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Big_Bird
Joined: 31 Jan 2003
Location: Sometimes here sometimes there...
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 Posted: Sat Sep 27, 2008 5:30 pm Post subject: A shattering moment in America's fall from power |
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This is a dire prediction.
A shattering moment in America's fall from power
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| The global financial crisis will see the US falter in the same way the Soviet Union did when the Berlin Wall came down. The era of American dominance is over |
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Our gaze might be on the markets melting down, but the upheaval we are experiencing is more than a financial crisis, however large. Here is a historic geopolitical shift, in which the balance of power in the world is being altered irrevocably. The era of American global leadership, reaching back to the Second World War, is over.
You can see it in the way America's dominion has slipped away in its own backyard, with Venezuelan President Hugo Ch�vez taunting and ridiculing the superpower with impunity. Yet the setback of America's standing at the global level is even more striking. With the nationalisation of crucial parts of the financial system, the American free-market creed has self-destructed while countries that retained overall control of markets have been vindicated. In a change as far-reaching in its implications as the fall of the Soviet Union, an entire model of government and the economy has collapsed.
Ever since the end of the Cold War, successive American administrations have lectured other countries on the necessity of sound finance. Indonesia, Thailand, Argentina and several African states endured severe cuts in spending and deep recessions as the price of aid from the International Monetary Fund, which enforced the American orthodoxy. China in particular was hectored relentlessly on the weakness of its banking system. But China's success has been based on its consistent contempt for Western advice and it is not Chinese banks that are currently going bust. How symbolic yesterday that Chinese astronauts take a spacewalk while the US Treasury Secretary is on his knees.
Despite incessantly urging other countries to adopt its way of doing business, America has always had one economic policy for itself and another for the rest of the world. Throughout the years in which the US was punishing countries that departed from fiscal prudence, it was borrowing on a colossal scale to finance tax cuts and fund its over-stretched military commitments. Now, with federal finances critically dependent on continuing large inflows of foreign capital, it will be the countries that spurned the American model of capitalism that will shape America's economic future.
Which version of the bail out of American financial institutions cobbled up by Treasury Secretary Hank Paulson and Federal Reserve chairman Ben Bernanke is finally adopted is less important than what the bail out means for America's position in the world. The populist rant about greedy banks that is being loudly ventilated in Congress is a distraction from the true causes of the crisis. The dire condition of America's financial markets is the result of American banks operating in a free-for-all environment that these same American legislators created. It is America's political class that, by embracing the dangerously simplistic ideology of deregulation, has responsibility for the present mess.
In present circumstances, an unprecedented expansion of government is the only means of averting a market catastrophe. The consequence, however, will be that America will be even more starkly dependent on the world's new rising powers. The federal government is racking up even larger borrowings, which its creditors may rightly fear will never be repaid. It may well be tempted to inflate these debts away in a surge of inflation that would leave foreign investors with hefty losses. In these circumstances, will the governments of countries that buy large quantities of American bonds, China, the Gulf States and Russia, for example, be ready to continue supporting the dollar's role as the world's reserve currency? Or will these countries see this as an opportunity to tilt the balance of economic power further in their favour? Either way, the control of events is no longer in American hands.
The fate of empires is very often sealed by the interaction of war and debt. That was true of the British Empire, whose finances deteriorated from the First World War onwards, and of the Soviet Union. Defeat in Afghanistan and the economic burden of trying to respond to Reagan's technically flawed but politically extremely effective Star Wars programme were vital factors in triggering the Soviet collapse. Despite its insistent exceptionalism, America is no different. The Iraq War and the credit bubble have fatally undermined America's economic primacy. The US will continue to be the world's largest economy for a while longer, but it will be the new rising powers that, once the crisis is over, buy up what remains intact in the wreckage of America's financial system.
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This article rather reminds me of a paper I once read that examined 3rd world countries that had conformed to US economic prescriptions, and those that had not. Those that didn't did a hell of a lot better than the recieved wisdom of the time would have it. Often far better, in fact.
I've never believed US dominance would carry over into the 22nd Century, but I didn't expect/want to see it evaporate too soon. I went to live in China in 2001 to take a look at the country hailed (at that time) as the world's next superpower, and it rather confirmed that I was happier with the status quo. I hope the writer of the article is being a little over-dramatic. |
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Kuros
Joined: 27 Apr 2004
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| Posted: Sat Sep 27, 2008 5:49 pm Post subject: |
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The world has more of a stake in Bretton Woods (although less perhaps in Bretton II) than it did in the Soviet empire.
This is a massive paradigm shift; in that sense our situation is similar to 20 years ago.
Its too early to tell how the US will respond to this situation. I'll better be able to give a long-term prognosis on November 5th, 2008. |
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Big_Bird
Joined: 31 Jan 2003
Location: Sometimes here sometimes there...
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| Posted: Sat Sep 27, 2008 5:51 pm Post subject: |
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| Kuros wrote: |
| Its too early to tell how the US will respond to this situation. I'll better be able to give a long-term prognosis on November 5th, 2008. |
I'm guessing that's election day in the US?
Britain certainly has a lot at stake. I hope the UK is not royally f***ed by it all. |
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Ya-ta Boy
Joined: 16 Jan 2003
Location: Established in 1994
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| Posted: Sat Sep 27, 2008 6:23 pm Post subject: |
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(Nov. 5th is the day after Election Day)
While the financial crisis is certainly a major problem, it is not necessarily the end of America. There is a whiff of wishful thinking in the article above. Nothing lasts forever, but the beginning of this crisis is a little too early to be making projections about the future. It isn't the absence of problems that make great states, it's how the state deals with the problems it confronts that makes it great.
