Paul Krugman Podcast

A month into the war, and now they’re talking about pointless ground action and/or war crimes.

TRANSCRIPT

Pete Hegseth believes in the lethality fairy, and that’s a very bad thing. Hi, Paul Krugman here.

Most people watching this probably don’t get the reference. In the aftermath of the 2008 financial crisis, a number of governments did what economic textbooks say is exactly the wrong thing. They slashed government spending in the face of mass unemployment. And they justified this in part by arguing that although, yeah, sure, if we slash spending and eliminate a bunch of jobs, that should be bad, could make things worse. never mind because it will improve confidence and that will lead to economic expansion. I, in an essay in 2010, called this believing in the “confidence fairy,” one of the coinages that seemed to stick.

And of course, the confidence fairy never arrived. Countries that created worse unemployment by engaging in austerity policies suffered worse unemployment. There was no rescue from improved confidence.

In this case, our Secretary of Defense, which is his legal title, although he calls himself the Secretary of War, continually argues that if only we get even more violent, if only we do even more damage, that this will somehow translate into success in Iran. He clearly relishes the thought of violence himself. He’s now holding prayer breakfasts, and in his prayer breakfast, he called upon the Lord to support us in “overwhelming violence of action against those who deserve no mercy.”

I think this is deeply un-American, but anyway, aside from the evilness — I don’t think there’s any other way to put it — of the world view, how is this supposed to work? If you look at the plans or ideas that are being bruited for using ground forces now, and that’s clearly very much sort the next step here, for using ground forces against Iran, well, yeah, you can seize Kharg Island, although hanging onto it could be very expensive, but then what?

You’ve cut off Iranian oil exports, we could do that anytime anyway, then what? You can, well, try to occupy some of Iran, but the relevant coastline is well over a thousand kilometers long. Missiles and drones can be fired from deep inside Iran. 10,000 soldiers, maybe, is not remotely enough to secure the Persian Gulf, let alone allow shipping to transit, let alone allow tankers to transit through the Strait of Hormuz. So this doesn’t make any sense, unless you somehow think that the sheer act of violence will shock and awe Iran into submission, which, if it was going to happen, would have happened already. Clearly not on the cards.

Hegseth is all, we are going to kill lots of people. Trump is vacillating. In his Truth Social post this morning, he started out by saying we are on the verge of successful negotiations, and we’ll get the Strait open soon because we’re having extremely good talks with the Iranians.

Other presidents have been accused of negotiating with themselves. Trump is negotiating with his imaginary friends. There’s no reason at all to believe that these talks are actually happening.

But he then pivots midway through the post, to saying, and if we don’t get this, then we’re going to start bombing civilian power plants and water supplies.

So give us what we want or we’ll commit a massive, massive war crime, which I hope is not going to happen. But even if it did, why would you think this would open up the Strait of Hormuz? So it’s this lust for violence with no actual coherent story about how that violence is going to produce results. It’s horrifying.

I really don’t know how this ends, except that it does feel as if this is a quagmire largely in the minds of top Trump officials, Trump himself and Hegseth, who having this utterly unshakable belief that hurting people will produce great results, respond to each failure of violence to produce results by getting even more destructive with no end game in sight.

Have a great day.

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Transcript

Has the US military already been Kudlowized? Hi, I’m Paul Krugman. I’ll explain what I meant by that in a couple of minutes.

It’s Friday morning. The war is continuing. A lot of what’s happened in the Iran war has sadly not come as a surprise. The fact that there was no planning, that there was no plan B in case a decapitation strike didn’t do the job, that Trump’s people didn’t seem to have gamed out at all what would happen if their fondest wishes did not come true — unfortunately, that’s par for the course.

There was a famous book in the Vietnam years about how all that went wrong, about how all of the sort of brains trust around LBJ led us into that disaster, and it was called “The Best and the Brightest.” In this case, it’s obvious: Everybody knows that we’ve got the worst and the dumbest. So we knew that the thinking about strategy was going to be nil, that it was going to be all very ill-conceived.

The surprise, and it’s an unfavorable surprise, is that the U.S. military has not been doing too well either. I mean, obviously, you know, they can blow up anything they want. There’s no question that the U.S. has unchallenged superiority in all of the conventional aspects of warfare. There’s no Iranian Air Force for, you know, there’s no Iranian Navy in any conventional sense. Unfortunately, it’s not that kind of war. The failure to have a prepared response to the modern world of drones and inferior powers which nonetheless have the ability to do a lot of damage, has been a bit of a shock.

Now, admittedly, that is something that I, like I think a lot of people who are amateur followers of military affairs, was worried about watching developments in Ukraine. You couldn’t help but wonder whether the U.S. military, with its emphasis on overwhelming force, with its historic superiority in technology, was actually ready for this new world of kind of democratized ability to inflict damage. And there were some straws in the wind suggesting that we were not, that maybe just the historical record of overwhelming dominance had made the US military complacent. But it still comes as a shock to find that U.S. bases in the region appear to be sort of completely unprotected, unhardened, that the U.S. went into this thing sending, you know, multimillion-dollar interceptors to shoot down multithousand-dollar drones.

It’s been really kind of shockingly overwhelmingly, I’m not sure incompetent, but unprepared. It’s just shocking how unready the world’s greatest military seems to have been for a war that was in many ways prefigured by what’s been happening in Ukraine for several years now. So how did that happen?

I was motivated to do this video by a report in The New York Times about what Pete Hegseth has been doing to the military, about the passing over of promotions for officers who happen to be black or female. It’s just been this shocking sort of anti, reverse DEI, otherwise known as racism and misogyny. But in general, I think it’s pretty clear, not just that Hegseth doesn’t like women, doesn’t like non-whites, but also he doesn’t like smart people. He doesn’t like people who are competent at their jobs. He wants people who are into lethality and dumb shows of force, which is not a good thing in a 21st century military. But I had thought that this would take longer.

And I’m wondering whether this is just Hegseth or whether this is a process that has been underway. And of course, it’s now accelerated drastically under current management.

And so let me explain about Kudlowization. In places where I do know something, do know what I’m talking about, which is economic policy making, economic discussion, there has been a long-standing dumbing down on the right wing, a dumbing down of economic thinking, dumbing down of economic discourse. Which is a little odd because for an academic field, economics has a lot of conservative people, not extreme right-wingers, but kind of small government, low tax, deregulation.

That kind of comes with the territory. It’s not that it’s necessarily right, but the simplified models that we use in economics do tend to point you that way. We like simplified models in which the market is always right, and in some ways the line of least resistance is to say that the models are right, the market is always right. So there are plenty of people who, at least by conventional, by historical standards, would be considered conservatives. And some of them have spent, over the course of my professional lifetime, have spent a lot of time trying to be part of the Republican policy apparatus, have sought appointments in Republican administrations. But more and more, and totally in recent decades, have been frozen out.

It turns out that the modern Republican Party doesn’t want, say, Greg Mankiw. They don’t want moderately conservative, technically competent economists. They want people who have no idea what they’re doing. They want ideologues, not even ideologues, but loyalists, people who will say whatever it is they want, the party wants them to say. They want Larry Kudlow, Stephen Moore. They want the often wildly incompetent but reliable people who are reliable in part because they’re incompetent. Somebody who has a professional reputation, a professional skill set might be tempted to actually someday take a stand on principle, and that’s unacceptable.

