The colossus is stumbling. In the geo-strategic, economic, political and diplomatic arena, the United States is rapidly losing power and goodwill. Is this the beginning of the end of the American dream?
Sometimes, just a glance at the cast of characters can decide the fate of the play unfolding in front of your eyes. Consider the following: It is 1945 and you are a bewildered global citizen staring at the debris of the Second World War. Europe, Japan, Korea & China are devastated ruins. Yet, there is hope. For the United States has emerged as the colossus replacing two centuries of British imperial rule. The doughty Harry Truman is the American President. His man for Europe is General George Marshall – of the now immortal Marshall Plan that rebuilt and resurrected Europe. His man for Japan is General Douglas McArthur, the Gaijin who won the hearts and minds of shattered Japanese people. Helping Truman is the towering British Prime Minister Winston Churchill. Helping them are Hollywood superstars like Humphrey Bogart, Grace Kelly, Clark Gable and Audrey Hepburn who helped America project soft power like no power ever in history had done. That was the American era.
It is 2005 and you are a global citizen bewildered at
how Afghanistan, Iraq & Palestine have been decimated and destroyed. Eisenhower is long gone and leading America is a man who cannot even be a pale shadow of great American presidents – the Texan cowboy George Bush. His man in Iraq is not Marshall, but Paul Bremer, the man who annihilated Iraqi hopes of survival. His man in Afghanistan is not McArthur, but Hamid Karzai, a man who cannot step out even onto Kabul streets without being surrounded by American bodyguards. Helping Bush is Tony Blair. Fittingly, Bush too is projecting soft power, with the likes of Michael Jackson, Britney Spears and Paris Hilton.
More than 50 years after America accepted the daunting challenge of leading and guiding the free world, the magic has worn off, the sheen has vanished and the mighty superpower is now almost akin to the emperor without clothes. Says Brent Snowcroft, former American Secretary of State in an exclusive chat with B&E, “There are new kinds of actors and we’re feeling our way as to how to deal with them. Indeed, we don’t influence what happens in the world to the extent we used to do in Carter and Regan era.” Joseph Nye, the Dean of John F. Kennedy School of Government is even blunter when he says, “Success in the war on terrorism depends on Washington’s capacity to persuade others without force, and that capacity is in dangerous decline. The US has become so unpopular that being pro-American is a kiss of death in other countries’ domestic politics.” It is not just in geo-strategic arena that America is vulnerable and on tenterhooks. Even on economic front, the magic of American capitalism seems to be waning. The economy is recording unprecedented trade and fiscal deficits, deficits that simply cannot be sustained. China has about $1 trillion forex in dollar currency notes; Japan holds more than $ 750 billion; India
Bailouts may lead to total collapse
What is your outlook on US economy and US housing? Now we are exiting the era of cheap money as central banks across the globe are going into a contraction mode. This has some serious implications on the housing sector which has kept the US economy afloat, till now. Banks pursuit to keep inflation in check has seen a slump in housing, adversely affecting consumer spending and economic growth. Now housing prices have started cooling down in the US and banks now have to make a choice. In essence, what I wish to express is simply that bailing out some rotten financial institutions (I guess all of them are) with monetary measures is far from certain to succeed and – most importantly – such bailouts may lead down the road to a total collapse of the US economic and social system.
So what, according to you, is going to be the future course of action for the central bank in the US? Is there any way out of this dilemma? Once housing weakens in earnest, which it has, and other asset markets such as the Dow Jones decline by about 10% from their highs, the US central bank will continue to reduce interest rates in giant steps and print money to support the economy. This will eventually lead to a collapse of the US Dollar and in bond prices, and will pave the way for an imminent recession amidst high inflation.
For Complete IIPM Article, Click on IIPM Article
Source : IIPM Editorial, 2008
Sometimes, just a glance at the cast of characters can decide the fate of the play unfolding in front of your eyes. Consider the following: It is 1945 and you are a bewildered global citizen staring at the debris of the Second World War. Europe, Japan, Korea & China are devastated ruins. Yet, there is hope. For the United States has emerged as the colossus replacing two centuries of British imperial rule. The doughty Harry Truman is the American President. His man for Europe is General George Marshall – of the now immortal Marshall Plan that rebuilt and resurrected Europe. His man for Japan is General Douglas McArthur, the Gaijin who won the hearts and minds of shattered Japanese people. Helping Truman is the towering British Prime Minister Winston Churchill. Helping them are Hollywood superstars like Humphrey Bogart, Grace Kelly, Clark Gable and Audrey Hepburn who helped America project soft power like no power ever in history had done. That was the American era.
It is 2005 and you are a global citizen bewildered at
how Afghanistan, Iraq & Palestine have been decimated and destroyed. Eisenhower is long gone and leading America is a man who cannot even be a pale shadow of great American presidents – the Texan cowboy George Bush. His man in Iraq is not Marshall, but Paul Bremer, the man who annihilated Iraqi hopes of survival. His man in Afghanistan is not McArthur, but Hamid Karzai, a man who cannot step out even onto Kabul streets without being surrounded by American bodyguards. Helping Bush is Tony Blair. Fittingly, Bush too is projecting soft power, with the likes of Michael Jackson, Britney Spears and Paris Hilton.More than 50 years after America accepted the daunting challenge of leading and guiding the free world, the magic has worn off, the sheen has vanished and the mighty superpower is now almost akin to the emperor without clothes. Says Brent Snowcroft, former American Secretary of State in an exclusive chat with B&E, “There are new kinds of actors and we’re feeling our way as to how to deal with them. Indeed, we don’t influence what happens in the world to the extent we used to do in Carter and Regan era.” Joseph Nye, the Dean of John F. Kennedy School of Government is even blunter when he says, “Success in the war on terrorism depends on Washington’s capacity to persuade others without force, and that capacity is in dangerous decline. The US has become so unpopular that being pro-American is a kiss of death in other countries’ domestic politics.” It is not just in geo-strategic arena that America is vulnerable and on tenterhooks. Even on economic front, the magic of American capitalism seems to be waning. The economy is recording unprecedented trade and fiscal deficits, deficits that simply cannot be sustained. China has about $1 trillion forex in dollar currency notes; Japan holds more than $ 750 billion; India
Bailouts may lead to total collapse
What is your outlook on US economy and US housing? Now we are exiting the era of cheap money as central banks across the globe are going into a contraction mode. This has some serious implications on the housing sector which has kept the US economy afloat, till now. Banks pursuit to keep inflation in check has seen a slump in housing, adversely affecting consumer spending and economic growth. Now housing prices have started cooling down in the US and banks now have to make a choice. In essence, what I wish to express is simply that bailing out some rotten financial institutions (I guess all of them are) with monetary measures is far from certain to succeed and – most importantly – such bailouts may lead down the road to a total collapse of the US economic and social system.
So what, according to you, is going to be the future course of action for the central bank in the US? Is there any way out of this dilemma? Once housing weakens in earnest, which it has, and other asset markets such as the Dow Jones decline by about 10% from their highs, the US central bank will continue to reduce interest rates in giant steps and print money to support the economy. This will eventually lead to a collapse of the US Dollar and in bond prices, and will pave the way for an imminent recession amidst high inflation.
For Complete IIPM Article, Click on IIPM Article
Source : IIPM Editorial, 2008
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