This is actually from an article written at the end of January. I’m a wee bit behind in reading things other than school. Sorry.
The article is an overview of the US economy’s current state and potential crises that it might face in the coming year. It ends with the below two paragraphs.
Part of me wants to laugh because part of me thinks it would be funny to see the US lose its economic hegemony. It’s bound to happen sooner or later, at least at the rate that things are going. I remember my high school history teacher saying how no one wanted to talk about the problems of idebtedness to other nations, that if things kept going the way they were (in the late ’90s) that eventually the US would essentially be owned by other countries. Well, it’s pretty much happened. If China, Japan or Europe decided to pull its backing of US debt, the country would be in serious trouble.
As for the level of debt, I knew that it was at unprecedented levels, but what I didn’t know was that it’s coupled with a zero-level of savings amongst consumers. In other words, the average person in the US is in debt up to his ears, and has virtually no money in the bank.
Now, I’m not economist, but that can’t be a good thing.
Meanwhile, we have Bush telling everyone just to keep spending. Remember how after 9/11–I think it was in his speech to the joint-session of Congress–he told everyone to go out and spend? Essentially pretend that nothing had happened. Initially it was maybe a good thing: keep the economy going. We’ve just been hit with something that potentially could have ground the economy to a halt, so let’s try to keep consumer confedence high. Fair enough.
But then he went and started two wars and started cutting taxes.
So the government kept spending, just like it was telling the rest of the population, but the government was getting less money. So the government has to go further and further into debt, just like the rest of the population.
I know I’m not the only one who thinks that this is obviously a bad idea.
Anyway, these concluding paragraphs are from the section on oil. I think that they speak for themselves. And it’s interesting, given an article that I read not too long ago (although I forget where) that suggested that in the next decade or two, there was a good chance that the world would see the rise of India, Brazil and China as global powers. China is the obvious one, of course, but don’t forget how many people live in India or how much Brazil’s economy has been booming.
The drive for resources is occurring in a world where alliances are shifting among major oil-producing and consuming nations. A kind of post-Cold War global lineup against perceived American hegemony seems to be in the earliest stages of formation, possibly including Brazil, China, India, Iran, Russia and Venezuela. Russian President Putin’s riposte to an American strategy of building up its military presence in some of the former SSRs of the old Soviet Union has been to ally the Russian and Iranian oil industries, organize large-scale joint war games with the Chinese military, and work towards the goal of opening up the shortest, cheapest, and potentially most lucrative new oil route of all, southwards out of the Caspian Sea area to Iran. In the meantime, the European Union is now negotiating to drop its ban on arms shipments to China (much to the publicly expressed chagrin of the Pentagon). Russia has also offered a stake in its recently nationalized Yukos, (a leading, pro-Western Russian oil company forced into bankruptcy by the Putin government) to China.
In a one-superpower world, this is pretty brazen behavior by all concerned, but it is symptomatic of a growing perception of the United States as a declining, overstretched giant, albeit one with the capacity to strike out lethally if wounded. American military and economic dominance may still be the central fact of world affairs, but the limits of this primacy are becoming ever more evident — something reflected in the dollar’s precipitous descent on foreign exchange markets. It all makes for a very challenging backdrop to the rest of 2005. Keep an eye out. Perhaps this will indeed be the year when longstanding problems for the United States finally do boil over, but don’t expect Washington to accept the dispersal of its economic and military power lightly.