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Krugman's Verdict: Iran Holds, America Folds

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Krugman's Verdict: Iran Holds, America Folds
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Krugman's Verdict: Iran Holds, America Folds

2026-05-02 22:46 Last Updated At:22:46

In the classic wuxia novel The Heaven Sword and Dragon Saber, the Golden-Haired Lion King's signature move is the "Seven Injury Fist" – devastating in power, yet self-wounding by design: for every seven points of damage dealt to the enemy, the user suffers three.

Trump unleashes the "Seven Injury Fist" against Iran, blockading its ports. Iran strikes back decisively, tightening its grip on the Strait of Hormuz. The result: America harms itself, and the global economy bleeds from within.

Trump unleashes the "Seven Injury Fist" against Iran, blockading its ports. Iran strikes back decisively, tightening its grip on the Strait of Hormuz. The result: America harms itself, and the global economy bleeds from within.

Trump is now trapped in a three-way deadlock with no good options left. He is unleashing this very fist against Iran – wielding economic strangulation through blockade. But the consequences may well invert the ratio entirely, injuring himself seven points for every three inflicted on Tehran, while the global economy hemorrhages from within. This is a textbook case of mutually assured destruction.

Blinded by arrogance, Trump presses on to save face. Nobel Prize-winning economist Krugman has already named the likely outcome: Iran will emerge stronger than before the war, and America will be left weaker.

By 1 May, the US-Iran war will have lasted 60 days. Trump boasted at the outset that the conflict would be over in two to three weeks. Instead, he has sunk into a quagmire of "no fighting, no talking, no withdrawing." His cards are few, yet he cannot admit defeat.

His only move is the "blockade play" – squeezing Iran's economic lifeline in hopes of forcing submission. The Wall Street Journal reports that at recent meetings – including a Monday session in the White House Situation Room to assess the war's progress – Trump settled on one course of action from several options: maintaining the interdiction of oil tankers and cargo vessels entering and leaving Iranian ports, striking at the country's jugular. He believes Iran's economy is on the verge of collapse, and that this move can force its "surrender" at lower risk than either resuming bombing or withdrawing entirely.

Trump genuinely believes this gambit will work. A White House spokesperson, responding to the Wall Street Journal, stated: "Thanks to the successful blockade of Iranian ports, the United States has maximum leverage over the regime." The strategic logic is clear: sustain the blockade long enough, and Iran will crack under pressure and be compelled to accept all of Washington's demands.

Comparatively speaking, this is indeed Trump's best choice within an impossible trilemma. A unilateral withdrawal now would be tantamount to surrender – he would have no face left to show his own people, and the Republican Party would suffer even heavier losses in the midterm elections. Resuming military operations, on the other hand, would invite Iranian retaliation, dragging the conflict into an endless spiral. The blockade carries fewer immediate downsides.

The real question is whether Iran will buckle under the pressure – or hit back hard. Judging by the tone of Iranian officials in recent days, the latter seems far more likely.

Iran's fundamental position is non-negotiable: control over the Strait of Hormuz must be maintained at all costs. The Strait is Tehran's trump card against the United States – the decisive factor in this war. Supreme Leader Mojtaba has already issued his directive: the blockade of the Strait must continue. The harder America tightens its grip on Iranian ports, the more fiercely Iran clings to the Strait. With both sides dug in, the prospect of full navigation being restored grows ever more remote.

Trump's "Seven Injury Fist" has wounded more than just Iran – the global economy is hemorrhaging from within. Since the Strait was blockaded, roughly 20 million barrels of oil per day have been cut off from world markets. With no end to the closure in sight, oil prices have surged again in recent days. Brent crude rose 7% today to US$119.50 per barrel – its highest level since June 2022 – completely erasing the earlier declines that followed a temporary ceasefire.

Soaring oil prices are battering every sector of the economy, fueling inflation and driving up interest rates. The International Monetary Fund has already revised its global growth forecast down to 3.1%. Should oil prices remain elevated, that figure could fall further to 2.5%. The World Bank has also warned that energy prices could rise 24% this year, significantly heightening the risk of recession.

Nobel Prize-winning economist Krugman predicts that after Trump's assault, he will have no more cards left to play , and Iran will emerge stronger than before the war, while America is left weakened.

Nobel Prize-winning economist Krugman predicts that after Trump's assault, he will have no more cards left to play , and Iran will emerge stronger than before the war, while America is left weakened.

Trump's recklessness has cost the world dearly, and Nobel Prize-winning economist Krugman is growing increasingly furious. In an article titled "The Oil Crisis Deepens, the World Economy in Peril", Krugman argues that if Persian Gulf oil supplies continue to fall, sufficient "demand destruction" must occur to bring consumption in line with supply. That process, he warns, will inflict enormous economic damage. The outlook, he states, is genuinely alarming.

Krugman attributes this catastrophe squarely to Trump's overweening arrogance. "His fragile sense of self-worth depends on constantly believing that he’s a winner while others are losers," Krugman writes. "Now he’s faced with the reality that he, more or less single-handedly, led America to humiliating strategic defeat."

