"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
John Gray The Observer, Sunday September 28 2008
John Gray is the author of Black Mass: Apocalyptic Religion and the Death of Utopia (Allen Lane)
http://www.guardian.co.uk/commentisfree/2008/sep/28/usforeignpolicy.useconomicgrowth/print
"The irony of the post-Cold War period is that the fall of communism was followed by the rise of another utopian ideology. In American and Britain, and to a lesser extent other Western countries, a type of market fundamentalism became the guiding philosophy. The collapse of American power that is underway is the predictable upshot. Like the Soviet collapse, it will have large geopolitical repercussions. An enfeebled economy cannot support America's over-extended military commitments for much longer. Retrenchment is inevitable and it is unlikely to be gradual or well planned... The fate of empires is very often sealed by the interaction of war and debt. ... 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...
Outside the US, most people have long accepted that the development of new economies that goes with globalisation will undermine America's central position in the world. They imagined that this would be a change in America's comparative standing, taking place incrementally over several decades or generations. Today, that looks an increasingly unrealistic assumption...
Having created the conditions that produced history's biggest bubble, America's political leaders appear unable to grasp the magnitude of the dangers the country now faces. Mired in their rancorous culture wars and squabbling among themselves, they seem oblivious to the fact that American global leadership is fast ebbing away. A new world is coming into being almost unnoticed, where America is only one of several great powers, facing an uncertain future it can no longer shape."
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Comments: 16
If we understand and accept the fact, we might get through this without destroying ourselves. If, on the other hand, we try to bully our way through this, we might very well get humiliated in a very destructive war.
I agree with you. What Gray does not suggest is that the US could reverse it's course if the people choose to. The diifferent regions and states are being forced to deal with problems and seek solutions that the federal government won't .
It seems to me that history is rife with examples of partisanship being the main factor in this equation.
Perhaps Gray is naive or clueless: the culture wars and partisanship seems to this American "real" enough, but essentially a "dog and pony" show for both parties are more interested in their survival than in informing or serving the nation.
If there is one thing Democrats are wrong about, it is being against free trade at a time like this.
New technology is advancing exponentially. The old economy is dead, and Congress is run by clueless lawyers.
The technology we need to develop was often started here, as in the 70's, but then developed elsewhere : the US government was against it. We know what needs to be done.
There is a sensible proposal by J K Galbraith I suggest you look into :
"A bailout we don't need"
http://www.washingtonpost.com/wp-dyn/content/article/2008/09/24/AR2008092403033_pf.html
"If the 1960s were about raising baby boomers and the '90s about technology, what should the '10s and '20s be about? It's obvious: energy and climate change. That's where the present great unmet needs are.
So, let's use the next few years to plan, mapping out a program of energy conservation, reconstruction and renewable power. Let's get the public sector and the universities working on it. And let's prepare the private sector so that when the credit crunch finally ends, we'll have the firms, the labs, the standards and the talent in place, ready to go.
Some will ask if we can afford it. To see the answer, don't look at budget projections. Just look at interest rates. Last week, in the panic, the federal government could fund itself, short term, for free. It could have raised money for 30 years and paid less than 4 percent. That's far less than it cost back in 2000.
No country in this situation is broke, or insolvent, or even in much trouble. For once, Wall Street's own markets speak the truth. The financially challenged customer isn't Uncle Sam. He's up on Wall Street, where deregulation, greed and fraud ran wild."
I was reading about a time traveler who said that future generations became displeased with this generation because we had it all and blew it. He said that by 2015 we would be divided into five areas, with five different leaders.
He may not have really been a time traveler, but he also may not have been too far off the beaten track. We have seen this so many times in history, countries becoming divided. Do we ever learn from previous mistakes?
A mentor of mine, George Kennan ( who created our Cold War policy of containment in 1947 ,when he was our ambassador to Moscow) recommended more than 25 years ago that the United States should be divided into five regions because the centralized government in Washington wasn't able to govern.
"Without a Bailout Plan, What Will the Cost Be?"
JUSTIN FOX - TIME
(This piece captures the reality: bailout or no bailout we are going to pay. The market lost $1.5 trillion today, twice the bill. Once credit contractions start they gather momentum, and have dire consequences. )
By voting down the proposed $700 billion financial bailout package - and causing a spectacular stock market rout - a majority of members in the House of Representatives made a clear statement that they didn't want to put taxpayers on the hook for the failures of financial institutions.
