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In its Annual Economic Report, published on Sunday, the Bank for International Settlements (BIS), known as the central bank for central banks, warned that the enormous spending on AI is accumulating financial vulnerabilities that could amplify any future shock and spread from markets into the wider economy.

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Presenting the findings, BIS general manager Pablo Hernández de Cos said the message was one of “urgency”, with policymakers urged to act before any reversal makes the eventual adjustment more painful.

At the core of the warning is the scale of the spending, despite massive investment having supported global growth over the past year.

The five largest “hyperscalers”, the technology giants racing to build AI infrastructure, are on track to commit more than $1 trillion (€878bn) to AI-related investment across 2025 and 2026, a pace that is outstripping their earnings and free cash flow and pushing some to borrow heavily to keep up.

The BIS suggests this race is fuelled by a belief that only a handful of dominant players will ultimately prevail, encouraging firms to pour money into projects whose returns remain deeply uncertain.

Echoes of past manias

The report sets today’s AI boom against a long historical lineage, from the canal mania of the 1830s and Britain’s railway mania of the 1840s to the electrification of the 1920s and the dotcom bubble.

Each began with a genuine technological breakthrough that attracted more capital than commercial returns could justify, the BIS notes, with each episode ending “with an eventual reversal in investment, inducing economy-wide recessions”.

Compounding the danger are stretched share prices and opaque financing.

The BIS highlights the spread of “circular financing”, in which chipmakers and cloud giants take equity stakes in AI labs that then commit to buying their chips and computing power, effectively recycling money back to the original investors as revenue.

Much of the funding now flows through hedge funds and private credit vehicles that face lighter scrutiny than banks.

According to Zhang Tao, the BIS chief representative for Asia and the Pacific, that reliance on non-bank channels means an AI downturn could unwind into a sharper, faster crash than a traditional banking crisis.

The hidden costs of data centres

Beyond financial markets, critics argue the true cost of the AI build-out is being obscured in plain sight.

A central concern, examined by the Wall Street Journal, is how the technology giants account for their data centres.

By assuming the expensive equipment inside them will stay useful for longer, firms can spread its cost over more years, lowering the depreciation charged against profits in any given period and making earnings look healthier than the underlying cash burn implies.

However, the specialist chips at the heart of these facilities may become obsolete far faster than those extended schedules assume, leaving a gap between reported profits and economic reality, as well as a balance sheet more exposed than it appears should demand disappoint or a sizable need to replace hardware arise.

The physical scale is staggering.

Columbia University economist Stijn Van Nieuwerburgh estimates the build-out could cost in the region of $8 trillion (€7tn) over the next six years, financed in part through the kind of off-balance-sheet arrangements the BIS flagged.

The costs are also no longer confined to corporate accounts.

Some economists now warn of a so-called “third wave” of inflation, after the pandemic and tariffs, driven this time by the AI build-out. As chip manufacturers prioritise high-margin parts for AI servers, the resulting squeeze on memory and storage has rippled out to consumer electronics.

For example, Apple raised prices on its MacBooks, iPads and other devices last week, citing an “extraordinary surge in demand for memory and storage” and saying it had “never seen a component price increase this much, this quickly”.

The company’s shares fell around 6%, their worst day in over a year, as Microsoft, Nintendo and Sony have also made similar moves.

Beyond hidden costs and inflationary pressures, where the strain may spread furthest is raw power.

Goldman Sachs expects data centres to account for nearly half of the growth in US electricity demand by 2030, with consumer power prices forecast to rise around 6% a year through 2026 and 2027.

The BIS itself notes that the build-out’s hunger for electricity is already pressuring prices and input costs, with potential spillovers to inflation, though it stresses, as do many economists, that AI could yet prove disinflationary if its promised productivity gains eventually arrive.

The next global food crisis is unfolding in a narrow stretch of water.

The United Nations warns that if fertilisers cannot pass through the Strait of Hormuz within just a few weeks, the world could face mass starvation.

