Reference News Network, March 17 report: The UK's Financial Times website published an article titled "Trump's 'Deterrence and War' Order Makes This Crisis Unusual" on March 15. The author is Andy Haldane, and the content is translated as follows:

Since the US and Israel attacked Iran last month, the economy and financial markets have been in turmoil.

The economic epicenter of this conflict is energy. The Strait of Hormuz is effectively closed, reducing global oil supply by one-fifth, nearly 20 million barrels per day. This has become the largest shock to the global oil market in history, leading to dramatic fluctuations in oil prices and large-scale release of strategic oil reserves, both of which have no precedent in history.

To understand the impact of the current conflict, analysts have been looking back at past oil and geopolitical crises for insights and scenario planning. However, perhaps a more recent example provides lessons and, on the surface, somewhat alleviates doubts about how the economy and financial markets might respond.

Almost a year ago, when the US announced punitive "Day of Liberation" tariffs, the world also experienced a day of deterrence and shock. At that time and now, the source was the US president. The direct impacts were surprisingly similar: asset prices fell sharply, gold prices rose, risk appetite dropped, growth forecasts were downgraded, and the risk of economic recession in the US rose sharply.

However, what happened next was equally surprising. By the end of 2025, global stock prices had risen by nearly one-fifth from the beginning of the year. Annual growth forecasts exceeded initial expectations. Instead of a recession, the US economy was booming. By year-end, severe financial and economic turbulence had given way to economic resilience and financial bubbles in tech stocks, private credit, and leveraged loans.

A simple explanation for this unusual reversal is that the booming tech wave overwhelmed the retreat of the tariff wave, boosting risk appetite and economic growth. This raises a question—will history repeat itself? Will 2026 be just a deeper "copy" of 2025 influenced by oil factors? Will the resilience of the global economy and the bubbles in financial markets surprise us again?

No. The current deterrence and war will leave deeper and more lasting scars than the previous deterrence and shock. In 2025, inflationary pressures were easing, and central banks around the world were able to lower interest rates to alleviate the impact of tariffs on global demand. With energy prices rebounding, this option no longer exists: markets have already priced in expectations of rate hikes in the Eurozone and the UK, and there are no signs of policy relaxation in the US in the near term.

In fact, financial markets are worried that inflationary pressures may persist even after the conflict ends. In addition to increasing fiscal pressures (including increased defense spending), this means long-term global bond yields are rising, which contrasts sharply with the situation in 2025. A tightening monetary policy across the entire yield curve will further squeeze global demand.

Moreover, this tightening is not limited to "safe" interest rates. In recent weeks, a flight-to-safety sentiment has emerged, particularly in assets with high levels of speculation, such as stocks related to artificial intelligence and cryptocurrencies, as well as bubble-prone markets like private credit and leveraged loans, exposing flaws in underwriting standards and valuations. The era of blind optimism has completely ended in these markets.

The same applies to Gulf countries. They once attracted talent and capital with the promise of "safety," but their safe-haven status has been broken.

Meanwhile, in the West, trouble is brewing in domestic labor markets. In the US and the UK, rising unemployment is intensifying consumer fears. This has led to financial instability for many households, and they face another significant cost-of-living shock related to energy, given that living costs have risen by 20% since 2022.

Will technology be the savior again, as it was in 2025? Artificial intelligence is the most energy-intensive technology ever invented. A world where energy is more expensive and supply is more uncertain may temporarily slow down the tech growth train, or at least reduce its speed—thereby extinguishing the only most powerful engine of global economic growth.

All in all, these are strong factors that could lead to stagflation. The tech and tariff waves of last year had a mitigating and calming effect on the economy and finance. This year's waves are colliding and escalating. This means increased turbulence, not stability—in economic, financial, fiscal, and political terms. Therefore, this time is different. (Translated by Ge Xuele)

Original: toutiao.com/article/7618133983410307593/

Statement: This article represents the views of the author alone.