So we have this kind of real extreme, not just political extremism, but complete lack of ability to do the job, which is almost, in a sense, incompetence is a job requirement.

And I’m starting to wonder if that hasn’t started to infect the military as well. Certainly the people that someone like Hegseth wants are people who believe in warrior ethos, who believe in lethality, who believe in muscles in an age when war is largely waged by guys staring at video screens. And it’s a technological war in which all of those things matter not at all. But anybody who is likely to think that is not this regime’s, this movement’s kind of guy.

Now, what worries me, I mean, how much damage could they have done in just 14 months? Well, maybe quite a lot, but when I talked with Phillips O’Brien a while back, he said that this rot has been underway for a while, that there’s actually a kind of a MAGA-esque faction even within the professional officer corps.

And we certainly seem to be seeing that. So it looks as if the worst and the dumbest are not just at the top of the political leadership. They’re not just on the diplomacy and strategic policymaking end, but even in the cutting edge of the military. And it’s terrifying. America as we knew it may just not exist, even in our military forces.

On that happy thought, have a great day.

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Another day in America’s self-immolation as a Great Power.

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Transcript

It’s Monday morning. Donald Trump has, at least for the time being, called off plans to bomb Iran’s civilian infrastructure. He has done so because, according to him, highly productive negotiations are underway involving the government of Iran, an invisible six-foot white rabbit, and his Canadian girlfriend.

Hi, I’m Paul Krugman. What I just said is not strictly true, or it’s not all true. Trump did not say anything about the invisible rabbit or the Canadian, but the gist of it is true. He said that there’s highly productive talks underway. And shortly afterwards, the Iranian government and Iranian state media said, no, they aren’t. This is not happening.

I’m not going to say that Iranian state media is necessarily a credible source, but the odds are that they are in fact telling the truth and the President of the United States is either lying or fantasizing or both. There’s really no reason at all to believe that anything like what he said is happening is in fact happening.

Why do I say that, Aside from the fact that Trump has not exactly been truthful on a lot of things? But beyond that, there are three important reasons to believe he might be making this stuff up.

First, he put himself in a very bad spot with his threat to commit a massive war crime if Iran doesn’t open the Strait of Hormuz. and must be looking for a way out. Another president at another time might say that on careful consideration, We have recalibrated the policy or something like that. Trump doesn’t do that. Trump is always winning, never admits that he’s had a setback, never admits that he’s changed his mind.

So saying that, oh, the Iranians have come to the table, probably big, strong Iranians with tears in their eyes, but anyway, that the Iranians have come to the table and that’s why we’re not doing what I said we would do is a very Trumpian out.

Second, Why would the Iranians be making a deal at this point? We can talk a lot about how the war is going, but it’s pretty clear that as the Iranians are likely to see it, they’re winning. I mean, they’re not winning militarily, but that was never on the cards. They are, they have successfully turned what was supposed to be a lightning decapitation of their government into a protracted contest in relative ability to bear pain and all indications are that the Iranians are nowhere near cracking and all indications are that the United States, although obviously we’re not losing thousands of people, and we are having our whole life disrupted, but the American public really doesn’t like higher gas prices, does not believe Trump. The clock is ticking for Trump on this in a way that it is apparently not for the Iranian regime. So Iran has has the upper hand here. And very hard to see why they would be wanting to make a deal until they basically humiliated us substantially more.

Finally, consider possible motives. Imagine that you were somebody close to Trump, somebody close enough to actually have an influence on his decisions as well as inside knowledge. Here’s what you could have done really just between last night and now. You could have sold a bunch of crude oil futures, at very high prices, Brent was over $112 over the weekend, then bought them back immediately after Trump’s announcement of triumphal progress, but before the Iranians said that is not happening. And you could have turned a very, very nice, very large profit.

To say that insider trading might be driving U.S. policy would have been outrageous. in the past. Who thinks that that’s beyond the realm of possibility now? So all of this could be happening.

Last point to make here. Think about how much America’s position in the world has been weakened, not just by apparent failure to subdue a fourth-rate power, but by the fact that everybody now knows that you cannot trust anything, cannot trust any promises the United States makes, you cannot count on the United States carrying through with promises, with threats, not just promises, but threats are also incredible in the sense of not being all credible, and that the default assumption should be that anything that this administration says is a lie.

That is a really, really bad thing. That is, you know, influence in the world power is not simply a matter of missiles and bombs, although we seem to be running low on those too. It’s very much a matter of people taking what you say and what you promise and what you threaten seriously. And we are not ruled by serious people.

Have a great day.

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The willingness of the Trump administration to let Iran keep selling oil shows that we’re not willing to endure pain in a war that it all about enduring pain.

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Transcript

If you want to understand how things are going in Iran and why it looks increasingly likely that the United States is going to lose this thing in every sense that matters, follow the oil money.

Hi, Paul Krugman with another not very happy update Sunday afternoon. Yesterday, Donald Trump threatened Iran with basically a massive war crime, saying that if they don’t open the Strait of Hormuz by 48 hours from the time of the post, which would be tomorrow, that he will order attacks on Iranian power plants, on civilian infrastructure, which is, you know, it is a war crime, not something that has never been done, not something that the United States has never done, but not something that you kind of just openly announce — that we’re going to try and terrorize you with this bombing campaign.

But at the same time, the United States is allowing Iran, and only Iran, to export oil, shipping it out through the Strait of Hormuz. The United States isn’t stopping other countries from doing it, but Iran is, and we are allowing them to grant safe passage only to ships that they approve going through that strait. Now that is wild. Sounds completely crazy. It’s not completely crazy, but what it is is it’s a demonstration of incredible weakness. Why would the United States allow Iranian oil to continue to be exported? Or shouldn’t we be trying to, you know, we’re at war with these people, and their revenue base depends basically on selling oil. So why are we allowing them to do that? It would be very easy as a matter of military force for the United States to just stop those oil exports.

And the answer is that, well, the two million barrels a day or something like that that Iran is managing to export are two million barrels a day of world oil supply. And we’re in a world in which the total supply to the world market is down substantially. down something like 10 million barrels or more per day because of the closure of the straits to everybody but the Iranians. And the United States is afraid to worsen the shortage by stopping the Iranians from selling oil, presumably because the Trump administration is afraid of the political backlash from higher gas prices. It’s already frantic enough to threaten war crimes in order to try and get oil flowing and gas prices down. But they’re apparently frightened enough of gas prices that they’re willing to allow the enemy to keep making money selling oil in order to keep those prices somewhat lower than they would otherwise have been.

That’s an admission, implicitly, of enormous weakness. It’s an admission that the Trump administration is not willing to accept sustained pain as part of this war. They’re willing to drop bombs and all of that, but they’re not willing to accept economic pain in the United States, even enough to shut off the revenue flow to the Iranian government.

And this war is fundamentally about who can stand the pain. It’s the United States doing lots of damage to Iran, but the Iranian government seems to think it can handle that. And the Iranians trying to inflict enough pain through hurting the world’s supply of oil that the United States ceases and desists.

