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March 1, 2005
The Last Waltz?
The Coming End of the American Superpower
By PAUL CRAIG ROBERTS
Paul Craig Roberts was Assistant Secretary of the Treasury in the Reagan administration. He was Associate Editor of the Wall Street Journal editorial page and Contributing Editor of National Review.
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The US economy is headed toward crisis, and the political leadership of the country--if it can be called leadership--is preoccupied with nonexistent weapons of mass destruction in the Middle East.
The US economy is failing. The afflictions are serious. They could be fatal even if diagnosed and treated. America is losing the purchasing power of its currency and its ability to create middle class jobs.
Oblivious to reality, the Bush administration has proposed a Social Security privatization that will cost $4.5 trillion in borrowing over the next 10 years alone! America has no domestic savings to absorb this debt, and foreigners will not lend such enormous sums to a country with a collapsing currency--especially a country mired in a Middle East war running up hundreds of billions of dollars in war debt.
A venal and self-important Washington establishment combined with a globalized corporate mentality have brought an end to America's rising living standards. America's days as a superpower are rapidly coming to an end. Isolated by the nationalistic unilateralism of the neoconservatives who control the Bush administration, the US can expect no sympathy or help from former allies and rising new powers.
http://www.counterpunch.org/roberts03012005.html
An Economy Dancing With Disaster
Sunday, February 27, 2005
Washington Post
All it took was a vague suggestion by Korea's central bank last Tuesday that it would keep less of its holdings in dollar-denominated assets to send tremors through global financial markets. The Dow Jones industrial average fell 174 points, the dollar gave up half of its recent gains, and oil prices spiked to $51 a barrel.
On one side are the nations of Asia, along with Canada, Mexico and oil-producing countries everywhere. Their lopsided economies are growing nicely these days, but only because of over-reliance on selling clothing, electronics, autos and auto parts, oil and natural gas to the United States -- and then lending the extra dollars they earn back to this country so Americans can afford to buy those goods. In other cases, foreigners have invested their export dollars in U.S. stocks, helping to prop up the stock market, or U.S. commercial real estate, where a bubble has developed in such places as New York and Washington.
At some point, however, those foreigners -- individuals as well as central banks -- are apt to worry about the size and vulnerability of their dollar holdings. All it would take would be a decision for enough of those foreign entities simply to cut back on new loans and investments and the whole arrangement would begin to come unraveled. The dollar would decline, interest rates and prices would rise, and economies would slow both here and abroad.
The question isn't whether all these things will happen, only when and how fast. It remains possible, even probable, that things could unwind slowly, over many years. But they could also unwind with the speed and rush-to-the-exits panic that characterize all financial crises. Certainly last week's jitters were a reminder of just how nervous markets have become about the size of those imbalances and the risks they pose for the global economy.
http://www.washingtonpost.com/wp-dyn/articles/A55219-20 ...
The Last Waltz?
The Coming End of the American Superpower
By PAUL CRAIG ROBERTS
Paul Craig Roberts was Assistant Secretary of the Treasury in the Reagan administration. He was Associate Editor of the Wall Street Journal editorial page and Contributing Editor of National Review.
----------------------------------------------------------------
The US economy is headed toward crisis, and the political leadership of the country--if it can be called leadership--is preoccupied with nonexistent weapons of mass destruction in the Middle East.
The US economy is failing. The afflictions are serious. They could be fatal even if diagnosed and treated. America is losing the purchasing power of its currency and its ability to create middle class jobs.
Oblivious to reality, the Bush administration has proposed a Social Security privatization that will cost $4.5 trillion in borrowing over the next 10 years alone! America has no domestic savings to absorb this debt, and foreigners will not lend such enormous sums to a country with a collapsing currency--especially a country mired in a Middle East war running up hundreds of billions of dollars in war debt.
A venal and self-important Washington establishment combined with a globalized corporate mentality have brought an end to America's rising living standards. America's days as a superpower are rapidly coming to an end. Isolated by the nationalistic unilateralism of the neoconservatives who control the Bush administration, the US can expect no sympathy or help from former allies and rising new powers.
http://www.counterpunch.org/roberts03012005.html
An Economy Dancing With Disaster
Sunday, February 27, 2005
Washington Post
All it took was a vague suggestion by Korea's central bank last Tuesday that it would keep less of its holdings in dollar-denominated assets to send tremors through global financial markets. The Dow Jones industrial average fell 174 points, the dollar gave up half of its recent gains, and oil prices spiked to $51 a barrel.
On one side are the nations of Asia, along with Canada, Mexico and oil-producing countries everywhere. Their lopsided economies are growing nicely these days, but only because of over-reliance on selling clothing, electronics, autos and auto parts, oil and natural gas to the United States -- and then lending the extra dollars they earn back to this country so Americans can afford to buy those goods. In other cases, foreigners have invested their export dollars in U.S. stocks, helping to prop up the stock market, or U.S. commercial real estate, where a bubble has developed in such places as New York and Washington.
At some point, however, those foreigners -- individuals as well as central banks -- are apt to worry about the size and vulnerability of their dollar holdings. All it would take would be a decision for enough of those foreign entities simply to cut back on new loans and investments and the whole arrangement would begin to come unraveled. The dollar would decline, interest rates and prices would rise, and economies would slow both here and abroad.
The question isn't whether all these things will happen, only when and how fast. It remains possible, even probable, that things could unwind slowly, over many years. But they could also unwind with the speed and rush-to-the-exits panic that characterize all financial crises. Certainly last week's jitters were a reminder of just how nervous markets have become about the size of those imbalances and the risks they pose for the global economy.
http://www.washingtonpost.com/wp-dyn/articles/A55219-20 ...
