Where To From Here?

(9:00PM EST – promoted by Nightprowlkitty)

Jeffrey Lieber asks this morning: “What Will Become Of My Beautiful America?“. I started to write a comment to Jeffrey’s essay, but it rapidly grew beyond reasonable limits for a comment and became this essay and the quote for discussion below.

I don’t think America’s really going anywhere, or even collapsing as many people fear.

I think that the “empire” of the imperialists may collapse, the political power structures may collapse, and maybe even the “system” that all us old hippies tried so hard in the sixties and seventies to undermine many even collapse, but America?

America is an idea. It’s not the banks or the investment houses or the insurance companies or the weapons manufacturers or the political parties, or any of that stuff. America is an idea. An idea and a set of ideals held by hundreds of millions of people. Can that idea and those ideals collapse?

There is an article this morning in the International Herald Tribune by David Leonhardt that may in fact “herald” the future  of America on the “international” stage, an article that talks of a potential “silver lining” in the dark clouds of despair and pessimism that make up the psychic weather in the dark sky so many are afraid is falling lately.

One of the things that happens though when thunderstorms peter out is that the sun begins to shine again in clear skies, and Leonhardt’s article this morning offers a glimpse of some rays of sunshine shining through some as yet unnoticed breaks in the clouds…

Here are a few quotes from his article to hopefully spark some discussion of what the uphill run of this roller coaster could look like after we barrel through the bottom of the hill…

A power that may not stay so super

AT the turn of the 20th century, toward the end of a brutal and surprisingly difficult victory in the Second Boer War, the people of Britain began to contemplate the possibility that theirs was a nation in decline. They worried that London’s big financial sector was draining resources from the industrial economy and wondered whether Britain’s schools were inadequate. In 1905, a new book – a fictional history, set in the year 2005 – appeared under the title, “The Decline and Fall of the British Empire.”

The crisis of confidence led to a sharp political reaction. In the 1906 election, the Liberals ousted the Conservatives in a landslide and ushered in an era of reform. But it did not stave off a slide from economic or political prominence. Within four decades, a much larger country, across an ocean to the west, would clearly supplant Britain as the world’s dominant power.

The United States of today and Britain of 1905 are certainly more different than they are similar. Yet the financial shocks of the past several weeks – coming on top of an already weak economy and an unpopular war – have created their own crisis of national confidence.

[snip…]

Whereas Britain lumbered under the weight of imperial overreach, as the historian Niall Ferguson has written, the United States will be shackled primarily by its financial overreach.

“Given the burden of debt that has accumulated, it’s hard to see the U.S. economy growing as fast as it did over the past few decades,” Ferguson said. “There is a profound mood shift occurring.”

But he added two caveats. The political language of both presidential campaigns makes clear that many voters, for all the current pessimism, still believe in the idea of American pre-eminence. So, apparently, do many of the world’s investors.

In recent weeks, the dollar has held its own. Stocks in every other major country are down about as much over the last year as they are in the United States, if not much more. America may not be a safe haven anymore, but it does seem to be safer haven.

Robert Zoellick, the president of the World Bank, said that he was recently speaking to a senior Chinese economist, who said that people in his home country – today’s rising economic power – don’t see the sky falling on the American economy. “They know its ability to turn around problems is really unmatched, historically,” Zoellick said, quoting the economist about the United States. “At the same time, they ask themselves, Will the United States get at some of the root causes that could determine its real strength over the next 10 or 20 or 30 years?”

This is not the first time in recent history that the economic position of the United States has appeared precarious. At various points between the mid-1970s and early 1990s, Europe and Japan each looked like the next great power. Neither turned out to be.

Japan suffered through its own burst bubble and spent years denying the depth of its problems. Europe proved unable to create engines of growth that could match the software, biotechnology or entertainment industries in the United States.

Taken to its extreme, the American preference for a faster, riskier capitalism led directly to the current crisis. But that preference also helps explain why America is weathering the crisis at least as well as other countries.

