Monday, March 21, 2005

Was March 16, 2005 America’s tipping point?

Groundhog Surfaces for Sunlight
Posted by James Wolcott
....I also wanted to write about Stephen Roach's column about the cracks in the ice that forked on March 16th, and why they're so ominous.
"Tipping points are a great concept, but virtually impossible to identify ahead of time -- let alone when they are occurring.  It is only with the great luxury of hindsight that we can look back and know that the proverbial bell has rung.  In my view, March 16, 2005 could end up in the running as a possible tipping point for America.  Suddenly, the US has taken on a very different aura in an increasingly unbalanced world: The confluence of a record current account deficit, a disaster from General Motors, and yet another new high for oil prices all speak of an increasingly precarious role for the global hegemon.  World financial markets have barely begun to sniff that out."
Manufacturing decay, outsourcing of jobs, soaring oil prices, widening trade deficits, shrinking savings--and if that weren't enough, throw in a hefty slice of imperial hubris.
"In the end, of course, there’s far more to this story than economics.  As I noted recently, history is replete with examples of leadership tests that pit a nation’s military prowess against its economic base (see my 28 February dispatch, 'The Pendulum of Global Leadership').  Yale historian Paul Kennedy has long argued that great powers typically fail when military reach outstrips a nation’s economic strength.  In that vein, there’s little doubt that America is extending its reach in this post-9/11 world.  Wars in Afghanistan and Iraq were the opening salvos. The Bush Administration’s recent nomination of two leading neocons to key global positions -- John Bolton as America’s ambassador to the UN and Paul Wolfowitz to head the World Bank (also announced on March 16) -- are more recent examples of a White House that is upping the ante on its 'transformational' projection of global power.  In Paul Kennedy’s historical framework, America is extending its reach at precisely the moment when its economic power base is weakening -- a classic warning sign of the fall of a Great Power. 
"Was March 16, 2005 America’s tipping point?  Only time will tell.  The optimist can hope that it was a wake-up call for a saving-short US economy to put its house back in order.   For once, call me an optimist.  It’s time for America to smell the coffee."
Call me a pessimist, a proud Eeyore, because I don't think America will smell the fine aroma of Gevalia anytime soon, if ever. This country is wearing a blindfold, staggering backwards, and slitting its own throat in slow motion. Watch the cable news, listen to our elected leaders: there's no more urgency about the economic decline in living standards dead ahead than there is about addressing global warming or loosening the chokehold of military spending. A country where "evolution" is becoming a bad word is not a country interested in facing reality. Instead, as the passage of the bankruptcy bill shows, corporate-political power is going to grind every last dollar out of the desperate and destitute rather than confront the difficult macro decisions. The elites in this country have never had it so good, and as long as they're prospering the distress will smothered under the surface, kept under a lid.
"Many Americans have virtually no leeway on their monthly budgets," writes Alexander Cockburn in Counterpunch. "A co-pay on some relatively minor health emergency sends them scrambling to the loanshops. If interest rates start to move upwards many households on flexible mortgage rates will default, and plummet into bankruptcy and debt peonage for the rest of their lives.
"If the current trend among countries such as China, Japan and India to reduce their dollar holdings continues, the dollar's status will plummet, and eventually its role as the world's reserve currency will come to an end. No longer will the Asian nations subsidize America's debt, and in consequence the cost of living for ordinary Americans will start to soar, pushing even more over the edge.
"And as the dollar tumbles, so does one of the keystones of what in the 1950s used to be termed reverently, the American Way of Life, meaning in coarse material terms a civilization that guaranteed its middle class affordable higher education and the decent jobs consequent upon same."
You can kiss that dream goodbye....