[music]

Brooke Gladstone: This is On The Media's Midweek podcast. I'm Brooke Gladstone. On our show last weekend, Vox's Future Perfect Bryan Walsh explained how and why the economic disruption caused by our war with Iran has not been reflected in the financial markets. We were puzzled.

News clip: We're in the middle of a war, we've got oil prices spiking, and yet stocks are soaring.

News clip: More new highs for the stock market today. The NASDAQ composite with a huge gain on top of a market that's already been super hot and continuing to see just honestly jaw-dropping strength at this point.

Bryan Walsh: The thing that bothers the heck out of me right now is oil's sitting in the mid-90s, so it's near its highs, or it got to a high point about a month ago, and then you got the stock market at an all-time record high. One of those things is wrong.

Brooke Gladstone: Bryan said that this staggering mismatch between economic reality and financial markets is an actual phenomenon known as economic blindness. It was a great conversation, but after we edited it down to 10 minutes to fit the show, we realized that too much good stuff had landed on the cutting room floor. Here's a longer version. He starts by recalling his own bout of a similar blindness while reporting on the emergence of the COVID pandemic in February of 2020.

Bryan Walsh: I had been writing about pandemics literally for more than 15 years. I had written about the first SARS in Hong Kong. I'd written about bird flu. I'd written about H1N1, the one we all forgot in 2009. I'd even written this cover story for Time Magazine just a few years before the pandemic started, that literally warns how we are not ready for the next pandemic in big, very scary letters on the cover.

Yet, as I was going back to those weeks, my overwhelming feeling was, "Well, this doesn't look great." Yet even going into February, well after Wuhan had already been locked down, well after, it was pretty clear, I think in retrospect, that this was not just an outbreak, that this could be something much more dangerous, much more global. I remember telling people, even, "Well, it'll probably go away."

Brooke Gladstone: Why did you say that?

Bryan Walsh: I had seen and covered so many other situations that looked like this at the start and yet petered out, because that is ultimately what generally happens in the world. An event like that is by definition incredibly rare. What's much more likely is something more like H5N1 bird flu, where there are a lot of warning signs, there are occasional cases, there are even small outbreaks. Yet something about the virus or our response to it ensures that it just doesn't have the ability to go global.

Brooke Gladstone: I remember there was some similar over-caution with regard to Ebola coming to America's shores.

Bryan Walsh: Yes. I remember at that time actually having to go the other direction, which was what's happening in West Africa is a catastrophe that has to be dealt with. Yet there was so much fear about Ebola specifically that as a reporter, I often found myself actually trying to modulate that, to tell people that the nature of Ebola means this is not something that's likely to spread like a flu, that we should not be terrified of Ebola coming to our shores, that we could control it, which is exactly what happened.

There was almost a fear I had of not wanting to seem alarmist, which is strange because I would often spend much of my time as a reporter outside this crisis trying to actually raise the alarm, trying to get people to understand this would be a real threat. We were not doing enough, we would not be ready. Yet when the moment came, what I found myself doing was trying to not come off alarmist. I'm not sure whether I was trying not to scare people or whether I myself just when presented with what ultimately was exactly what I had been warning people about, I couldn't recognize it because I couldn't make myself believe it. I suppose it didn't feel real to me.

Brooke Gladstone: Right now, we're talking about economic blindness, and you say it's afflicting us again. First of all, talk about how the markets behaved during COVID.

Bryan Walsh: Yes, leading up through January into February, the markets really weren't recognizing COVID as a serious threat. On February 19, 2020, the S&P hit an all-time high. You have to remember at that point, we've already gone more than a month and a half since the first cases have been occurring in China, since China was doing things that were unprecedented with Wuhan and the shutdown there.

Yet it hadn't really reached American shores. The economy kept on going, even as in the background there was this drumbeat of concern. It took another several weeks for that to really kick in. Then you had what was the sharpest market correction in history. I think the market dropped 34% in just a few weeks. That was after Italy had shut down. Cases really were occurring in America. There was that famous day in March when Tom Hanks revealed that he had been infected with COVID. The MBA shuts down.

Brooke Gladstone: Schools close.

