The Gulf: What's That Cracking Noise?

Thanks to Saddam, a credit crunch could squeeze the world economy

After all the gloomy forecasts, all the frenzied selling of the first few days, the mood of the world's financial markets brightened a bit last week -- from near hysteria to mere anxiety. War could still erupt in the Persian Gulf; oil prices could remain relatively high. Yet for the moment it appears that ahead lies not a global depression of historic proportions but an old- fashioned recession -- painful, though probably not fatal. Saddam Hussein's oil shock has not destroyed the foundations of the world economy, but it has exposed serious weaknesses in the beams.

Even the most pessimistic forecasters...

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