It says the consequences could be severe if shipping disruptions linked to the Iran conflict drag on.

Food prices are already at a three-year high, while fertiliser costs critical for agriculture have rocketed.

Aid agencies fear a prolonged disruption could push tens of millions more people into hunger.

For vulnerable economies already struggling with debt and high import costs, the risks are growing fast.

“For Want of a Horse,” a play by Olivia Dufault receiving its world premiere in an Echo Theater Company production at Atwater Village Theatre, wants to have a rational conversation about a taboo topic that can provoke instant outrage.

The subject is zoophilia, not to be confused with bestiality, though for many of us it will be a distinction without much of a difference.

Calvin (Joey Stromberg), a good-looking, mild-mannered married accountant, has harbored a secret for much of his life. He has a thing for horses. His erotic interest began at an early age, and all his efforts to lead a normal life have left him depressed and contemplating suicide.

His wife, Bonnie (Jenny Soo), is a permissive kindergarten teacher who’s having difficulty restraining a girl in her class who has discovered the joys of masturbation. Worried about her husband, she discovers through his browsing history that he’s once again visiting strange animal sites.

She suggests he keep a horse, explaining that she doesn’t want to end up a widow or divorcée. Calvin is taken aback by her generosity but has come to recognize that his preference is more than a kink. It’s part of his identity — and maybe the only part that makes his life seem worth living.

Joey Stromberg and Jenny Soo in “For Want of a Horse” at the Echo Theater Company.

(Cooper Bates)

A horse named Q-Tip (Griffin Kelly) enters the couple’s lives. A stable is secured, and the mare, who senses that something strange is going on, is indulged with apples and caresses.

Kelly, a statuesque presence in a dress, harness and boots, brings the horse to life with wild, unpredictable movements. The sheer size of the animal poses a threat to humans. One kick, as Q-Tip herself explains in one of her thought-bubble monologues, is capable of penetrating a steel wall. But controlling an animal’s food supply is an effective way of winning over its trust.

Calvin has found support in the online zoophilia community. PJ (Steven Culp), a man whose current inamorata is a bichon frise, is considering moving to a country where zoophilia isn’t illegal. He’s tired of the shame and the secrecy. He’s proud of his attachment to pooch, even if his thing for dogs has cost him contact with his daughter and ex-wife.

Dufault doesn’t shy away from sexual details. For PJ, intimacy depends on peanut butter. Calvin describes the physical signals that reveal Q-Tip’s erotic satisfaction. The play occasionally descends into sitcom humor. (PJ says he’s considering creating a human-dog dating app called Rin Tin Tinder.) But mostly the subdued tone steers clear of sensationalism.

The production, directed by Elana Luo, is scrupulously well-acted by the four-person cast. Stromberg makes Calvin seem not only reasonable but surprisingly sensitive. Soo’s Bonnie sweetly embodies the excesses of a kind of progressive piety. As PJ, Culp gruffly embraces his role as the play’s polemical fire-starter. And Kelly’s Q-Tip, in the production’s most physically demanding performance, straddles the human-animal divide with theatrical aplomb.

Steven Culp, left, and Joey Stromberg in “For Want of a Horse” at the Echo Theater Company.

(Cooper Bates)

The open-mindedness that Dufault, a trans playwright, brings to the play creates some dramatic slack. Possibly the same fear of making value judgments that has inhibited Bonnie from imposing common-sense discipline in her classroom has robbed “For Want of a Horse” of a propulsive point of view.

The play moves monotonously between Calvin and Bonnie’s bedroom and the stable. Scenic designer Alex Mollo has worked out an efficient way of shifting between these realms by employing the same set of wooden trunks. But the argument of the play doesn’t so much build as elapse.