As Twain said, "The reports of my death are greatly exaggerated". |
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Gatsby
Joined: 09 Feb 2007
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| Posted: Sat Sep 27, 2008 7:04 pm Post subject: |
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If America didn't have 10 trillion dollars of national debt on the books, and if America hadn't invaded Iraq on false pretenses, and if America hadn't polluted the world's economy with junk home mortgage derivatives, it would still be the most powerful nation on Earth.
But it did, and it isn't, anymore.
America has dug itself into a pretty deep hole, one that extends more than halfway to China. Can we dig our way out? Sure, if we have the will and good leadership, and are willing to acknowledge how bad things are.
I think Obama has the potential to be a good leader. But he is not leveling about how bad things are, which I think is a mistake, giving up an opportunity to show some FDR type leadership and hope. Why isn't he? There is little sign the majority of Americans have the will to make the major changes that would be required.
Most Americans seem to want things to stay the same or to roll back the clock 50 years. That's what the last three Presidential elections have been about, and what Reagan's campaigns were about: trying to recapture the illusion of an America that's gone with the wind.
It's over. |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Sat Sep 27, 2008 8:12 pm Post subject: |
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| The empire is done, shortly. America will be fine. You don't need to dominate the world to be wealthy and healthy. |
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Ya-ta Boy
Joined: 16 Jan 2003
Location: Established in 1994
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| Posted: Sat Sep 27, 2008 8:40 pm Post subject: |
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| Nature abhors a vaccuum. |
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NAVFC
Joined: 10 May 2006
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| Posted: Sat Sep 27, 2008 8:46 pm Post subject: |
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| you people are utterly deluding yourself if you really believe that the US has fallen from power. |
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canuckistan
Mod Team
Joined: 17 Jun 2003
Location: Training future GS competitors.....
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| Posted: Sat Sep 27, 2008 8:47 pm Post subject: |
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Re: Hugo Chavez's ridiculing the US with impunity--a bit of a ridiculous claim.
Castro used to make ridiculing the US his breakfast, lunch and dinner before dialing it down in his later years. The US has always been a favorite meal of leftists. Chavez is just continuing the tradition.
It seems people's memories are quite short these days.
Last edited by canuckistan on Sat Sep 27, 2008 8:47 pm; edited 1 time in total |
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NAVFC
Joined: 10 May 2006
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| Posted: Sat Sep 27, 2008 8:47 pm Post subject: |
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| Gatsby wrote: |
If America didn't have 10 trillion dollars of national debt on the books, and if America hadn't invaded Iraq on false pretenses, and if America hadn't polluted the world's economy with junk home mortgage derivatives, it would still be the most powerful nation on Earth.
But it did, and it isn't, anymore.
America has dug itself into a pretty deep hole, one that extends more than halfway to China. Can we dig our way out? Sure, if we have the will and good leadership, and are willing to acknowledge how bad things are.
I think Obama has the potential to be a good leader. But he is not leveling about how bad things are, which I think is a mistake, giving up an opportunity to show some FDR type leadership and hope. Why isn't he? There is little sign the majority of Americans have the will to make the major changes that would be required.
Most Americans seem to want things to stay the same or to roll back the clock 50 years. That's what the last three Presidential elections have been about, and what Reagan's campaigns were about: trying to recapture the illusion of an America that's gone with the wind.
It's over. |
Yes, we still are #1. Sorry to burst your bubble. |
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Gopher
Joined: 04 Jun 2005
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| Posted: Sat Sep 27, 2008 8:49 pm Post subject: |
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| NAVFC wrote: |
| you people are utterly deluding yourself if you really believe that the US has fallen from power. |
Welcome to the internet. You get to assert your will, wield power, and create your very own reality with a press of a button. Dress it up with some flashy, propagandist words such as "empire" and "done..." and voila. |
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Joo Rip Gwa Rhhee
Joined: 25 May 2003
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| Posted: Sat Sep 27, 2008 9:09 pm Post subject: |
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If the US can get the price of oil down. All US economic problems are solved.
Will China be no 1 in the world? Three words: One Child policy. |
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Kuros
Joined: 27 Apr 2004
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| Posted: Sat Sep 27, 2008 9:37 pm Post subject: |
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| Joo Rip Gwa Rhhee wrote: |
If the US can get the price of oil down. All US economic problems are solved.
Will China be no 1 in the world? Three words: One Child policy. |
Plus,
Environmental problems, non-performing loans, massive civil unrest, a miniscule navy and air force, and a form of government that has no satisfactory built-in mechanism for reform.
Democracies have built-in mechanisms for reform.
But China's autocracy does allow it to be more fiscally responsible than democracies. But that's a slight advantage given autocracy's other limits. |
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Privateer
Joined: 31 Aug 2005
Location: Easy Street.
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| Posted: Sat Sep 27, 2008 10:46 pm Post subject: |
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| The US has far too many advantages over the rest of the world to "fall from power". It might be rocked a little by the crisis but no more. |
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Ya-ta Boy
Joined: 16 Jan 2003
Location: Established in 1994
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| Posted: Sat Sep 27, 2008 11:13 pm Post subject: |
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| The empire is done, shortly. |
Without buying into your empire idea, let's say the US does pull back militarily. That means certain other countries will have to pay the full cost of their own defense.
One example to think about: The US decides to save a few billion by withdrawing all naval presence from South and East Asia. Who, if anyone, will patrol the sea routes from Dubai to Singapore to Japan? |
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