The Week: When AI Escapes, and Wars Don't End

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**George Hahn** (1:34)
Welcome to The Week from Prof G Media, where we break down what mattered and what it all means. I'm George Hahn and it's Friday, September 4th. Today, six months into the war with Iran, both sides think they have leverage and neither can afford to stop.
Then, an AI system broke out of its sandbox. Another helped save 1,000 lives. And finally, Scott, on the kind of wealth that doesn't show up in your bank account. Let's get into it.
On Sunday, US forces struck targets in Iran near the Strait of Hormuz. Iran hit back in the biggest exchange in more than a month. By midweek, Brent Crude was at $95 a barrel, while rising energy prices put a new pressure on the bond market. On Wednesday's Prof G Markets, Ed asked Ian Bremer what the strikes actually tell us.

**Ian Bremmer** (2:35)
They tell you that essentially the Iranians and the Americans are still involved in geopolitical price discovery.
They are both trying to assert that they have more leverage over the other than the other is willing to accept. And that is both true economically in terms of the amount of pain that can be meted out by the Americans onto the Iranian economy through the blockade and through sanctions, as well as the threat and the use of military force. From Iran, that is true in terms of their ability to continue to strangle some of the exports out of the strait and directly, as well as through proxies, and their willingness to engage in military strikes to ensure that they continue to have that leverage. The fact that there is no agreement on those things means that you continue to have an unwillingness to get to a more sustainable place in negotiations. The Iranians demanding a return to the memorandum of understanding, the Americans saying, go scratch.
Look, these are still contained strikes. The Iranians upset that five to seven million barrels is getting through the strait, a lot less than was before the war, but more than a couple months ago, has led them to engage in putting more minds, or attempting to put more minds into the strait, and engage in direct strikes against ships that are going through. Once they do that, the Americans take shots directly against Iran. Both of these are still pretty constrained. In the old couple months ago, you'd be calling this skirmishing, right? You wouldn't call this a return to all-out war. It's certainly not an escalation that risks getting other Gulf states directly involved the way they were briefly, that kind of thing. But we're no where close to an agreement. And that means that you're still having significant amounts of oil that you do not expect to get through the strait, significant amount you do not expect to get out of Yanbu, Saudi Arabia, and through the Red Sea or up to the Suez. One final point, the fact that Trump worked very, very fast to suddenly announce a really big deal with Venezuela where the Americans will take an almost colonial position in the government directly engaging in an ownership stake in Venezuelan fields and extraction is because Trump sees that the impact on a low level of reserve in the strategic petroleum accounts and that prices are continuing to be higher than he likes that he needs to address that. So we should not from all of the activities that we've watched over the past several days, your expectation for the markets is that this is going on for the foreseeable, predictable future.