Time takes its toll, and Calvin eventually has to make a decision. But the character who interested me most was Bonnie, whose reality is only glimpsed. The play tacitly uses her husband’s threat of suicide as a trump card. Zoophilia isn’t merely a fetish for Calvin but a nonnegotiable part of his identity.

This questionable assumption can be psychologically scrutinized not only from Calvin’s point of view but also from his wife’s. The play wants to have an intelligent debate, but it doesn’t want to interrogate certain political positions too skeptically.

At one point, Bonnie objects when Calvin compares his situation to that of homosexuality, but the conversation ends there. The reality is that the right wing has been making a similar claim, arguing that same-sex marriage opens the door to bestiality, polygamy and incest. “For Want of a Horse” inadvertently lends legitimacy to this line of reasoning.

Griffin Kelly in “For Want of a Horse” at the Echo Theater Company.

(Cooper Bates)

Not that extremist positions should be off limits, but they ought to be more rigorously addressed. Similarly, Bonnie’s concern about the issue of consent — how can a horse say yes to intercourse with a human — is introduced only to be dismissed in a shrug of mild-mannered bothsidesism.

While watching “For Want of a Horse,” I recalled a program on PBS called “My Wild Affair” that wasn’t about zoophilia but about the problematic nature of human bonds with untamed animals. Relationships with a seal, an elephant and a rhino, for example — obsessive, protective, loving friendships — all seemed to end if not in outright tragedy, then in shattering heartbreak.

Q-Tip is rightfully given the play’s last word, and Kelly, an actor (HBO’s “The Book of Queer”), writer and comedian, is the production’s driving force. We can never know what’s inside this mare’s mind because Q-Tip’s brain has evolved so differently from our own. Kelly plays the anthropomorphic game while retaining some of the inscrutability of a four-legged creature.

It is through language that we, as humans, traverse the chasm separating us from one another. That’s not possible with animals, even with our closest domestic companions. (Try explaining a necessary medical procedure to a cat.)

“For Want of a Horse” sets out to speak about the unspeakable, but its construction may be too tame for such a wild subject.

Tehran, Iran – United States President Donald Trump’s announcements about securing major concessions from Tehran have riled supporters of the Iranian establishment, prompting rejections and clarifications from the authorities.

Several current and former senior officials, state media and the Islamic Republic’s hardcore backers expressed anger, frustration, and confusion after the US leader made a series of claims, with days left on a two-week ceasefire reached on April 8.

Trump on Friday said Iran and the US would jointly dig up the enriched uranium buried under the rubble of bombed Iranian nuclear sites, and transfer it to the US. He claimed Iran had agreed to stop enriching uranium on its soil.

He also said the Strait of Hormuz had been opened and would never be closed again, while the US naval blockade of Iran’s ports remained in place, and sea mines were removed or were in the process of being removed.

Trump also emphasised that Iran would not receive billions of dollars of its own frozen assets abroad due to US sanctions, and that the 10-day ceasefire between Israel and Lebanon was completely unrelated to Iran.

Amid Pakistan’s ongoing efforts to mediate another round of negotiations, Iran’s Parliament Speaker Mohammad Bagher Ghalibaf, who led the Iranian delegation to the Islamabad talks earlier this month, rejected all of Trump’s claims.

“With these lies, they did not win the war, and they certainly will not get anywhere in negotiations either,” he posted on X early on Saturday.

By Saturday noon, the Khatam al-Anbiya Central Headquarters of the Islamic Revolutionary Guard Corps (IRGC) released a statement, saying the Strait of Hormuz is once again heavily restricted and under “strict management” of the armed forces. It cited continued “acts of piracy and maritime theft under the so-called label of a blockade” by Washington as the reason.

‘Haze of confusion’

In the hours it took between Trump’s flurry of announcements on Friday and official responses from Iranian authorities, supporters of the establishment voiced serious concerns about any major concessions.

“Is there no Muslim out there to talk to the people a bit about what is happening?!” Ezzatollah Zarghami, a former state television chief and current member of the Supreme Cyberspace Council that controls the heavily restricted internet in Iran, wrote on X.

