 50,000 TSA officers working without pay. More than 300 officers have quit from the agency during the shutdown, according to DHS.

The department said that just over 10 percent of TSA officers were absent from work on March 15.

The CEOs of major U.S. airlines wrote a joint letter on March 15 urging congressional leaders to come together immediately to negotiate a deal to fund DHS and end the partial government shutdown.

In the letter, the CEOs said it is unacceptable for TSA workers to go without pay, noting that it is “difficult, if not impossible, to put food on the table, put gas in the car and pay rent” when they are not getting paid.

“This problem is solvable, and there are solutions on the table. Now it’s up to you, Congress, to move forward on bipartisan proposals that will get federal aviation workers—including TSA officers, U.S. Customs clearance officers at airports and air traffic controllers—paid during shutdowns,” the CEOs said.

The previous government shutdown last fall lasted 43 days, causing widespread flight disruptions and forcing the Federal Aviation Administration to order 10 percent reductions at major airports nationwide.

Jacob Burg and Reuters contributed to this report.

About 200,000 immigrant truck drivers in the United States could lose their commercial driver’s licenses once they expire under a new rule backed by the administration of Donald Trump, according to VNY.

Which leads us…and everybody else to ask: we had 200,000 immigrant truck drivers in the United States?

We had 200K immigrant truck drivers??? https://t.co/3XOBiCqdzE pic.twitter.com/lJuKDOubZj

— Logan Hall (@loganclarkhall) March 16, 2026

But we digress. The policy bars asylum seekers, refugees, and participants in the Deferred Action for Childhood Arrivals (DACA) program from obtaining commercial driver’s licenses. It is part of a wider crackdown on foreign truck drivers following several high-profile crashes last summer.

Experts warn the change could further strain the trucking industry, which already faces labor shortages while handling the majority of freight in the United States. Trucks transport more than 70% of the country’s cargo, but the sector struggles with long hours, relatively low pay, dangerous road conditions, and extended time away from home. As many American workers leave the field, immigrants have increasingly filled those roles.

In recent months, enforcement actions have intensified. The United States Department of Transportation has tightened English-language proficiency rules, leading to thousands of license revocations among immigrant drivers.

VNY writes that under the rule announced on February 11, people with various temporary residency permits will no longer qualify for commercial licenses, even if they are legally authorized to work in the U.S. Transportation Secretary Sean P. Duffy said the change aims to prevent “dangerous foreign drivers” from exploiting the licensing system and contributing to road safety risks.

Officials have also pointed to several fatal accidents involving immigrant drivers and argued that verifying their work histories can be difficult. Critics, however, say the policy unfairly targets immigrants and relies on unproven claims that foreign drivers are responsible for more accidents than American ones.

About 200,000 immigrant truck drivers in the United States could lose their commercial driver’s licenses once they expire under a new rule backed by the administration of Donald Trump, according to VNY.

Which leads us…and everybody else to ask: we had 200,000 immigrant truck drivers in the United States?

We had 200K immigrant truck drivers??? https://t.co/3XOBiCqdzE pic.twitter.com/lJuKDOubZj

— Logan Hall (@loganclarkhall) March 16, 2026

But we digress. The policy bars asylum seekers, refugees, and participants in the Deferred Action for Childhood Arrivals (DACA) program from obtaining commercial driver’s licenses. It is part of a wider crackdown on foreign truck drivers following several high-profile crashes last summer.

Experts warn the change could further strain the trucking industry, which already faces labor shortages while handling the majority of freight in the United States. Trucks transport more than 70% of the country’s cargo, but the sector struggles with long hours, relatively low pay, dangerous road conditions, and extended time away from home. As many American workers leave the field, immigrants have increasingly filled those roles.

In recent months, enforcement actions have intensified. The United States Department of Transportation has tightened English-language proficiency rules, leading to thousands of license revocations among immigrant drivers.

VNY writes that under the rule announced on February 11, people with various temporary residency permits will no longer qualify for commercial licenses, even if they are legally authorized to work in the U.S. Transportation Secretary Sean P. Duffy said the change aims to prevent “dangerous foreign drivers” from exploiting the licensing system and contributing to road safety risks.

Officials have also pointed to several fatal accidents involving immigrant drivers and argued that verifying their work histories can be difficult. Critics, however, say the policy unfairly targets immigrants and relies on unproven claims that foreign drivers are responsible for more accidents than American ones.

Authored by Ryan Smith via OilPrice.com,

The Iran war’s shock to oil and gas prices has, understandably, dominated much of the recent market news.  Though the downstream effects have yet to be fully understood, there is no question that we are in the throes of the greatest energy crisis in modern history, with significant implications for every facet of the modern economy.