18 comments

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    • Edger on October 12, 2008 at 8:19 pm
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    Down but not out? Or roll over and give up?

  1. … version of a Jubilee. Firms go bankrupt, taking their obligations with them, monoline “insurers” go out of business, taking their obligations with them … lots of companies die, taking their debt with them.

    And for enterprises in the productive sector, leaving their real assets behind.

    Being a Financial Capitalist event, it of course causes far more pain and suffering to ordinary people than a real Jubilee, but then feudalism has rarely ridden easily on ordinary people, and there’s never been any reason to expect corporate feudalism to be any different.

    So, I disagree with David Leonhardt on:

    Whereas Britain lumbered under the weight of imperial overreach, as the historian Niall Ferguson has written, the United States will be shackled primarily by its financial overreach.

    Indeed, the British Empire was originally an endeavor in consolidating a balance of payments surplus in the face of things like the depressing financial consequences of the corresponding deficit in South Asia. It was Imperial Overstretch as the UK held onto bits and pieces of the Empire even as they became more of an economic drag than an economic boon.

    However, the American Base-Network Empire has been a deficit-spending enterprise from the outset. The economic rationale of the post WWII Military Industrial Complex was to avoid the global recessionary impact of a sustained US trade surplus at the same time as providing for a strong employment economy in the US without recourse to the New Deal mechanisms of the government fulfilling its obligations as Employer of Last Resort.

    This was not economic insanity in 1946 or 1956 or even 1966 … but given US Peak Oil in 1968, the first Oil Price Shock and the entrenching of a trade deficit position it was increasingly out of touch with economic reality by 1976 (as shown by the collapse of the Bretton Woods system and the floating of the US$) … and after the Second Oil Price Shock, the explosive growth of imported value added in the Auto industry, the collapses in the US Steel Industry, the beginning of the hollowing out of the Middle Income Classes, it was clearly economic insanity by 1986.

    We can refrain from noticing the actual overstretch in the US Base Network, but we cannot indefinitely evade the economic impact of the Imperial Overstretch.

    Indeed, we can fix what needs to be fixed with the finance sector … it will be a painful year and a half as we do so, but it can be done. However, if we do not get the twin structural trade deficits under control … the overseas expenses of “our” Base Network and our structural dependence on imported Energy … sooner or later it will just break again.

  2. as a defunct empire, and is their lot an indicator of our future.  Well frequently stories about the assholians of Orwell total surveillance and their Satanic obsessions about the most anal of control over society come out of England.  Being a long time watcher of New World Order sites I can state this is a trend.  

    I still see the current “crisis” as a manufactured one specifically designed to re-allocate world energy usage.  Big Al Gore and his “green scam” didn’t produce results fast enough.

    Watch as we go from this.

    http://apod.nasa.gov/apod/ap97

    To something more like this.

    http://www.globalsecurity.org/

  3. Maybe we can tell the greed heads to STFU and listen instead to the wisdom of the people who lived here first. listen to the Grandmother’s and obliterate the notion that Mother Earth can be owned by a human being. Now I sound like a hippie too. 😉

    • banger on October 13, 2008 at 3:32 am

    I suspect fragmentation will continue as will the trends towards a weird form of feudalism. It’s plain people are cast adrift in a profoundly corrupt system. Where will they go for safety, law, meaning and regularity?

    The key may be the MSM. How will they generally react?–so far it has been to spread general confusion and misinformation. Will increasing number of people move away from the TV? Seems unlikely since TV is so highly addictive and substitutes for real community among those who bought into the lifestyle of fantasy. There is a remote possibility that the MSM will be out front in demanding a solution to the current economic crisis that actually helps people and society–if that happens we will have a major and profound change. If not I suspect we will have a very rough time–stick to family and friends and make alliances with powerful people and your immediate community.  