And given the behavior, who would you bet on in this situation? So this is looking, I don’t want to say this, right? I mean, I do not want to see, obviously for domestic political reasons, I don’t want a Trump victory parade.

But a world in which the United States loses this war is going to be really a very dangerous world for all of us. But I’m afraid that that’s the direction we’re heading.

Have a nice rest of your weekend.

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Of war, fertilizer, airlines and force majeure.

Transcript (AI-generated)

So let’s talk for a few minutes about fertilizer. Hi, I’m Paul Krugman. Fertilizer is not usually one of my things, but it’s important in what’s happening right now. And it’s also part of trying to understand just how big a mess we are in as a result of this unplanned, ill-conceived war.

So it’s Saturday, it’s three weeks and one day since the bombing began. Donald Trump is now, the story keeps changing, we’re either going to apply force and devastate Iran or our job is done and it’s up to other countries to reopen the Strait of Hormuz because we don’t rely on it, says the president, which is, first of all, it turns out not to be true. The United States does not import significant amounts of crude oil coming through the Strait of Hormuz, but we do import fertilizer, which I wasn’t aware of. Lots of things that are coming to light now that we’re facing the crisis.

The reason we are getting fertilizer, mostly from Qatar, is that the fertilizer is made, urea and some other things are made from natural gas. Natural gas can be exported, is exported, in large quantities from the Persian Gulf, or was until this war began. That’s expensive. You have to super cool it and liquefy it and ship it out through special terminals and special ships.

And, you know, it can be done and it’s become really critical to a large part of the world. But the other thing you can do with the natural gas that’s available in the Persian Gulf area is convert it into fertilizer, which is a lot easier to ship.

And so a lot of the world’s fertilizer turns out to come from that area and normally get shipped through the strait. And the United States, we’re a great agricultural nation, and we do import significant amounts of fertilizer. We import a large share of our fertilizer, and some of it from the Persian Gulf, a significant share of that.

So this is having a direct impact on U.S. farmers. The price of urea is way, way up. And there’s something that I’ve recently been alerted to, which is quite scary. The planting season is coming up, says somebody who has no idea what agricultural life is like, but that’s what I’m told.

And the farmers have long since contracted for their fertilizer. They’ve already paid or at least signed the contracts. The prices are locked in. But will there actually be fertilizer available? It’s not at all hard to imagine that the suppliers will declare force majeure, say there’s a war on, which is normally a valid excuse for backing out of contracts. and simply fail to supply the fertilizer. That would be a real catastrophe.

By the way, there are other places where that’s going to matter. The airlines quite often, you know, airlines cancel flights all the time, and sometimes they declare force majeure and cancel flights and don’t even compensate, although that I think is less of an issue right now. The price of jet fuel has risen. At last I checked 88% since the crisis began. Airlines, you know, they’re already talking about cutting back schedules, not about canceling. Well, it’s not entirely clear.

And, you know, I’m as insulated as anybody can get from all of this, but Robin and I do have some travels planned starting in late April. A mixture of pleasure and business, and some of it we really need to be in certain places, and it seems entirely possible that flights will be canceled. You know, we may or may not receive compensation, which I don’t really care about, but just not being able to get to the places that I have promised to be. would be a really serious disruption. Now this is trivial compared with farmers are facing potential financial ruin, but this is just an illustration of the disruptions.

And of course, at a fundamental level, saying that because the United States doesn’t buy its oil from the Persian Gulf, that therefore we are insulated, that this doesn’t matter to us. I mean, take a look at your gas station. Gas prices are up about $1 a gallon since the war began.

Wholesale gas prices are up about $1.20 a gallon, so this is going to get worse. Diesel is up even more. So the fact that the United States actually produces more oil than it consumes is pretty much irrelevant.

If you want to ask how does the U.S. economy get affected, well, the economy is people, like Soylent Green.

I mean, the economy is people and most people in the United States are significantly adversely affected by the spillover from this war. Now, oil companies, particularly oil refiners, who seem to be seeing a big explosion in their margins, they’re doing well, but what good does that do the rest of us? It’s not as if the U.S. has any fiscal measures in place to capture those gains. So this is in fact, this is hitting the United States, it’s hitting all of us quite hard, and it may be actually kind of catastrophic because plans, plans to travel, never mind, but plans to plant crops may be seriously endangered by all of this.

Has anybody told Trump about this? From everything we’re reading, the answer is probably not. Basically, we’re in a situation where the courtiers don’t tell the emperor that he has no clothes and don’t tell him that actually war in the Persian Gulf really hurts the United States a lot, too. So, you know, God knows.

By the way, I have no idea how this ends. I don’t even know what I would do at this point. I mean, take a time machine and go back and not do this, but now it’s going to be really, really ugly. And have a nice weekend.

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Also: Substack generates a transcript for these videos, available on the app and the web, but the button doesn’t show up in email. So here’s a cut-and-paste (not edited):

Transcript

Is it time to bring back the 55 mile an hour speed limit? Not going to happen, but it’s actually would not be stupid right now. Hi, Paul Krugman. Update on Friday morning where the Strait of Hormuz is still closed, stuff is burning, futures markets are saying that the, you know, pretty sophisticated money thinks that oil prices are going to stay extremely high for a very long time. And we’re starting to hear some talk about things we could do to conserve oil, with the International Energy Agency actually calling for measures to conserve oil, including driving more slowly, working from home, using electric cookers, all things that would be doable. Let’s talk about what the case is, not because it’s going to happen, but because it kind of illustrates where we are right now.

By the way, my coffee cup has never seemed more appropriate.

I remember the 70s. I’ve been around way too long. And I remember the 55 mile an hour speed limit, which even inspired songs about how people hated it. “I can’t drive 55.” It inspired a lot of sectional tension. Bumper stickers in Texas saying, “drive 100 and freeze a Yankee.” And it inspired Jimmy Carter. who famously or infamously gave a speech from the White House wearing a thick sweater calling upon people to conserve energy and called for energy conservation as being something we should do and he called it the moral equivalent of war. He had really bad acronym advisors because that came out as MEOW but not stupid actually maybe politically stupid but economically not stupid.

Where we are right now is that we have essentially a forcible shutoff of a large fraction of the world’s oil supply. Twenty percent of the world’s oil passed through the Strait of Hormuz before this war. Some of that can get out other ways. The Saudis have a pipeline to the Red Sea, which is good for now and until or unless the Houthis start firing missiles at oil tankers in another strait that leads from the Red Sea to the Indian Ocean. The Iranians are still exporting oil. They are letting their own tankers and tankers headed for China pass through, and the United States is not trying to stop them, at least at this point. But still, we’re still looking at something like a 10% reduction in the amount of oil available to the world market.

And the trouble with oil demand in the short run, there’s lots of things you can do to burn less oil in the longer run. In the short run, really the only thing you can do is drive less.

That’s pretty much... Now, the cooking, natural gas, is also a big issue, especially in Europe, so that’s where that would come in. But basically, oil is used primarily for transportation, and it takes time to switch to change your automotive fleet to more fuel-efficient vehicles. It takes time to just generally shift the way that you drive and the way that you work, but you could simply drive less.

