'America's global fall from graceJOHN GRAY
From Wednesday's Globe and Mail
October 1, 2008 at 12:00 AM EDT
Our gaze might be on the markets melting down, but the upheaval we are experiencing is more than a financial crisis, however large. Here is a historic geopolitical shift, in which the balance of power is being altered irrevocably. The era of U.S. global leadership, reaching back to the Second World War, is over.
You can see it in the way the United States' dominion has slipped away in its own backyard, with Venezuelan President Hugo Chavez taunting and ridiculing the superpower with impunity. Yet the setback of U.S. standing at the global level is even more striking. With the nationalization of crucial parts of the financial system, the U.S. free-market creed has self-destructed while countries that retained overall control of markets have been vindicated. In a change as far-reaching in its implications as the fall of the Soviet Union, an entire model of government and the economy has collapsed.
Ever since the end of the Cold War, successive U.S. administrations have lectured other countries on the necessity of sound finance. Indonesia, Thailand, Argentina and several African states endured severe cuts in spending and deep recessions as the price of aid from the International Monetary Fund, which enforced the U.S. orthodoxy. China, in particular, was hectored relentlessly on the weakness of its banking system. But China's success has been based on its consistent contempt for Western advice and it is not Chinese banks that are currently going bust. How symbolic that Chinese astronauts should take a spacewalk while the U.S. Treasury Secretary is on his knees.
Despite incessantly urging other countries to adopt its way of doing business, the United States has always had one economic policy for itself and another for the rest of the world. Throughout the years in which the United States was punishing countries that departed from fiscal prudence, it was borrowing on a colossal scale to finance tax cuts and fund its overstretched military commitments. Now, with federal finances critically dependent on continuing large inflows of foreign capital, it will be the countries that spurned the U.S. model of capitalism that will shape the United States' economic future.
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The Globe and Mail
Whichever version of the bailout of U.S. financial institutions cobbled together by Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke is finally adopted is less important than what the bailout means for the U.S. position in the world. The populist rant about greedy banks that is being loudly ventilated in Congress is a distraction from the true causes of the crisis. The dire condition of U.S. financial markets is the result of U.S. banks operating in a free-for-all environment that these same legislators created. It is the U.S. political class that, by embracing the dangerously simplistic ideology of deregulation, has responsibility for the present mess.'
You can see it in the way the United States' dominion has slipped away in its own backyard, with Venezuelan President Hugo Chavez taunting and ridiculing the superpower with impunity. Yet the setback of U.S. standing at the global level is even more striking. With the nationalization of crucial parts of the financial system, the U.S. free-market creed has self-destructed while countries that retained overall control of markets have been vindicated. In a change as far-reaching in its implications as the fall of the Soviet Union, an entire model of government and the economy has collapsed.
Ever since the end of the Cold War, successive U.S. administrations have lectured other countries on the necessity of sound finance. Indonesia, Thailand, Argentina and several African states endured severe cuts in spending and deep recessions as the price of aid from the International Monetary Fund, which enforced the U.S. orthodoxy. China, in particular, was hectored relentlessly on the weakness of its banking system. But China's success has been based on its consistent contempt for Western advice and it is not Chinese banks that are currently going bust. How symbolic that Chinese astronauts should take a spacewalk while the U.S. Treasury Secretary is on his knees.
Despite incessantly urging other countries to adopt its way of doing business, the United States has always had one economic policy for itself and another for the rest of the world. Throughout the years in which the United States was punishing countries that departed from fiscal prudence, it was borrowing on a colossal scale to finance tax cuts and fund its overstretched military commitments. Now, with federal finances critically dependent on continuing large inflows of foreign capital, it will be the countries that spurned the U.S. model of capitalism that will shape the United States' economic future.
Related Articles
Recent
* Finger-pointing begins
* Financial tremors rattle emerging powers
* The rescue package: What now?
* Bailout plan failure raises spectre of U.S. recession
The Globe and Mail
Whichever version of the bailout of U.S. financial institutions cobbled together by Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke is finally adopted is less important than what the bailout means for the U.S. position in the world. The populist rant about greedy banks that is being loudly ventilated in Congress is a distraction from the true causes of the crisis. The dire condition of U.S. financial markets is the result of U.S. banks operating in a free-for-all environment that these same legislators created. It is the U.S. political class that, by embracing the dangerously simplistic ideology of deregulation, has responsibility for the present mess.'
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