Bryan Walsh: Schools close. Exactly. At that point, the reality is impossible to avoid, and it gets priced into the market. Well, after the information that should have been integrated was there, it wasn't like there was new information, really. Rather, the information was finally integrated into the reality of the market. The market then responded, but well after the fact.

Brooke Gladstone: Right. You say this economic blindness is afflicting us again with the Iran war. The reality of the oil crisis, which stems from Iran's closure of the Strait of Hormuz, is not matching up with the markets. They kept climbing through April. This week, the S&P 500 and NASDAQ Composite set all-time highs. Now, last week, a Reddit user posted on Reddit Money, "Can someone explain how the stock market keeps hitting all-time highs while everything feels so bad?" Maybe you can.

Bryan Walsh: There's something called The Ostrich Paradox, and this is from Robert Meyer and Howard Kunreuther at Wharton. They identify six biases that tend to afflict people in these times. One is myopia. That's simply the inability to see what's in front of you. That's an inability of the market to fully recognize what's happening on the ground with oil as an actual commodity. There's amnesia, simply forgetting the fact that we've had past crises, including COVID, that can take something that was at the top of the market and suddenly lead to a sudden correction.

You have optimism, which is everything's going to work out ultimately. In that case, you're looking to what markets have seen with Trump and tariffs, where when there's a market looks like it'll react, he always backs down. That'll happen this time. There's inertia, which is today will be like yesterday and tomorrow will be like today. The world just more or less keeps on going. There's simplification, which is just refusing to see the complexity of something like oil supply, which is very hard to understand. Then there's hurting, which is when you see other traders continuing to price the market up and up. It is not a comfortable thing to be the person saying, maybe not, because you can get burnt financially.

That's what's happening here. Even though people who deal with the physical reality of oil itself are screaming that we're having huge amounts taken off the markets, we are going to be running out of the supply we have. We're seeing jet fuel prices go up. We're seeing airline companies cancel flights en masse. We're seeing energy rationing happening throughout parts of Asia, all these things, and yet the market continues to go up. Even the oil price doesn't really change hugely. It goes up and down, but not to the degree that it should if it was reflecting the physical reality on the ground. I think that's the blindness I'm seeing here.

Brooke Gladstone: All of this research that you've cited is grounded in the study of our reaction to natural disasters. I n the case of The Ostrich Paradox and more broadly, climate change. There is a comparison to be made here. This gap that we're talking about has to do with our collective inability to process the slow drip of information, like about climate change.

Bryan Walsh: Exactly. I think climate change is where a lot of this research comes out of, because it's such a perfect example of something which is that you have long-term change happening. We know that climate change is long since underway. We know it will continue. That's a scientific and physical reality. Yet it's happening slow enough that we're not really catching up to them.

Obviously, the markets are not pricing the future of climate change. I think our brain has evolved really for. This is something that Daniel Gilbert of Harvard talks a lot about. I think specifically within the vein of climate change, we are evolved for threats that are immediate, that are instinctive things that we can really feel right in front of us that are a threat we have to respond to. Climate change is not like that. Strait of Hormuz, really, is not either.

Brooke Gladstone: Not yet, perhaps. Yet we're already feeling it.

Bryan Walsh: Yes, we absolutely are already feeling it. 170 million barrels of oil are apparently stuck on over 150 tankers in the Gulf. It's going to take months to clear that out if the Strait opens up. That will take a long time to normalize the oil market. Then elsewhere, you're getting fertilizer supplies running out in the US and certainly in places like Africa. I know in much of Asia, which is particularly dependent on imported energy, you're seeing major energy rationing. I saw Philippines ordering government officials to work from home, elevators being closed down. I think in Thailand as well.

You're seeing these aspects of what happens when energy becomes scarcer and scarcer. That is the reality of what's happening. It's not just what we're seeing in futures markets. It's not just gas price going up in parts of the world that are more affected. It's being felt right now. That's not a future problem, that's a right now problem.

Brooke Gladstone: We could describe the ways in which flights are being canceled. Farmers can't buy diesel fuel, and they can't fertilize their crops. On and on and on. Then, of course, with climate change, devastating fires, devastating floods, devastating heat waves all over the world and here in the United States, what's it going to take?