  4. . . . there’s no particular reason why that set needs to be wedded permanently to the North American continent or embodied forever by the United States.  There was a time when “England” or “Holland” meant roughly what “America” is supposed to mean today–the safe haven from tyranny and reactionary anti-intellectualism.  Those same countries, or some others, might (once again) become the new “America” if the United States doesn’t make a serious and squeaking U-turn, and very soon, in most of its public policies.  But to answer your direct question, I have to plead “insufficient data at the present time to make a prediction.”  One can predict pretty confidently by now that Obama will be the next president, but I think it’s what happens after Obama that will make the permanent difference, one way or the other.

  5. The initial Bush proposals to deal with the crisis so reeked of totalitarianism that they were quickly modified. Under intense lobbyist pressure, they were reshaped as “a clear win for the largest institutions in the system . . . a way of dumping assets without having to fail or close”, as described by James Rickards, who negotiated the federal bailout for the hedge fund Long Term Capital Management in 1998, reminding us that we are treading familiar turf. The immediate origins of the current meltdown lie in the collapse of the housing bubble supervised by Federal Reserve chairman Alan Greenspan, which sustained the struggling economy through the Bush years by debt-based consumer spending along with borrowing from abroad. But the roots are deeper. In part they lie in the triumph of financial liberalisation in the past 30 years – that is, freeing the markets as much as possible from government regulation.

    These steps predictably increased the frequency and depth of severe reversals, which now threaten to bring about the worst crisis since the Great Depression.

    Also predictably, the narrow sectors that reaped enormous profits from liberalisation are calling for massive state intervention to rescue collapsing financial institutions.

    Such interventionism is a regular feature of state capitalism, though the scale today is unusual. A study by international economists Winfried Ruigrok and Rob van Tulder 15 years ago found that at least 20 companies in the Fortune 100 would not have survived if they had not been saved by their respective governments, and that many of the rest gained substantially by demanding that governments “socialise their losses,” as in today’s taxpayer-financed bailout. Such government intervention “has been the rule rather than the exception over the past two centuries”, they conclude.

    John Maynard Keynes, the British negotiator, considered the most important achievement of Bretton Woods to be the establishment of the right of governments to restrict capital movement.

    In dramatic contrast, in the neoliberal phase after the breakdown of the Bretton Woods system in the 1970s, the US treasury now regards free capital mobility as a “fundamental right”, unlike such alleged “rights” as those guaranteed by the Universal Declaration of Human Rights: health, education, decent employment, security and other rights that the Reagan and Bush administrations have dismissed as “letters to Santa Claus”, “preposterous”, mere “myths”.

    link

  6. Jeffery leiber writes that America saved his grandmother from capture and detention. It makes absolutely no historical sense though. I don’t believe it’s true at all. I don’t believe he can logically explain how is grandmother immigrated to the United States at the end of World War II presumably from France, since France was occupied entirely by Germany until it’s liberation and there were no Visa exchanges going on for anyone, especially Jewish people….

    But neither does this sappy diary buttressed about America as an “idea” make any sense.

    What does that mean, that America is an “idea”. It doesn’t mean anything but it sounds vaguely poetic.

    America is a nation, like all other nations in history. It lives and then it dies. There is nothing special about America as far as it’s life’s span goes. It’s going to cease.

    The American citizen is indoctrinated to believe that there is something special about America. The Oligarchy that controls the country feels the same way. There is something special about THEM….they are better, more evolved, more intelligent  by virtue of their wealth than anyone else.

    Americans typically imagine themselves to be better than people who live in “3rd world” countries and most all nations for that matters. They don’t admit it to themselves consciously…it’s so embedded in their conciousness that they are not even aware of it. They DENY it. It’s not true. And it will be denied by these diarists who show it in their writing which is filled with sentimentality about “America”.

    This is a nation made up of people who are not exceptional in any way from any other people. The people live and the people die and so do nations.

    The unspoken, unwritten history of America is drastically different from the school book version.

    It’s a history of a nation that is cold.

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