Why do that? Econ 101 says that if you want to conserve, and if you want to reduce the amount of something that is consumed, that raising the price is the cleanest, easiest way to do that. That is actually how it’s going to happen. This is all going to happen through high prices of gasoline and diesel and jet fuel. But there are two reasons why a public effort, a public campaign, maybe even rules to induce people to burn less stuff to drive less and so on would make sense.

One is distributional. Rationing gasoline, rationing oil through price is a big hit to consumers and a big windfall profit to oil companies and also to oil exporting countries like Russia. And if you could do less of that, that would be, might not be maximize economic efficiency, but, you know, what matters is the welfare of the people that we’re trying to deal with.

The second is that there are clear kind of collective action issues. If you were to try to drive 55 on our highways right now, it would be pretty menacing. I mean, there’s a stretch of road in New Jersey heading for the New York Thruway where the official speed limit is actually 55, although nobody does it. And on the rest, where it’s 65, and actually people drive 70 to 75, an individual driver trying to drive 55 would be creating havoc and would be at substantial risk themselves.

And that’s the easier part. I mean, things like working from home, we see that’s very much a collective action issue. And if we could get people, you know, a renewed acceptance post-COVID for remote work, that would help. There’s all kinds of reasons why a conservation strategy would, as a short run measure to deal with this fuckup that we’ve created in the Persian Gulf. Makes a lot of sense.

Not going to happen, not a chance it’s going to happen, certainly under current management in the United States. It’s all been about burn baby burn and drill baby drill and we’re going to have cheap gas and we’re going to be a power in the world, not through self-restraint, but through warrior ethos and all of that. So it would be an incredibly humiliating climbdown, for them to advocate conservation. But it is worth thinking about the fact that this could be an important part of the solution.

I don’t know how this thing ends in the Persian Gulf. I think even if we got better people in charge, now they’ve created a really, it’s a quagmire, and I don’t know how this ends. But one way to mitigate it would be, in fact, to try to burn less gasoline.

Not a chance. Take care.

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Imagine if the U.S. government had wasted as much money as Mark Zuckerberg. PS: I know, the company still named Meta was formerly Facebook; bit of a senior moment in there.

Also, it’s easy to miss, but there’s a button above that says “Transcript.” It’s AI-generated and not edited like my Saturday interviews, but it’s there for the text-oriented.

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I don’t believe that it’s corruption, but it’s not a good look.

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People in power can keep insisting that things are going great, never mind reality — until they can’t.

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Another month, another war — this one looking like a complete c*******k. I spoke again with my go-to military historian, who among other things has thoughts about shoes. Here’s a transcript:

. . .

TRANSCRIPT: Paul Krugman in Conversation with Phillips O’Brien

(recorded 3/12/26)

Paul Krugman: Paul Krugman here with another conversation with my favorite military historian/expert, Phillips O’Brien. We do this every time there’s a new war, which means I guess we’re gonna be having a lot of them at the rate we’ve been going.

Phillips O’Brien: Yeah, I’ll see you when he attacks Cuba, right? That’s the next one. So we have Iran now, and then Cuba in a few weeks, I think.

Krugman: I’m not sure we have the resources for Cuba, but yeah. So okay. We’re recording this a bit less than two weeks into this new war with Iran. There are a couple of specific areas I wanna talk about, but first, do you have anything to say that might be a useful starting point?

O’Brien: I don’t think they know what they’re doing. And I don’t think that they had a plan. He basically did what megalomaniac leaders do. They underestimate their enemy and they think they will do this quickly. It’s what Putin did to Ukraine in 2022. “We will just march in, we’ll do what we want. We have this great military.” He was boasting about American military power, and I think he just thought this would be relatively straightforward. He liked to refer to the Venezuela model and I think he thought, ‘okay, what I’m gonna do is blow up the leadership, kill the leadership, and then I’ll get a new leadership that will be much more compliant and do what I want. I don’t wanna actually bring any kind of freedom or democracy to the Iranian people.’ Because, by the way, he’s talking about a leader for the next five to 10 years. So he is actually talking about putting another authoritarian in place. And he thought it would happen, a little bit harder than Venezuela it seems, but not much harder. And he completely underestimated what he was taking on. And what he’s done is caught himself without a strategic plan. They never thought through the second and third order effects, they were nowhere down wondering what would happen if the Strait of Hormuz was cut and they couldn’t get anything out of the Gulf. And I think they’re just making it up now as they go along.

Krugman: Yeah. That’s what we’re all seeing. I wanna come back to that a bit, but, your specialty has been air power, sea power, and strategically how wars are fought that way. And in a way the United States came in with “the O’Brien Supremacy.” We have vastly more, in normal terms or in historic terms, complete air superiority. We have the Navy but actually, let’s talk first about air power. In some ways it seems more effective. It can do big things.

O’Brien: Well, the United States and Israel can blow up anything they want in Iran. Or practically anything they want in Iran. They can’t get to the deep nuclear stuff, or at least they don’t. They’re not sure if they can get to it, but otherwise they could blow up any target on the ground they want to blow up and there’s nothing the Iranians can do about it. Their air defenses, from what we can tell, have mostly been neutralized.

The issue with air power is, it’s great for blowing things up if you have air supremacy, but it’s not great for putting anything else in its place. And this is what they hadn’t worked out. They thought, ‘Okay, we’ll blow things up and something we want will come along and start ruling Iran in a way that we’d like.’ They also didn’t understand that Iran has air power. Not to defend itself, but to strike back. So they totally missed the Iranian capacity to strike back. And Iran has struck back with very cheap drones and very cheap sea drones from what we can tell. And so the Americans haven’t been able to take out Iran’s strike power coming back at them. And it’s why we’re left in this situation.

The US and Israel can destroy anything they want in Iran. And that’s what they’re doing every night. But that doesn’t leave them in the ability to keep Iran from striking back. It doesn’t allow them to put anything else in the government’s place.

Krugman: They can destroy anything they can find. I guess part of the issue is that there’s stuff you can’t find.

O’Brien: This is what I was just saying in the article for The Atlantic. I know it’s only been over a year into Trump’s second term, but already I think we see signs of rot in American institutions. They spent months preparing for this, and on the first day they attacked a girl’s school on one of obviously the high priority targets. You would’ve thought they would’ve had the best intelligence possible. They had a long time to prepare this, but what they did is they committed a massive war crime. Because they didn’t have good intelligence, that alone should set alarm bells off. If you’re planning this intricate military campaign, you would think, at least on the opening strikes, you would have some idea of what you were attacking, but clearly they didn’t have an idea of what they were attacking and if that was the quality of intelligence that they had when it started, now that the Iranians are probably hiding more, spreading things out, trying to protect themselves, we don’t know the quality of the intelligence that they’re gonna have.

They don’t seem to have gotten the second supreme leader. So they got the first one because they knew where he was. But since then, they’ve seemed to have had more trouble tracking down the Iranian leadership. So I think it’s a sign of rot that the Trump administration has brought to US institutions.

Krugman: Yeah, I was really struck by the decapitation strike. That was an intelligence triumph—not the weapons that were there, but actually being able to find, basically, the entire leadership and wipe them out on the first day. That seemed to say that they had very good intelligence. And yet on the same day, they struck this girl’s school. And I don’t know how to reconcile that.