Bryan Walsh: Let's look to past examples. What did it take with COVID? It took it happening really here in the United States. We can't have NBA games anymore. Oh, celebrities have it. Oh, wait, our schools have to close now. At that point, it becomes unavoidable. With Hormuz, if you really start to see, say, a major US airline, say we are canceling tens of thousands of flights the way that European airlines already have, that might do it.

Brooke Gladstone: We're not talking about Spirit here, obviously.

Bryan Walsh: No, we're not talking about Spirit. We're talking about a situation where suddenly mass numbers of people's summer vacations are canceled, something like that, where it's not someone else's problem, it becomes your problem, then it becomes an immediate threat, then you react to it all at once, I think. With climate change, it's always going to be difficult because it's not like we haven't had storms or heat waves before. We're having a hard time picking up that signal that this is a fundamentally different future that we've entered into.

I don't know what the thing is for that. We've had things like Superstorm Sandy, and yet you don't see that massive change. There may never be for something like this. It's simply too massive and too global and too slow-moving to ever have the COVID moment, or maybe the moment we'll have with Iran, which is why I worry so much about the future when it comes to that particular issue.

Brooke Gladstone: You wrote that the deeper problem is that human cognition is built for sudden threats with a specific source. The punch that you can see coming, and badly miscalibrated for diffused distributed ones. You mentioned Harvard psychologist Daniel Gilbert, who argues that gradual threats fail to trip the brain's alarm, leaving us soundly asleep in a burning bed, that this is evolutionary.

Bryan Walsh: If you think of it from an evolutionary perspective, if you weren't able to respond very quickly to the immediate threat in front of me, you probably weren't going to last very long. At the same time, if you were overreacting to every potential threat, that would also be bad for you as well. What we settled on was the punch right in front of me, the saber-toothed tiger, whatever. That's what I have to respond to. I have great alarm system for that.

What I don't have is for something where it's a drip, drip, drip. I think climate change is that for sure, even with what's happening around Iran is that as well, because what we hear the media, we hear headlines that are disconnected. You hear about Lufthansa canceling all these flights. You hear about these rationing activities that have been taken in Asia. You hear about countries in Africa that are running out of fuel altogether, and yet they're all presented as somewhat discreet events. You don't hear that one story that says all of this is connected. It's easy to miss it.

Brooke Gladstone: One thing that you said to my producer, Candace, is that now we have fewer clear and present threats in our lives. This is screwing with our psychology even more.

Bryan Walsh: Yes, exactly. We are not likely to be hunted down and killed by a predator animal on the savanna as opposed to hundreds of thousands of years ago. Many the threats we now face do tend to take the form of these longer-term, slower-moving threats. Think in terms of health. So much what we deal with in health is not necessarily that immediate threat, that immediate disease, but the longer term. Diabetes, for instance, or any disease of longevity that you see symptoms creeping up over time. It's harder to respond to that.

Even looking forward to something that's in the future, technological like AI, we really struggle with that, one, because that's not just potentially massive. It also could be one that doesn't ultimately materialize. We hear about the threats of AI. We hear about how transformative it could be. We might be preparing for something that doesn't exist at all. That is a real struggle for us, especially when the response to it would be something that would require some global coordinated action. There's nothing about our brains that is wired to deal with that.

Brooke Gladstone: You mentioned the slow drip and how inured we are to it. The canceled flights in Frankfurt, Fertilizer is up 60% in Mississippi. Propane cues in Dhaka. People fail to perceive the shift while it's happening. You cite a paper by UCLA's Rachit Dubey. He calls it the boiling frog effect. You suggest that a straightforward headline, "The Strait is closed" would register more powerfully. I wonder, is that the key? Did we tell the story of COVID-19 wrong? Are we telling the story of this oil crisis wrong? How do we tell it right?

Bryan Walsh: I do think we told the story of COVID wrong. We failed to put the pieces together. I think really make audiences understand that something was happening in China in January. Looking back, I can't believe I didn't appreciate it more. Definitely failed to put it in the binary terms that maybe would have broken through.