As for how things might unfold, Krugman poses a pointed question: "How long will it take before Trump accepts the reality that he doesn’t have the cards, that in the end his Iran venture will be resolved in a way that leaves Iran stronger and America weaker than before the war?" At this stage of the US-Iran war, many would argue that Krugman's prediction is no longer a question mark. It looks like an outcome all but certain to come true.

Lai Ting-yiu




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** 博客文章文責自負,不代表本公司立場 **

Washington is making enemies on all fronts and even alienating its own allies. Logically, the United States needs a strong intelligence apparatus right now. But Trump is taking the exact opposite approach. He has dispatched his loyal enforcer, Pulte, to execute a sweeping purge of the intelligence community.

The bloodletting is sending shockwaves through the ranks. It started at the Office of the Director of National Intelligence (ODNI). Now it is spreading to the 18 agencies beneath it. The CIA has long harbored deep tensions with Trump and is unlikely to be spared.

Acting DNI Pulte is Trump's ruthless enforcer. Taking office this week, he instantly launched a sweeping intelligence purge to cut down the president's enemies.

Acting DNI Pulte is Trump's ruthless enforcer. Taking office this week, he instantly launched a sweeping intelligence purge to cut down the president's enemies.

Several members of Congress wrote to Pulte to demand an immediate halt. They warned this political purge will erode America's intelligence capabilities. But those warnings fall on deaf ears. Pulte answers to only one master, making a massacre all but certain.

Pulte is wasting no time sharpening his blade. CNN reports that he officially began work on Monday, a full day ahead of schedule. He immediately convened closed-door meetings with lawyers and aides. After securing a complete roster of ODNI employees, he started cutting. The first casualties were the politically appointed loyalists of former Director Gabbard. By Tuesday, multiple staffers were already leaving the office with boxes in their hands. More dismissals are sure to follow.

Gabbard was originally a "Barbie-type" senior official hand-picked by Trump himself. But she fell out of favor after clashing with her boss over the Iran strikes and internal restructuring. She resigned last month citing her husband's illness.

The reality is she was pushed out. Trump swiftly installed Pulte as the acting DNI for a 210-day term. Pulte previously served as the director of the Federal Housing Finance Agency. This diehard loyalist was brought in for nothing but one obvious reason: to serve as the president's personal enforcer and bring about a massive purge.
The ODNI plays a role of enormous consequence in Washington. The agency serves as the president's intelligence adviser and briefs him on the most sensitive classified information. It coordinates all 18 intelligence agencies under its umbrella and oversees a staggering budget of nearly $100 billion.

Yet, Trump has always harbored deep suspicions about this apparatus. Since taking office, he has suspected that holdovers from the previous administration remain embedded within various agencies. He views these officials as fundamentally disloyal. Rooting them out is Pulte's primary mandate.

True to form, Pulte began slashing before his seat was even warm. CNN indicates he will quickly pivot his attention to the National Counterterrorism Center and the National Counterintelligence and Security Center. He ordered those bodies to submit personnel files on Monday. They are already compiling lists of employees earmarked for dismissal.
Trump sees these agencies as riddled with subversives. Recent events have only reinforced his suspicions. The United States launched military action against Iran in mid-March. Shortly after, National Counterterrorism Center Director Kent abruptly announced his resignation. He released an open letter stating he could not support the war against Iran in good conscience. He further alleged that Israel had pressured the president into the conflict.

Such remarks sent Trump into a furious rage. He is now more driven than ever: thorough cleansing of the intelligence community is clearly long overdue.

Trump's distrust of the CIA runs just as deep and stems from long-standing grievances. A group of CIA officers participated in intelligence assessments related to the "Russia collusion" investigation back in 2016. The president brands these individuals as "deep state" operatives actively working against him.

Some of those officials remain at the agency to this day. They are prime targets in this new purge. It is only a matter of time before Pulte sets his sights on Langley.

Trump and the CIA share a bitter history. The agency is now firmly in Pulte's crosshairs.

Trump and the CIA share a bitter history. The agency is now firmly in Pulte's crosshairs.

Make no mistake: Trump is openly embracing accusations of a political purge. He spoke to the Wall Street Journal just two days ago and described the ODNI as bloated and unnecessary. He boldly declared he wants to see the agency get smaller, adding that many people there simply do not belong.

The president expects Pulte to execute this process immediately. He insists that whoever is eventually nominated to the permanent post must carry on the ruthless work. He views a massive "housecleaning" before a new director arrives as a profoundly good thing. Trump argues there are simply too many intelligence personnel, and he openly welcomes deep personnel cuts.
America's military vulnerabilities were already laid bare by its recent campaign against Iran. Now Trump is gutting the very intelligence services the nation depends on to survive. He is effectively severing his own limbs in a desperate drive to excise the "deep state."

At this destructive rate, the United States will inevitably be exposed as nothing more than a paper tiger.

Lai Ting-yiu

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