O’Brien: Well, they had very good intelligence on one strike package, but they didn’t have the depth of intelligence throughout the system. A lot of good people have left the US government, a lot of good analysts, so they might have had enough ability to do the strike on the leadership with, by the way, the help of the Israelis. We assume Israelis played a big role in providing a lot of that intelligence, but they haven’t had the depth and they didn’t have the depth to protect those troops in Kuwait. They clearly left American soldiers in Kuwait, unprotected. And unable to fight to protect themselves from what they should have anticipated coming at them. So there’s just all these really worrying signs. The US military is still gonna win every battle it fights with the Iranians. That’s not the issue. They can win any battle. But what we don’t know is if they can maintain the high level of excellence to actually triumph in this war.

Krugman: Just as a very casual observation, the Israeli IDF seems to be less degraded as a force. I don’t like at all what Israel has done. Gaza is a massive war crime. But the IDF seems to be functioning in a way that I’m not sure the US military is.

O’Brien: No, I think the Israelis have maintained a higher level of military efficiency. What Israel has done, a very small country, arguably has the second most powerful air force in the world, or third most powerful air force in the world. We don’t know how the Chinese one would actually operate, but we could say that the best air power in the world is the US, China, and Israel probably among first rank. No one else would be in that category. And the Israelis also have great intelligence of what is happening in Iran. So that is absolutely key. On the other hand, the Israelis seem to also have a much harsher group of political objectives than the United States. Not that the United States’ objectives aren’t harsh, but the Israelis seem to be wanting to go for full regime change. So they’re helping the United States, but in some ways they’re also leading the United States down a road that the United States might not want to go down.

Krugman: And it is striking that they don’t seem to be able to take out the drone sites, the missile sites. How is it that the Iranians are managing to keep these things hidden?

O’Brien: Because they’re small, they’re really easy to launch. The US has been thinking in terms of taking out the air power of another country by taking out its major air bases where it keeps its expensive aircraft in actually relatively small numbers. A few hundred would be a very large air force for most people. And you can’t spread all these aircraft around everywhere because they need maintenance. So actually the ability of anyone to exercise traditional air power with fixed wing aircraft would have a relatively limited number of targets. With drones and missile launchers, they’re cheap, they’re unpiloted, you don’t need to build a lot of military support and you can spread ‘em around. So if you have them spread out, it’s very hard to find all of them.

Remember the Iranians have been preparing for this since last summer, since they were first attacked in that campaign by the Israelis and the United States. So clearly they have been thinking about some kind of strategy of response since then, and it seems what they have done is dispersed a lot of these drones around the country in very small numbers, which is making it difficult for the US and Israel to track them all down.

Krugman: That now is astonishing to me. I thought that they must have been doing that and I’m a pure amateur. But just watching the conflict in Ukraine, it was obvious that drones, cheap missiles were going to be major tools of this war. And that if you didn’t have a strategy for neutralizing those, you didn’t have a strategy. How is it that the US didn’t know that?

O’Brien: I really think Trump believed he would’ve had a few days of air raids, decapitate the government, and that would be it. I just don’t think it entered their mind, and because no one stands up to him. Supposedly, there were some military warnings, people saying, ‘the Iranians might fight back and you have to have preparations in case they do. But he seemed to not take those on. And these are people who wear shoes that are too big for them to make him happy.

That story about Marco Rubio, that picture reveals a great deal about where we are. I don’t know how he kept them on, but he did and he was humiliated, because Trump gave him those shoes. If that is the culture you create around you, you’re gonna make really bad decisions. You know what I thought? I actually thought, and I’m not saying Trump is Stalin but it’s very much the culture Stalin had around him where he humiliated everyone around him by making them look and be faintly ridiculous. That was actually something he did deliberately. And what happened, of course, is that all they would do is reinforce all his prejudices. And that’s why you end up with Stalin saying, “Oh, Hitler’s not gonna attack me in June, 1941. Never! Not gonna happen!” And everyone around him going, “Of course Joseph, of course they won’t do that.” And that’s where we are. We basically have a Stalin-like court around Trump and we see the decisions that such a court makes.

Krugman: Now I’m trying to understand. I think we knew what conventional air power could do. What are the capabilities of the kind of stuff that the Iranians have left? In Ukraine there’s a kill zone, but there’s also a lot beyond that. So can you tell me about that?

O’Brien: They have a very great geographical advantage. They control the coast of the Gulf to the north. That’s basically all Iran. So the Iranians are the north coast of the Gulf, and what they really have to attack to keep that closed is shipping. And ships are slow. They’re slow and big and not that difficult to hit with a drone and they can’t maneuver. They’re not gonna be able to maneuver out of the way. And these are civilian ships that don’t have any protective devices on them. No one seems to want to go in and protect those vessels. So actually the Iranians have a very easy job in that way, that the targets they’re going for are targets that really are not protected and as long as they can keep attacking those with a small number of drones, they don’t need a lot. As long as they can keep shutting down shipping, they are going to put massive pressure on the Trump administration.

Oil prices are already up. They dipped a little bit when Trump acted like the war was almost over. They’re back up. We’ve seen real problems with nitrogen supplies and real trouble with helium supplies. And the irony is, the only country shipping out of the Gulf is Iran. Iranian shipments of oil are up, so Iran is sending everything it wants out of the Gulf and they’re sending oil directly to the Chinese. I think the Chinese are laughing at this, that they’re seeing the US unable to have its allies get their oil out.

Krugman: Yeah. There were Chinese chartered ships going through the Strait of Hormuz broadcasting in English. “We are a Chinese ship carrying Iranian oil,” and they were transiting the strait. But just to enlarge this a bit, there’s a lot of talk about how the Strait of Hormuz is 33 kilometers wide at its narrowest point, but in some ways I think that, as I understand, it’s irrelevant. Essentially, the entire Persian Gulf or Arabian Gulf is easy drone range for the Iranians, right?

O’Brien: Yeah. It’s a very narrow body of water considering the vital shipping that goes through it. Far more vital than I understood. I had no idea of the value of the nitrogen exports or the helium exports that went through. I had no idea. If someone had told me that 20% of the world’s fertilizer supplies came out of the Gulf or something like that, I would’ve had no idea. But considering what a narrow body of water it is and how long the Iranian coast is, Iran runs along the Gulf for hundreds and hundreds of miles. It just means the Iranians can really pick and choose their targets and the United States and Israel are gonna be left scrambling trying to find every little drone. It’s a real needle and haystack kind of situation.

Krugman: Yeah. Again, Ukraine. There’s obviously tremendous intellectual crossover between these two wars and in Ukraine we talked about this sort of 40 kilometer wide kill zone, but that’s a kill zone for, like, tanks.

O’Brien: Yep.

Krugman: And the kill zone for oil tankers has gotta be basically....

O’Brien: There is not a safe place in the whole Gulf for an oil tanker. I can’t believe there’d be any safe place. And by the way, the Americans are acknowledging that because the tankers have asked for American escorts and the United States won’t even send warships into the Gulf. The fact that the United States is rebuffing requests for escorts means that they don’t believe that they can keep US war ships safe in the Gulf right now. And that’s a pretty damning indictment. If you go to war and have not anticipated that you might need to protect your own warships in this vital body of water… It reveals a lot about the shoddy nature of the strategic planning we’re seeing.