Brooke Gladstone: You also suggested the herd effect. The herding had an effect on you.

Bryan Walsh: Oh, yes, absolutely. The fear of getting outside the herd. Talk about evolution. That's not a safe place to be. Doing a binary headline demands putting something on the line, saying something declaratively. Again, with the Strait of Hormuz, you can't trust what the President's saying. It often seems as if information is being released in a deliberate attempt to time the markets.

Brooke Gladstone: And to push the markets.

Bryan Walsh: Absolutely. To push it in certain directions. Then you look at the Strait itself. Is it open? Is it closed? Every day, it seems uncertain. When we actually look at the facts, are ships going through the Strait? The number is much, much, much lower. That's closed. Yet there's just enough uncertainty that we don't feel comfortable as the media simply saying that, I think. You can see as well with climate change. It's hard to say, like a definitive headline about, "All right, this is the moment." There is, like, "What is the binary moment in climate change?" I don't know if there is one, actually. That's really why that one becomes. That's the ultimate example of something that's really hard to deal with in this precise way.

Brooke Gladstone: Yes. The question of when reality tends to hit the markets, you suggest that it might take armed conflict for the market to react definitively.

Bryan Walsh: If you see the US once again launching attacks on Iran, that would really drive home the fact that this thing is not opening up anytime soon. That would lead to significant market reaction. I think that's one reason, frankly, that the President seems to have been very reluctant to renew attacks. That's clearly one example of what would do it. If we see real impacts on airlines here in the US, again, not just Spirit. Nothing wrong with Spirit, but one of the major ones, that would probably do it as well.

Brooke Gladstone: That was your first factual error that I could detect.

[laughter]

Bryan Walsh: I have flown on Spirit, so I can agree with you there.

Brooke Gladstone: I cut you in the middle to make a stupid joke, so go ahead and start that again.

Bryan Walsh: Oh, I think if we saw significant cuts on the part of a major US Airline that really impacted Americans' summer vacations, that would do it. Gas prices are clearly having the biggest impact right now. They are up a startlingly high level. Yet even that is comparatively slow-moving. Because we see gas prices moving up, up, up. There's not like day one, there's gas, day two, there's no gas.

Brooke Gladstone: I was in California, and at some gas stations, it was costing $6 a gallon.

Bryan Walsh: Yes. You'd think that would do it. Then at the same time, America's a big country. It's not $6 a gallon everywhere. This is clearly having an impact that's being felt. There's no doubt. That is the thing driving, I think, the politics of the situation more than anything else.

Yet it hasn't really impacted the market yet. Part of that is the market has become so tech-heavy that really what matters to the market in the moment is much less what's happening in and around Iran or whether people in the Philippines can get energy. It matters is like what can the AI companies do? Is usage still going up? All those things. That's so top-heavy and so much driving it that weirdly these other factors don't impact it, but they will eventually if they don't change.

Even an AI-driven bull market that's hitting record highs all the time cannot ignore simply not having energy, which is the path you eventually go down if this doesn't get settled. At least you wouldn't have energy the way we have now.

Brooke Gladstone: Right. You mentioned AI. Let's look at that as a looming crisis. How do you deal with AI as a futurist?

Bryan Walsh: I'm thinking again about COVID because AI is another subject that Future Perfect wire work we've written about a lot in the past. One thing I found strange is that we used to write a lot about existential AI risk. That was almost easier for me to really imagine before you started to see things like ChatGPT, before you started to see AI become a part of everyday life.

Brooke Gladstone: You mean when we were afraid that they would become conscious and destroy the world à la Terminator?

Bryan Walsh: Exactly. Like the really out there science fiction worries. I could actually take those more seriously before I saw AI in front of me all the time. I don't know whether that's in part because I have a better familiarity with what it can and cannot do, because I use it more than I did five years ago.

