Ali’s blog

Mostly quant stuff with occasional digressions

The collapse of American power

Posted by alifinmath on March 23, 2008

A nice article by Paul Craig Roberts here:

A troubled currency and financial system and large budget and trade deficits do not present an attractive face to creditors. Yet Washington in its hubris seems to believe that the US can forever rely on the Chinese, Japanese and Saudis to finance America’s life beyond its means. Imagine the shock when the day arrives that a US Treasury auction of new debt instruments is not fully subscribed.

The fact of the matter is that the US is bankrupt. David M. Walker, Comptroller General of the US and head of the Government Accountability Office, in his December 17, 2007, report to the US Congress on the financial statements of the US government noted that “the federal government did not maintain effective internal control over financial reporting (including safeguarding assets) and compliance with significant laws and regulations as of September 30, 2007.” In everyday language, the US government cannot pass an audit.

Noam Chomsky recently wrote that America thinks that it owns the world. That is definitely the view of the neoconized Bush administration. But the fact of the matter is that the US owes the world. The US “superpower” cannot even finance its own domestic operations, much less its gratuitous wars except via the kindness of foreigners to lend it money that cannot be repaid.

The US will never repay the loans. The American economy has been devastated by offshoring, by foreign competition, and by the importation of foreigners on work visas, while it holds to a free trade ideology that benefits corporate fat cats and shareholders at the expense of American labor. The dollar is failing in its role as reserve currency and will soon be abandoned.

We’ve heard it before. Doesn’t make it any less true, though. The mass media puts people like Roberts and Buchanan at one end of an imaginary spectrum and people like Nader and Chomsky at the other. Yet on many issues — foreign policy, militarism, empire, domestic economy, labor — they speak with virtually one voice.

I suppose it’s a novel experience to be living in an empire in its twilight days. A bit like the Austro-Hungarian empire  (or the Ottoman empire) in 1913. Or the Soviet Union in 1990. It feels a bit like being in a plane that has just entered a storm, and we as passengers are beginning to sense the turbulence and feel our stomachs going queasy.

Empire hasn’t suited the United States, and its politicians and officials have had to dissemble continuously to hide from its people what the country has become, what the real motives are behind foreign policy and military actions, and how it’s perceived abroad. The country today is hardly the USA of Whitman, Emerson, and Twain.


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