Krugman: I’m not even sure what an escort would do.

O’Brien: An escort might essentially try to shoot down the drones with Gatling guns or different kinds of technologies that they would have. They could use Aegis or other very expensive systems. But you might try to just shoot down all the drones you can with the escorting ships.

Krugman: As I understand it, the Ukrainians have developed some of these technologies since we keep on not giving them Patriot missiles. They’ve developed systems that shoot down drones that are substantially cheaper. The Ukrainians had actually offered to sell them to the United States and are now going to sell them to, like, Saudi Arabia. What exactly is the Ukrainians’ role in this?

O’Brien: Well, the Ukrainians understand the cost and expense of the way this war goes. The issue that the United States has been faced with is these drones probably cost the Iranians $30,000 to make, some say 50, some say once you get to mass production, they’re even cheaper. But let’s say $30-40,000 for one of these Shahid type drones. The United States, if they shoot them down with a Patriot or a THAAD, is spending millions of dollars to take down a $30,000 drone. That’s an unsustainable kind of exchange. And plus, the United States stockpiles weren’t that great to begin with. The United States has fired more Patriots in the few days fighting the Iranians than they’ve given to Ukraine the entire war. That’s to give you a sense of the kind depth of fire.

What the Ukrainians understood is they’re not gonna be able to rely on their expensive systems. They’ve been trying to keep their Patriots to defend themselves against the very expensive Russian missiles, the hypersonic missiles, the ballistic missiles—that’s what they keep their Patriots for. So they said we have to come up with a system that will protect ourselves against the cheaper drones. And so they’ve come up with anti-drone drones. That’s what these are, they’re basically smaller anti-drone drones, and they cost between $1000 and $5,000. So that actually is a very good cost balance ratio. The United States just didn’t have that. And American partners didn’t have them ‘cause they were relying often on American technology.

So Trump will never say thank you, but as soon as they ended up in this situation and their air defense stock came under pressure, they turned to the Ukrainians. To the point, and this is actually something that I think should make people stop and think: Ukraine has provided the United States with more aid in 2026 than the United States has provided to Ukraine. United States provided no aid to Ukraine in 2026. Ukraine has provided military aid to the United States and to American allies in the Gulf. And people might think about that.

Krugman: Yeah, there was almost none already in 2025. There’s this chart from the Kiel Ukraine Support Tracker that shows that US aid just disappeared already last year. And it’s all European aid at this point. And Ukraine’s helping us more than we’re helping the Ukrainians.

So, as I know from your writings, air power has been tremendously effective in wars, but there’s a context to that. Let’s talk a little bit about what the US is trying to do now.

O’Brien: Air power is changing. We used to think about air power from an American point of view, and I think the US Air Force probably still did going into this war. And air power was, first of all, shutting down the ability of the other side to attack you. So you would suppress enemy air defense and destroy the other side’s ability to strike back. And then once you did that, you would go and take out all the targets you wanted. So it was a phase process, but the first phase was to neutralize the other side’s air force. It might be now that you cannot do that. Then you cannot fully neutralize the other side’s air force and air power because the other side can produce quite cheap drones in large numbers. So until you actually have a good defensive system, you can’t do what would’ve been doing in the first step in (classic) American air power, which is to neutralize the other side’s air power, which is why in some ways both sides can still attack, and that is a change in air power.

We’ve normally seen air power as a struggle for dominance. One side wins, and when one side wins, it can overwhelm the other side. But we are now in a situation where both sides can continue fighting and actually striking. I mean, my own view on this is that it’s gonna lead us down a very dark road. I wrote a little piece on it saying The future of war seems to be ranged fires and war crimes, because no one’s gonna be able to stop people from having some kind of ranged air capacity. And it will be very tempting to rely on war crimes to try and get your way; threats and that kind of coercive behavior. But it does seem to me that we will have a lot of long range fires and aggressive firing for this period of warfare.

Krugman: Yeah, I found myself reading a little bit about Normandy in World War II and where the Germans had a terrible time just getting forces to the front. To go back to Ukraine, both sides are in that position now because of these ranged fires. Neither side has air superiority and both have air superiority in the sense that there’s this wide zone of death.

O’Brien: In the second World War, you would think, “oh, the United States made so many aircraft.” The United States made, I think, 88,000 aircraft in 1944 at the absolute high point of production. For one year it was 80 or 90,000 aircraft. Ukraine’s gonna make 7 million drones this year.

Krugman: I didn’t know it was that big.

O’Brien: The number of systems that are being thrown in the air are so much larger. They’re not always that effective, but they don’t have to be. It’s gonna be impossible to shoot them all down now unless you have a revolution in the ability to do air defense. And so we are dealing with a world where air power is going to be everywhere and it’s going to be very hard to deal with.

Krugman: And so how does all this compare with Venezuela, which was a limited operation?

O’Brien: My view on Venezuela was, this is not regime change and it’s not bringing freedom to the Venezuelan people. It’s basically replacing one dictator with a compliant dictator. So it’s been great for Trump. It’s been absolutely brilliant for Trump and God knows where the money’s going and who’s getting kickbacks in these business deals. But he has a leader in Venezuela who is, I think, playing for time right now. And as she plays for time, she’s going to make sure that she doesn’t get him upset. I didn’t understand even the total venality of what he was doing. Everyone was saying, “Oh this is all Rubio trying to bring some freedom and openness to Venezuela.” That’s just nonsense.

And I think in Iran the problem is, even that is much harder to do. It’s much farther away. The Iranians have a far more capable military. They’ve been preparing for this. And also, by the way, the Russians and the Chinese are going to help the Iranians. No one was gonna step in for Venezuela. But I don’t think the Russians or the Chinese are quite keen to see a pro-western, pro-US Iran. And they’re not going to go down without a fight. So far, the Russians have been helping the Iranians kill Americans. Quite clearly they’re helping them do that. And it will be interesting to find ou—if we ever find out later—what the Chinese have been doing, but I’m assuming they’ve been helping as well.

Krugman: There was a comment by Adam Serwer, I think just a day or two ago, that Trump doesn’t understand people who act on principle, that the Venezuelan regime was just thugs. It was just a mafia. The Iranians are thugs, they’re horrible, they’re murderers but they actually also believe in something. They’re genuine religious fanatics and that actually seems to have completely caught Trump and his people off guard.

O’Brien: Exactly. He just thought someone would play ball for him. Some second rate, second ranking leader would be brought in to take control. They’d install him and then they would start cutting deals. He has no idea what he’s doing, and that’s the scariest thing, that there’s just so many things they haven’t thought about because they assumed it would be easy. He’s got a very different kettle of fish in Iran than Venezuela, and he was a fool to think that they were similar cases.

Krugman: I am surprised that the military didn’t manage to get through at least a sense of fear in Trump.

O’Brien: You know, what did Trump do when he first came in? He had an excellent chairman of the Joint Chiefs, General Brown. They got rid of him for no other reason, probably because he was a black guy and he was appointed by Biden. And they went through and they’ve been purging officers. They’ve been getting rid of officers who they do not trust. And yeah, they’ve been doing things like cutting off Ivy League institutions from sending officers there. There is a strong intellectual chill in the US military now, and you get promoted, not because you’re good. You get promoted if you’re considered loyal to the regime. So it will be interesting to see, but I don’t think that the US military is capable now of pushing back because I don’t think the personnel who would do it are near the positions of power to try and have that influence.