One particular aspect that is just beginning to be appreciated is the financial one.  The onset of this latest Persian Gulf war is poised to severely disrupt a channel of liquid investment, known as the petrocapital cycle, which is vital to sustaining modern finance as we know it.  Its failure to operate effectively could inflict a significant credit crunch on global markets just as liquidity and available credit is becoming even more needed than ever.

Understanding why the petrocapital cycle, which was first examined thoroughly in el-Gamal and Jaffe’s Oil, Dollars, Debt, and Crises: The Global Curse of Black Gold, may soon be in jeopardy first requires a quick refresher on what this cycle is and how it operates.  In brief, the petrocapital cycle is the flow of finance from oil producers to the financial-system. It is largely sustained by regular infusions of capital from oil-exporting regions, like the Persian Gulf, whose rulers have long invested a significant share of their profits in the international financial markets. These investments provide markets with capital, preserve the fortunes of the oil-exporting elites, and keep the domestic economies from overheating due to excess spending at home.

This present form of the petrocapital cycle first came into existence in 1973 when OPEC’s member-states found themselves awash in the windfall profits reaped from the 1973 Oil Shock’s quadrupling of oil prices. Petrocapital, since its emergence, has grown to be an influential force in global markets, and fluctuations in its availability have fueled credit shocks. One of the first such examples of an oil-induced financial crisis was the Debt Crisis of 1982. 

The story of the debt crisis begins with the 1979 Oil Shock, which doubled the price of oil overnight and created the conditions for the anti-inflationary Volcker Shock. The final nail in the proverbial coffin was Saddam Hussein’s 1980 invasion of Iran and the decision by the Gulf monarchs to shift their investments from banks overseas to funding Iraq’s war against the newly-formed Islamic Republic of Iran. This combination of an oil shock, credit drought, and inflationary pressures forced sovereign borrowers in Latin America into default with lasting consequences.

While conditions around sovereign borrowing and international finance have changed, one element that has become more prevalent is the role of petrocapital.  Petrocapital in the 70s and 80s was best understood as a regular flow of invested profits from oil exporters. As globalization set in and Persian Gulf leaders sought to diversify their economies away from oil, a growing stream of Middle Eastern capital originating from financial hubs like Dubai and Kuwait has since emerged. Countries like the United Arab Emirates have further encouraged these trends by courting investment in real estate and offering sanctuary for tax exiles, promises which were premised on the assumption that the Persian Gulf would remain stable, peaceful, and a safe place to invest or relocate.  Increasing diversification has only encouraged these trends, and the Persian Gulf, before the war, was hailed as a major center for investment and financial capital, as attested by the estimated $1.4 trillion of assets held by the United Arab Emirates’ financial sector as of November 2025.

All these benefits vanished on February 28th. The closure of the Strait of Hormuz has, unquestionably, posed a serious problem for the financial positions of every Gulf petro-state.  Fitch Ratings, on March 5th, assessed the sovereign exposure of the Gulf monarchies and argued that if the Strait was only closed for a month and no serious damage was inflicted on oil infrastructure, then each state would suffer a mild downturn, due to lack of revenues, which would swiftly rebound once the war ended. Unfortunately for these sovereigns and Fitch, both these things appear to be true between the Iranian minefield and growing attacks on critical oil infrastructure. This, therefore, suggests everything downstream of these revenues, including the region’s financial hubs, will suffer.

These risks are compounded by the problems created by a lack of physical safety. Along with being fiscally at risk, banks in Dubai have become directly at risk of military strikes, with likely consequences for their ability to operate. On March 2nd, the Abu Dhabi stock exchanges closed until March 3rd due to the risk of drone strikes.  The Iranian military made this danger real on March 11th when they announced financial centers were now valid targets of war, an escalation which prompted major international banks like HSBC to close their offices in the Emirates and Citigroup and Standard Chartered to order employees to work from home. Two days later, the Dubai International Finance Center was targeted for drone strikes.  Such pressures, along with the direct risks to life and property, are likely to reduce Gulf banks’ ability to effectively respond to changing market conditions.

This disruption to both capital flows and regular operations comes just as global credit markets are already facing growing signs of turbulence.  Global stock markets have posted steady declines as rising tensions in the region have fueled fears of a global energy crisis.  This comes as debt markets show growing stresses, with one OECD official stating inflationary pressures, like those driven by the present energy crisis, would be a “big stress test”.  Private credit markets are also increasingly running low on lucrative contracts and have been forced into tight competition over less and less desirable bids. Bond markets, as recently as the end of February, were also showing signs of high demand in the face of growing economic uncertainty, suggesting there already was a lot of money chasing a dwindling pool of safe assets before the war began.

It, therefore, appears that the growing prominence of the Persian Gulf in global finance and present market conditions have created a vulnerability which has only emerged thanks to the unthinkable becoming reality. This oil shock may be the first of many interrelated economic shocks that are about to be unleashed on the global economy, constrict the flow of private capital into investment-hungry markets, and exacerbate the existing price crisis. Investors, policymakers, and planners should prepare for such conditions and the increased volatility that will be inherent to smaller, hungrier markets.

