http://www.independent.co.uk/opinion/commentators/rupert-cornwell-the-worlds=
-lone-superpower-is-on-the-wane-797757.html
Wednesday, 19 March 2008
Even now, here in the US, if you turn off the radio or television
blaring the latest news of financial apocalypse, you can pretend that
it's still business as usual.
Incredibly, those unsolicited loan and credit card offers continue to
pop through the letterbox, offering the American dream on the never-
never. Do you feel it's time for that oft-postponed home improvement,
or that richly deserved holiday you've been putting off? Or are you
simply having trouble getting credit? Just call this number and within
15 minutes a qualified officer can approve a loan of $30,000 for you,
interest free for the first three months.
Of course, what sounds to be too good to be true, is. But you used to
have to wade through the fine print on the back to discover that. Now
you just turn the TV back on.
To say so out loud would be an offence against American optimism, but
the unspoken truth is that the good old days are gone, probably for a
very long while. Like its predecessors, this particular financial
meltdown has brought fear verging on panic. The difference, however,
is that it is destroying not only wealth. It is also destroying
illusions.
The US has long inhabited a world of make-believe - of a war that
demands no sacrifice, of a consumer boom that demands no payment, of a
power and prosperity that seemed America's birthright, whatever events
in the real world. Now those fantasies are yielding to the truism
coined by Herb Stein, a top White House economic adviser in the 1970s.
If something can't go on for ever, it won't.
You have to be in your 80s to have a real memory of the 1929 crash and
its devastating consequences. Today, however, the spectre of the Great
Depression is everywhere - and not just because the housing market
bust which provoked the current crisis is the most severe since the
Depression. As for George W Bush, he now jostles at the bottom of the
league table of American presidents, not only with Richard Nixon, but
Herbert Hoover as well.
In a sense, Bush's misbegotten war in Iraq and today's financial
earthquake complement each other. Both are evidence of how the world's
lone superpower is losing its dominance. Iraq has shown the limits of
American military power. The limits of US economic power are visible
in the tumbling dollar (now looked on askance even in countries where
it recently served as a second currency) and in the inflation to which
the dollar's decline contributes.
Ultimately, great powers are brought down not by military defeat, but
by economic weakness. Take, for example, Tibet. Once Wa****ngton might
have kicked up a serious economic fuss - but not when China is the
biggest US creditor, and when a major bond market sell order by
Beijing could send US monetary policy reeling.
Paradoxically, if China did want to retaliate in that fa****on, the
most powerful argument for it not doing so is the Bear Stearns
argument, that the ruin of USA Inc. would bring the ruin of the global
economy, China included.
But even if the US is "too big to fail," this wrenching crisis will
have huge consequences nonetheless. A backlash against the moguls of
Wall Street - so greedy in good times, so quick to plead for the
state's safety net in bad ones - is already starting. The tide of
deregulation will be reversed, and government, so often branded the
enemy, will again be regarded as a friend. Financial mayhem, in other
words, will hasten the leftward ****ft in America's politics. But here,
too, comforting illusions are being stripped away.
For a while at least, the gripping 2008 election campaign is a side-
show, an exercise in make-believe. While politicians claim credit for
economic prosperity, in reality, as everyone knows, they have scant
influence on matters. Rarely, however, has the sham been as brutally
exposed as now. Take the competing Clinton and Obama healthcare plans,
costing $120bn (=A359bn), or $150bn, depending on the expert you
believe. But, assuming one of them is elected, where will the money
come from? Either sum is dwarfed by the $200bn-plus line of credit the
Federal Reserve has already extended to Wall Street, with goodness
knows how much more to follow, courtesy ultimately of the US taxpayer.
On the Republican side, John McCain inhabits a similar fantasy land.
In its current cir***stances, can the US really continue to spend
$12bn a month on a war that has already cost $600bn - when even that
sum may pale beside the federal bailout of Wall Street and subprime
mortgages? Engagingly, McCain admits that economics is not his strong
suit. But even he understands that, just as with those loan offers
still arriving on the doorstep, sooner or later the piper must be paid.
|