But there's a catch: taxpayers are already on the hook for the failures of financial institutions, and it's possible that the bill will actually be larger without bailout legislation than with it. That's because the regulators who mind the financial industry - the Federal Reserve, Treasury and FDIC - will keep doing what they've been doing: stepping in to prevent the chaotic failure of banks and other large financial institutions. This means continuing to put hundreds of billions of taxpayer dollars at risk, but in a way that adheres to no clear plan of action and doesn't require members of Congress to explicitly approve their actions.
On Monday afternoon, Wall Street basically stopped trading to watch TV - mainly CNBC - to see how the House of Representatives would vote on the $700 billion bailout package. When it first started looking like the bill would fail, the Dow plummeted 389 points, or 3.6%, in just seven minutes. If it had continued at that pace for much longer, this would have been perhaps the most harrowing day in stock market history. It didn't, but things were still really, really bad. The Dow ended the day down 778 points, or 7%, and the S&P 500 - a better measure of the overall market - was down 107 points, or 8.8%, its worst performance since the 1987 market crash. And markets for bonds and short-term loans were, for the most part, nonexistent.
So what happens now? On Capitol Hill, House leaders said they'll try again soon. Treasury Secretary Henry Paulson practically begged for a revised deal in his brief appearance after the market carnage. "Our tool kit is substantial but insufficient," he said. The market's traumatized reaction today may change some minds and some votes.
In asking Congress 11 days ago for the authority to spend up to $700 billion to buy troubled assets, Paulson and Fed Chairman Ben Bernanke were hoping to share some of the responsibility and the blame - and get the freedom to boost companies that weren't already on the brink of failure. Instead, they're back to being crisis managers for the moment - and maybe for the duration of the crisis.
That's not all bad, especially now that most of the endangered financial institutions are commercial banks. The Federal Government has clearly defined that authorities take them over, merge them out of existence or shut them down - whereas it had to make things up as it went along with investment banks Bear Stearns and Lehman Brothers and insurer AIG. That's why the demise of giant banks Washington Mutual and Wachovia, arranged over the past week by the FDIC, occurred in a far more orderly fashion than the non-bank meltdowns.
But orderly isn't the same as cheap. To get Citigroup to absorb Wachovia, the FDIC agreed to share the risk on a $312 billion portfolio of loans (Citi has to eat the first $42 billion in potential losses; anything above that hits the FDIC fund).
Also, the fact that every big FDIC deal so far in this crisis has been different - IndyMac was allowed to fail, with only insured deposits safe; WaMu was seized, but all depositors were protected; and Wachovia was sold in a deal that protected both depositors and owners of the company's bonds but left shareholders with very little - has left investors guessing about the fate of the rest of the banking world. Hardest hit in today's market sell-off were regional banks like Sovereign Bancorp and National City, perhaps because they seem too small to get special FDIC treatment.
Federal authorities are going to keep doing whatever they can to keep the financial system from collapsing. Taxpayers will bear the risks and the costs of that, whether Congress votes to put them there or not. And it's possible - although nobody can know for sure - that this ad hoc approach will end up costing more than an up-front $700 billion bailout.
http://www.time.com/time/nation/article/0,8599,1845609,00.html?cnn=yes
After watching as much "news" from differing sources as I could handle (stomach) I have come to the conclusion that all we get is differing lies anyway ... everyone is spinning and twisting things to make their own private cases ...
Suzi Ormon (sp) was all over CNN in a panic almost shouting out wide eyed scare stories (she is the one that got my wife all excited) which makes me think that she must have lost a bundle herself ... and she is really mad about it ... claiming as the author of the above article did how so much was lost today ... as if it were REAL money and not just Paper transactions ... as if it would never recover at all ... it is the stock market after all ... a business of speculation and gambling ...
I could care less if a bunch of multi-billionaire gamblers had a bad day ... if it causes me to have a bad year or more but ends up being a better world for it, then bring it on ...
The public will always pay for it all in the end anyway ... I am fine with the super rich paying their share ... there has already been too much of a long history of them making excessive profits when things go well and us bailing them out when it turns around ... what a world ... geesh! Piss on them all !!!