Brooke Gladstone: You mentioned COVID. Is it because it's closer now? [unintelligible 00:19:16]

Bryan Walsh: I do. Yes, I do. I wonder that very thing, like it's as the moment is here, potentially, a big thing we've been focusing on AI over the last month or so has been this new Anthropic model, Mythos. What can it do to cyber defense? What can it do to cyber offense? Suddenly, even the Trump administration is talking about regulating models for their release. That's meaningfully different. Yet I find myself a little bit like I'm feeling this February 2020 to really pull the trigger on, "Oh, the thing that we were worried about is upon us." I weirdly find myself reluctant, I think for the same reasons, that hurting, that fear of being seen as alarmist, that fear of being proven wrong.

Brooke Gladstone: How do we rectify our tendency to ignore looming threats, not just to oil scarcity, but to climate catastrophe, AI domination, the deterioration of our democracy?

Bryan Walsh: One thing I've been trying to do is pay more attention to the tail risks and pay more attention to the people who take those tail risks seriously.

Brooke Gladstone: Define tail risk.

Bryan Walsh: Sure. The tail risk is something that's not very likely but has a huge impact. That would be something where, like climate change, you don't just get the 2-degree warming or the 2.5-degree warming. You get, I don't know, 4 or 5, because there's something in the climate system that creates a reinforcing effect that really turbocharges climate change. That is a very, very bad future.

It's not the most likely one, but I find myself paying more attention to that. With something like AI, it would be, I guess, the Terminator effect. What I'm thinking is I'm paying more attention to people who have long been concerned and long been warning about these various tail risks. They're easy to ignore because they're usually not true. Most tail risks do not turn out to happen. They wouldn't be tail risks if they did.

Being a little more open to those people who say five, six, seven years ago were warning that AI risks are real, that even well before ChatGPT or Claude or any of those things, this is something we should really be worried about. I might have been more inclined to dismiss them in the past or think, well, they're probably being a little alarmist. Now, I try to take them a little more seriously. That goes as well for an economic situation like the Strait of Hormuz. I think it goes for climate change as well.

Again, most of the time this will not happen. Most of the time tomorrow really is like today, but I want to be a little more open to the possibility that it isn't and then see how that can be reflected in my reporting. I think writing this piece and thinking again about how I dealt with COVID in the very early days, what I missed trying not to have that happen again, is part of that practice, at least for me.

Maybe lastly, I think with this, we should look more to the past. We should look more to what we got wrong and not just skip past it, but actually try to learn from it as much as we can, which I don't think in the media we're always that great at. We're always focused on what happens next. We don't spend a lot of time in retrospect, but perhaps you should a little bit more, because I think it would help sharpen our thinking, perhaps, when it comes to these situations.

Brooke Gladstone: What is at stake when we are the slow-boiling frog when it comes to the oil crisis?

Bryan Walsh: What's at stake, I think, is we risk the economic damage being a lot greater than it would be otherwise. Imagine if the market has reacted to this much more strongly. It's had much sharper correction based off what's happening in and around the Strait of Hormuz. That probably would lead to political action that would bring this crisis to an end sooner than it would otherwise.

What we risk is conditions getting worse and worse. That is with a system, when it comes to the oil itself, it can't just be turned on again. The longer this crisis goes on, the greater the damage is across the board to people, most of all who are very poor, who are not getting fertilizer, who are not getting energy. Eventually, it makes its way to us as well. That's going to be felt in how much we're paying for energy. It's going to be felt in the chance of a recession being that much more likely.

None of this is anywhere near to the degree the damage or the loss of life certainly that we experienced during COVID, but it's a big deal. What we really risk is simply waiting longer and longer to finally put into place the responses we should have put in place days, weeks, even months ago.

Brooke Gladstone: Bryan, thank you so much. I loved this interview.

Bryan Walsh: Thank you very much.

Brooke Gladstone: Bryan Walsh is a senior editorial director at Vox and editor of Vox's Future Perfect section. Thanks for listening to the Midweek podcast, and don't forget to follow us on Instagram and TikTok, where we post videos that are quite good. See you on Friday for the big show. I'm Brooke Gladstone.

Copyright © 2026 New York Public Radio. All rights reserved. Visit our website terms of use at www.wnyc.org for further information.

New York Public Radio transcripts are created on a rush deadline, often by contractors. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of New York Public Radio’s programming is the audio record.