Alireza Zakani, the hardline mayor of Tehran, said if any of Trump’s claims are true, then the Iranian establishment must beware “not to gift the vile enemy in negotiations what it failed to achieve in the field”.

A fan account on X for Saeed Jalili, an ultrahardline member of the Supreme National Security Council who has opposed any deals with the US for decades, said “dissent” may be at play. It said Supreme Leader Mojtaba Khamenei, who has not been seen or heard from outside of several written statements attributed to him, must release a voice or video message to confirm what is happening.

Jalili’s main account distanced itself from the comment, saying the fan account – which was subsequently deleted – was a sign of “infiltration” by enemies of Iran who were trying to sow discord.

Iranian state media released another written statement attributed to Khamenei on Saturday to mark Army Day, but made no mention of the political drama unfolding hours earlier, or the negotiations with the US.

The dissonance was clearly on display on state television and other state-linked media on Friday, especially those affiliated with the IRGC.

Multiple state television hosts and analysts harshly attacked Foreign Minister Abbas Araghchi because he tweeted on Friday that the Strait of Hormuz was “declared completely open for the remaining period of ceasefire, on the coordinated route as already announced by Ports and Maritime Organisation”.

One of the hosts demanded Araghchi must immediately clarify. Another said the top diplomat’s tweet was in English, and since the Iranian people do not have access to X due to the state-imposed near-total internet shutdown for seven weeks, the message was not directed at the people.

With a huge Hezbollah flag in the background, a furious presenter on state television’s Channel 3 claimed that Araghchi was somehow “the representative of the people of Lebanon, Yemen and Iraq” because they are a part of Iran’s “axis of resistance” of armed forces, so he should demand concessions on their behalf from Trump.

Morteza Mahmoudvand, a representative for Tehran in the Iranian parliament, went as far as saying Araghchi would have been impeached had it not been for “the excuse of war”.

The Fars and Tasnim news sites, which are affiliated with the IRGC, also heavily criticised Araghchi and called for further explanations on Friday evening, with Fars arguing that “Iranian society was plunged into a haze of confusion.”

Armed supporters in the streets

Critical comments from supporters of the Iranian government also flooded social media, including local messaging applications and the comments section of state-run sites.

“We took to the streets every night with clear demands, but you shook hands with the killer of our supreme leader and handed our strait to the Zionists,” one user wrote on Friday in the local app Baleh, in reference to Israel.

“After all these years of sanctions and war and costs imposed on the people, if you are to give up the uranium and the strait, then why did you play with the people’s livelihoods and the blood of the martyrs for so long?” another user wrote.

A large number of analysts and media personalities, including Hossein Shariatmadar, the head of the Kayhan newspaper, who was appointed by late Supreme Leader Ayatollah Ali Khamenei, also voiced criticism and demanded answers on Fars and other outlets.

Regardless of whether there will be more mediated negotiations in Pakistan or whether the war will continue, Iran continues to encourage and arm backers to take to the streets to maintain control.

State media on Friday aired footage of more armed convoys moving through the streets of Tehran while waving the flags of Lebanon’s Hezbollah, Iraq’s Hashd al-Shaabi and other groups. The video below shows women and children crewing heavy machineguns mounted on the back of pick-up trucks during a rally in downtown Tehran.

With no end in sight to the state-imposed internet shutdown that has wiped out millions of jobs in Iran, in addition to steel factories and other infrastructure that were destroyed, the Iranian economy continues to suffer.

The timing of the back-and-forth between Trump and the Iranian officials meant that oil prices dropped before Western markets closed on Friday, and the Iranian currency experienced more volatility.

The rial was priced at about 1.46 million against the US dollar on Saturday morning, the first day of the working week in Iran. But it shot back up to about 1.51 million after the IRGC announced the repeated closure of the Strait of Hormuz.