A Dose of Krugman

A Crude Shock -- So far, the current world oil crunch doesn't look at all like the crises of 1973 or 1979. That's why it's so scary.

The last time oil prices were this high, on the eve of the 1991 gulf war, there was a lot of spare capacity in the world, so there was room to cope with a major supply disruption if it happened. This time there isn't.

If there is a major supply disruption, the world will have to get by with less oil, and the only way that can happen in the short run is if there is a world economic slowdown. An oil-driven recession does not look at all far-fetched.

It is, all in all, an awkward time to be pursuing a foreign policy that promises a radical transformation of the Middle East — let alone to be botching the job so completely.

The Wastrel Son -- He was a stock character in 19th-century fiction: the wastrel son who runs up gambling debts in the belief that his wealthy family, concerned for its prestige, will have no choice but to pay off his creditors.

George Bush reminds me of those characters — and not just because of his early career, in which friends of the family repeatedly bailed out his failing business ventures. Now that he sits in the White House, he's still counting on other people to settle his debts — not to protect the reputation of his family, but to protect the reputation of the country.

As long as political figures aren't willing to disown Mr. Bush's debt — the impossible situation in which he has placed America's soldiers — there isn't much they can do.

So how will it all end? The cries of "stay the course" are getting fainter, while the calls for a quick exit are growing. In other words, it seems increasingly likely that the nation will end up disowning Mr. Bush and his debts.

That will mean settling for an outcome in Iraq that, however we spin it, will look a lot like defeat — and the nation's prestige will be damaged by that outcome. But lost prestige is better than ruin.