Why Paul Krugman is Panicking [View all]

“I’m in a bit of a panic … even in purely economic terms,” says Paul Krugman.

He isn’t panicking because Donald Trump called him a “lightweight thinker” and a “deranged bum”. In fact, Krugman thinks that it is “evidence that I am doing something right”.

He also isn’t panicking because, despite writing daily criticism of the US president, he does not yet consider himself a serious target for persecution. “Ask me in two-and-a-half years. Let’s not be hysterical yet,” he says soberly. He is, he reasons, “some ways down the list.”

One of the two reasons Krugman is panicking: “Six million barrels a day. That is the rate at which global oil stocks are currently running down.”

The Strait of Hormuz — through which roughly 20 million barrels of oil passed daily before Trump and Israel launched strikes on Iran — has been closed for 83 days. Brent crude is hovering around $106 a barrel. The price reflects jawboning (cough, market manipulation, cough) by the US government, massive injections from global reserves, and hope.

Even if the Strait reopens tomorrow, that hope is ignoring physical reality. Iranian strikes have torn through the Gulf’s energy backbone — oilfields and pipelines in Saudi Arabia, Qatar’s Ras Laffan, the world’s largest LNG complex. Repairs alone will take years.

Continued
https://open.substack.com/pub/eliasrutten/p/why-paul-krugman-is-panicking