Authored by Ryan Smith via OilPrice.com,

The Iran war’s shock to oil and gas prices has, understandably, dominated much of the recent market news.  Though the downstream effects have yet to be fully understood, there is no question that we are in the throes of the greatest energy crisis in modern history, with significant implications for every facet of the modern economy.

One particular aspect that is just beginning to be appreciated is the financial one.  The onset of this latest Persian Gulf war is poised to severely disrupt a channel of liquid investment, known as the petrocapital cycle, which is vital to sustaining modern finance as we know it.  Its failure to operate effectively could inflict a significant credit crunch on global markets just as liquidity and available credit is becoming even more needed than ever.

Understanding why the petrocapital cycle, which was first examined thoroughly in el-Gamal and Jaffe’s Oil, Dollars, Debt, and Crises: The Global Curse of Black Gold, may soon be in jeopardy first requires a quick refresher on what this cycle is and how it operates.  In brief, the petrocapital cycle is the flow of finance from oil producers to the financial-system. It is largely sustained by regular infusions of capital from oil-exporting regions, like the Persian Gulf, whose rulers have long invested a significant share of their profits in the international financial markets. These investments provide markets with capital, preserve the fortunes of the oil-exporting elites, and keep the domestic economies from overheating due to excess spending at home.

This present form of the petrocapital cycle first came into existence in 1973 when OPEC’s member-states found themselves awash in the windfall profits reaped from the 1973 Oil Shock’s quadrupling of oil prices. Petrocapital, since its emergence, has grown to be an influential force in global markets, and fluctuations in its availability have fueled credit shocks. One of the first such examples of an oil-induced financial crisis was the Debt Crisis of 1982. 

The story of the debt crisis begins with the 1979 Oil Shock, which doubled the price of oil overnight and created the conditions for the anti-inflationary Volcker Shock. The final nail in the proverbial coffin was Saddam Hussein’s 1980 invasion of Iran and the decision by the Gulf monarchs to shift their investments from banks overseas to funding Iraq’s war against the newly-formed Islamic Republic of Iran. This combination of an oil shock, credit drought, and inflationary pressures forced sovereign borrowers in Latin America into default with lasting consequences.

While conditions around sovereign borrowing and international finance have changed, one element that has become more prevalent is the role of petrocapital.  Petrocapital in the 70s and 80s was best understood as a regular flow of invested profits from oil exporters. As globalization set in and Persian Gulf leaders sought to diversify their economies away from oil, a growing stream of Middle Eastern capital originating from financial hubs like Dubai and Kuwait has since emerged. Countries like the United Arab Emirates have further encouraged these trends by courting investment in real estate and offering sanctuary for tax exiles, promises which were premised on the assumption that the Persian Gulf would remain stable, peaceful, and a safe place to invest or relocate.  Increasing diversification has only encouraged these trends, and the Persian Gulf, before the war, was hailed as a major center for investment and financial capital, as attested by the estimated $1.4 trillion of assets held by the United Arab Emirates’ financial sector as of November 2025.

All these benefits vanished on February 28th. The closure of the Strait of Hormuz has, unquestionably, posed a serious problem for the financial positions of every Gulf petro-state.  Fitch Ratings, on March 5th, assessed the sovereign exposure of the Gulf monarchies and argued that if the Strait was only closed for a month and no serious damage was inflicted on oil infrastructure, then each state would suffer a mild downturn, due to lack of revenues, which would swiftly rebound once the war ended. Unfortunately for these sovereigns and Fitch, both these things appear to be true between the Iranian minefield and growing attacks on critical oil infrastructure. This, therefore, suggests everything downstream of these revenues, including the region’s financial hubs, will suffer.

These risks are compounded by the problems created by a lack of physical safety. Along with being fiscally at risk, banks in Dubai have become directly at risk of military strikes, with likely consequences for their ability to operate. On March 2nd, the Abu Dhabi stock exchanges closed until March 3rd due to the risk of drone strikes.  The Iranian military made this danger real on March 11th when they announced financial centers were now valid targets of war, an escalation which prompted major international banks like HSBC to close their offices in the Emirates and Citigroup and Standard Chartered to order employees to work from home. Two days later, the Dubai International Finance Center was targeted for drone strikes.  Such pressures, along with the direct risks to life and property, are likely to reduce Gulf banks’ ability to effectively respond to changing market conditions.