So I really think what we’re seeing is something that the Trump administration helped bring about by destroying independent thought in the US military. It’s why they’re sitting there now not knowing what the heck to do. If the generals did have courage, they’d go to Trump now and say, “This is a disaster.” But they don’t.

Krugman: You must have more contact than me, but I’ve known some people in the military. I’ve given talks at West Point, even. This was back in the Obama years, but I was always struck by how smart, well-informed, almost intellectual the US military was. But no sign of that now. I guess you’re saying that it took only about 13 months to undo all of that.

O’Brien: Sadly, there had been a growth of a MAGA officer corps from the first term.

Krugman: I didn’t know that.

O’Brien: There were a lot of pro-Trump officers. And I think they knew who some of them were from the first term. And there were a lot of military people who were backing Trump. And my guess is they are the ones now who have been freed by all this to bring their own ideologies to go higher. I don’t think under any other president we would’ve had an officer say, “This is a holy war where we’re going to crush the infidel,” and that’s what’s happened. That officers are feeling empowered to say that is really scary.

Krugman: Oh boy. That worries me not just about the Iran war, but about domestic stuff.

O’Brien: Yes. There are reports that the Iranians might be about to launch some kind of attack on the west coast, from a ship that has some drones in it. This is now a possibility. And I’m like, do you think Kash Patel’s FBI is up for the job of protecting against a counter-terrorist operation on US soil? I don’t. Kash Patel’s FBI is killing Americans.

Krugman: We should also think about Tulsi Gabbard as our chief intelligence official. Good God. So we’re now in this stage of war where the attempt to, at one stroke change the regime has failed. Also one in which it’s clear that the air superiority ain’t what it used to be. How does this campaign unfold?

O’Brien: I think the real question is shipping in the Gulf. That is the thing that will bring the crunch. If there was no shipping problem in the Gulf, they could keep pounding away for a few weeks and see if they could bring regime change by pounding away. But they cannot have a sustained shutoff of shipping in the Gulf. It just cannot happen. Already oil prices have gone up by 50% and that was even after they thought this might not be a long conflict. If shipping actually stops in the gulf. It’s going to have massive economic ramifications. So my guess is that they are stuck. This is the rock in the hard place, right? They either have to, in some ways, accept they’ve lost and say to the Iranians, “we’re gonna back down now. You just behave and let shipping through.” Or they have to send ground troops into southern Iran to clear out a buffer zone and allow the shipping to go through. Those seem to be the only other options. They have to get the shipping through. And they’re gonna have to do it relatively soon. So it’s either back down or ground troops.

Krugman: I can’t imagine we have that many ground troops.

O’Brien: We certainly don’t have that many in the theater, I think. They built up air power and sea power. They didn’t build up ground power from what we can tell. So they’d also have to have really good intelligence to know where they would put those ground troops ashore. I assume they’d need a port to bring in sustainment, to bring in supplies. It’s a big operation if they’re gonna send in ground troops. But if they just rely on air power, they’re going to really have to hope they have such good intelligence that they’ll be able to hit every Iranian drone before it takes off to hit a tanker, otherwise the tankers aren’t gonna go. They’re simply not going to head through the Gulf. Trump urged them to head through the Gulf a few days ago. And what happened is a lot of them were hit by drones. So I just don’t see it working in the present way.

Krugman: I’m wondering about things like helium. I had not even thought about that. But helium is really critical for the production of I guess semiconductors, right?

O’Brien: Yeah, absolutely. I guess a lot of it goes to Taiwan. And if that trade dries up, there’ll be a helium rush around the world. Everyone will be trying to get helium. The price will double, and that means the price of electronics and computers will go up enormously. Everything’s going to go up if this goes on.

Krugman: We’re already having this massive crunch with semiconductor memory prices skyrocketing because of the data centers and AI and all that. But I was thinking, I actually didn’t know at all about the shipping of helium. One of those things you never thought you’d have to think about. But there are other ways out of the Gulf. There’s even a pipeline that gets you out to the Red Sea, although that ain’t great either. But I was wondering whether maybe you could start somehow or other trucking helium out to the Mediterranean.

O’Brien: I have no idea. I had no idea. The Trump administration never had an idea, right? They simply had not worked this out.

Krugman: So you’re basically saying, the one scenario has been basically, “Let’s destroy Iran, wipe out their power plants, their water systems, basically…”

O’Brien: That’s a war crime too, by the way.

Krugman: That is a war crime. At least the Israelis have definitely committed war crimes on that front and I’m afraid that the US may be doing it too. But the idea that this would be a sustained thing, something like what the Russians have been trying to do to Ukraine, trying to knock out the power systems. But you don’t think that we have time for that.

O’Brien: I think the Republicans face Armageddon in 2026. The longer this goes on, the worse it is for the Republicans. And it’s already March. They’re not that far away from the election. We’re only eight months away from the election. So I can’t see it going on, say, over the summer. Then you’re into the campaigning season and this is already the most unpopular military intervention in US history. No intervention has started with such a low base and all the independents are against it. Basically, Republicans are for it, and Democrats and independents are very strongly opposed to it. So I personally think politically the Republicans are really in a bind here. If Trump had another year, if this was his first year in office, maybe he could continue it for longer, but it’ll be hard politically to keep it up. Now, maybe he doesn’t care and maybe he doesn’t plan to have free elections. But these are issues that they’re gonna face if they’re gonna go in and really try to clear out Southern Iran to allow the shipping through. But it’s not gonna be quick.

Krugman: One of the things I’ve been wondering, and again, this is not original, but it’s not clear that the Iranians would agree to a quick ending, even if the United States basically admits defeat.

O’Brien: That is the real wild card. On the whole, you would think Iran would like some time to consolidate its rule after getting all this bombing. But of course they now have a lot of cards. The Iranians have real cards to play over everyone else in the region by dominating shipping in this way. And so they might demand a lot to stop fighting. If Trump decides to throw in the towel, which he might, I think there’s a chance this is over relatively soon, because Trump just simply can’t sustain it politically. The Iranians might ask for a lot. In fact, they’ll come out of this in a better situation. They’ll make no more concessions on their nuclear program. Why would they? And they’ll demand the end of sanctions. Why wouldn’t they? Trump really needs to get out and get out soon. The Iranians are in a very powerful position.

Krugman: And there’s even the concern that the Iranians may want to see a lot of suffering, just independent of what the United States offers. They just might want to make the point that they can inflict massive damage, and the only way to make that absolutely clear is by actually inflicting massive damage.

O’Brien: Yep. And they also will want to preserve their leader. That is one thing. Having blown up one leadership, they probably don’t wanna lose another, one assumes. I’m not an Iranian expert, so what the heck do I know? Whenever I’ve tried to put my own rationality in a leader’s mind, it’s always wrong. I thought Putin would never invade Ukraine in 2022. That’s such a disastrous decision. Of course, then they go ahead and do it. So I have no idea what the Iranians are going to want. But certainly, objectively, they would be in a very strong position if Trump needs to get out now.

Krugman: Okay. So basically you think the sustained war crime campaign is just untenable from the US point of view. And so then this question of how does an exit happen?

O’Brien: Well, remember what he did last summer. He bombed Iran once, decided it was over, then ordered the Israelis to turn around. So he can actually do something like that. That’s the way he behaves. He doesn’t care about other countries really. And therefore, if he decides he’s gotta get out to save himself, he’ll get out. So there’s some talk he’s gonna say to the Europeans, “You clean up the Gulf, I’m outta there. I made the mess and you’ll be the janitors.” And that might be where we are.

So if he decides to cut and run, he’ll cut and run. That I think is clear. He’ll just get out, but he’ll leave a mess behind. But, he is weakening the United States. This might be one of those moments as a marker in American decline. Making the United States weak, making the United States seem or be less powerful than it was. We could be seeing quite an important historical moment here. The Chinese are laughing.

Krugman: Yeah. And just at the moment when we really need allies. And so in other news we just launched section 301 investigations against everybody. It’s trade sanctions against all our erstwhile allies. It’s really scary. But let’s go back to Ukraine for a few minutes here. What is happening in the Russia-Ukraine war?

O’Brien: What is interesting is that Russian advances basically haven’t stopped, but the Russians are taking less and less, and for a while the Ukrainians took more than the Russians. I think the Ukrainians also are not taking a lot now, but the analytical community was talking about how Ukraine is going to have this massive manpower crisis, and collapse throughout 2025. “They needed more men at the front. They’ll have to draft all these young kids.” They’re really quiet on that now. I haven’t heard a lot of talk about the Ukrainian need to draft everyone and send them to the front. The frontline is what the frontline is now. It is the kill zone. And the Ukrainians can make some advances when they have communications help, so actually the Starlink cut from what we can tell helped, but there was more than that.

But the Russians can only make advances when they sacrifice large numbers of soldiers. And the reality, from what I’m hearing, and this is anecdotal, is that the quality of the soldiers the Russians have is going down. You have to be a pretty odd duck to join the Russian military. If you’re gonna join the Russian military, you are having a bit of a death wish. So we are left now with a land war which probably won’t change a lot for the next few months and it will be this ranged war that we see. The Russian winter campaign did a lot of damage to Ukraine, but the Ukrainians have made it through. The weather will get better. It is getting better. It’s already warmer.

Clearly, Trump helped Putin launch that massive assault by saying, “Oh, Putin’s gonna have a ceasefire.” Remember that? That actually seemed to be a coordinated action where Trump helped Putin go for the big enchilada, and the Russians threw everything into that massive two days of attacks in a short period of time to try and drive the Ukrainians out of the war, deprive them of power. That didn’t work. It was pretty horrible. There were a lot of cold and dying people, but the Ukrainians are making it through.

I think the question is, what happens now in the spring-summer in the ranged war? Ukrainians’ systems are getting better. They’re getting more effective. They still don’t get the big Western systems they’d like, like the German Iris-T. I think the Russians are what the Russians are. They’re going to keep pounding away at infrastructure. So, I don’t wanna say it’s swinging towards Ukraine, but it’s actually better for Ukraine now than it was a while ago.

Now Trump has come to Putin’s aid by attacking Iran and driving up the oil prices. Russia’s making an extra $150 million a day now because of what’s happening in the Gulf. I think the Russian economy would’ve had real problems in terms of generating income over the summer, but now they get help with that. So I think we’re still in a bit of a stalemate.

Krugman: One other striking thing is that—although the US is a net exporter of oil—the US, if you take a national accounting standpoint, is a little bit richer because of oil prices, but the US government doesn’t capture any of that. It’s not there. There is no “we.” There is no United States. There’s only oil companies and there’s everybody else. And in Russia, Putin captures a lot of the extra revenue. So it’s actually a weird thing where this benefits Putin but not the United States. And in a way, the Russians have already tried using the dark side of the force against Ukraine, and that’s the US-Israeli approach to Iran now. “Let’s just knock out the infrastructure.” But it didn’t work. I don’t think they have freezing cold winters in Tehran, but anyway, we’ve certainly done incredible damage. We’ve all seen the photos of the poisonous black smoke covering it. But I don’t think there’s ever been a case where a terror bombing campaign really worked.

O’Brien: No. And a city like Tehran has very tenuous water supplies. If the US and Israel were to go against that, that would create a famine of really quite extraordinary proportions, we could compare it to a drought of extraordinary proportions. But the thing about the Iranian people is they don’t seem to be at all convinced Trump wants to help them. Trump said, “Rise up and I will back you.” And in neither case did he back them. And they understand that. I think what they’re hearing is that he wants to put in place someone from the old regime.

So the Americans didn’t try to actually work with the Iranian people. They didn’t seem to work with any of the opposition to try and overthrow the regime. So the Iranian people for now just seem to be keeping their heads down. Again, I’m not an Iranian expert, but we don’t see signs of an immediate uprising to go along with these US and Israeli air attacks. That does not seem to be happening. And that’s probably because of what Trump has done and how he’s shown them what he stands for.

Krugman: Well, I’m actually a little personally worried—not that I’m gonna be killed by an Iranian drone, but I have plans. I’m supposed to be doing various stuff in Europe in the spring and now, is there going to be jet fuel supplies? How much of the world economy is gonna be really disrupted by this? And I guess you’re telling me that this goes on until, not only Trump cries uncle, but he cries uncle convincingly enough to get the Iranians to go along.

O’Brien: Yeah, again, it might happen soon because I think there must be huge pressure on him now to get out.

Krugman: I’ve never been the kind of person who is constantly checking the markets, but I’m just looking at the price of Brent Crude, which is $101 as we speak.

O’Brien: All right. Now it’s over a hundred again. It was down in the eighties when Trump said the war would be short. And now the markets are figuring out it’s not going to be short. But that’s going to put big pressure on him to end this soon. How much is oil now in America for a gallon? If you go fill up your car—

Krugman: The national average was like $3.65 or something, as of yesterday, and rising. And apparently the real thing is diesel. Diesel has gone up more than a dollar a gallon. And there’s a lot of red-hatted truck drivers who are very unhappy right now.

O’Brien: Yep.

Krugman: I’d say let’s have another conversation, but I’m afraid we only have conversations when terrible things happen. But thanks for the rather grim update.

O’Brien: You know, none of this makes sense to me, Paul. None of it makes sense. What the United States is doing, what it’s become, the lack of professionalism in the US government. It just seems like a farce.

Krugman: I spent a year in the US government more than 40 years ago. It was the Reagan administration. I was just at the sub-political level but I was shocked at the level of ignorance and incoherence that I saw in 1983. But people said, “Oh, this is just the Reagan administration, this won’t happen again.” And these guys make the Reagan administration look like consummate professionals.

O’Brien: Oh my God, I can’t imagine. The picture of the shoes did it for me. Just look at this group of clowns. They’re clowns performing for a ringmaster. Supposedly Trump would just guess their shoe sizes. And if he guessed the wrong size, they didn’t have enough courage to actually get a pair of shoes that fit. They’re wearing shoes because Trump guessed the wrong size. That is a sign of mental illness, I think.

Krugman: Yeah. Brings new meaning to the cliché: “If the shoe fits, wear it.”

So on that note—God help us all.

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