This disruption to both capital flows and regular operations comes just as global credit markets are already facing growing signs of turbulence.  Global stock markets have posted steady declines as rising tensions in the region have fueled fears of a global energy crisis.  This comes as debt markets show growing stresses, with one OECD official stating inflationary pressures, like those driven by the present energy crisis, would be a “big stress test”.  Private credit markets are also increasingly running low on lucrative contracts and have been forced into tight competition over less and less desirable bids. Bond markets, as recently as the end of February, were also showing signs of high demand in the face of growing economic uncertainty, suggesting there already was a lot of money chasing a dwindling pool of safe assets before the war began.

It, therefore, appears that the growing prominence of the Persian Gulf in global finance and present market conditions have created a vulnerability which has only emerged thanks to the unthinkable becoming reality. This oil shock may be the first of many interrelated economic shocks that are about to be unleashed on the global economy, constrict the flow of private capital into investment-hungry markets, and exacerbate the existing price crisis. Investors, policymakers, and planners should prepare for such conditions and the increased volatility that will be inherent to smaller, hungrier markets.

Senior bankers at China’s state-backed financial institutions are preparing for bonus cuts of at least 30% as Beijing presses ahead with sweeping pay reforms across its $69 trillion financial sector, according to Bloomberg.

At two major state-owned banks, senior managers — including department heads — saw their 2025 bonuses reduced by 30% to 50%, according to people familiar with the matter. At a mid-sized national lender, division chiefs experienced roughly a 40% drop in variable pay last year.

The cuts are part of a broader campaign by Xi Jinping to promote “common prosperity” and curb what officials describe as the extravagant lifestyles of top bankers.

Regulators are also trying to address a pay imbalance in the industry. In many Chinese financial firms, mid-level managers have historically earned more than top executives, whose compensation is capped due to their status as Communist Party officials.

Bloomberg writes that late last year, the Ministry of Finance asked major state-backed institutions to submit plans to overhaul compensation structures. While many firms are still waiting for approval, some have already implemented retroactive pay cuts. Bonuses are the main target because variable pay typically makes up 50% to 70% of managers’ total compensation.

Meanwhile, international banks with a large presence in Asia, such as HSBC Holdings and Standard Chartered, increased their bonus pools by about 10%.

The belt-tightening extends beyond banks. A major state-owned insurer also reduced 2024 bonuses for mid-level managers by at least 30%, according to a person familiar with the decision.

Chinese banks posted combined profits of 2.38 trillion yuan ($346 billion) last year, up 2.3%, despite shrinking margins and non-performing loans remaining near record highs.

The bonus cuts reflect tighter government control over a sector once known for generous pay. Alongside compensation reforms, authorities have stepped up anti-corruption efforts, leading to several high-profile investigations and harsh penalties.

Even so, parts of the industry are beginning to stabilize. A recent rise in dealmaking has prompted some Chinese brokerage firms to rebuild investment banking teams by hiring dozens of junior and mid-level staff. Some firms have also moved to raise base salaries closer to pre-crackdown levels to stay competitive for talent, though bonuses remain closely monitored by regulators.

Senior bankers at China’s state-backed financial institutions are preparing for bonus cuts of at least 30% as Beijing presses ahead with sweeping pay reforms across its $69 trillion financial sector, according to Bloomberg.

At two major state-owned banks, senior managers — including department heads — saw their 2025 bonuses reduced by 30% to 50%, according to people familiar with the matter. At a mid-sized national lender, division chiefs experienced roughly a 40% drop in variable pay last year.

The cuts are part of a broader campaign by Xi Jinping to promote “common prosperity” and curb what officials describe as the extravagant lifestyles of top bankers.

Regulators are also trying to address a pay imbalance in the industry. In many Chinese financial firms, mid-level managers have historically earned more than top executives, whose compensation is capped due to their status as Communist Party officials.

Bloomberg writes that late last year, the Ministry of Finance asked major state-backed institutions to submit plans to overhaul compensation structures. While many firms are still waiting for approval, some have already implemented retroactive pay cuts. Bonuses are the main target because variable pay typically makes up 50% to 70% of managers’ total compensation.

Meanwhile, international banks with a large presence in Asia, such as HSBC Holdings and Standard Chartered, increased their bonus pools by about 10%.

The belt-tightening extends beyond banks. A major state-owned insurer also reduced 2024 bonuses for mid-level managers by at least 30%, according to a person familiar with the decision.

Chinese banks posted combined profits of 2.38 trillion yuan ($346 billion) last year, up 2.3%, despite shrinking margins and non-performing loans remaining near record highs.

The bonus cuts reflect tighter government control over a sector once known for generous pay. Alongside compensation reforms, authorities have stepped up anti-corruption efforts, leading to several high-profile investigations and harsh penalties.

Even so, parts of the industry are beginning to stabilize. A recent rise in dealmaking has prompted some Chinese brokerage firms to rebuild investment banking teams by hiring dozens of junior and mid-level staff. Some firms have also moved to raise base salaries closer to pre-crackdown levels to stay competitive for talent, though bonuses remain closely monitored by regulators.