San Diego Housing Market News and Analysis
America Loses Its Dominant Economic Role
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Submitted by SD Transplant on October 1, 2008 - 8:31am
Unfortunately/Fortunately, the MM over the pond sees things clearly and accurately. We're too distracted by political campaing here, and only a big bailout mess turns American's attentions (piggs not included) to what's important. The overly used pharase "it's the economy stupid" hasn't been more important.
"The banking crisis is upending American dominance of the financial markets and world politics. The industrialized countries are sliding into recession, the era of turbo-capitalism is coming to an end and US military might is ebbing. Still, this is no time to gloat.
There are days when all it takes is a single speech to illustrate the decline of a world power. A face can speak volumes, as can the speaker's tone of voice, the speech itself or the audience's reaction. Kings and queens have clung to the past before and humiliated themselves in public, but this time it was merely a United States president.
Or what is left of him.
George W. Bush has grown old, erratic and rosy in the eight years of his presidency. Little remains of his combativeness or his enthusiasm for physical fitness. On this sunny Tuesday morning in New York, even his hair seemed messy and unkempt, his blue suit a little baggy around the shoulders, as Bush stepped onto the stage, for the eighth time, at the United Nations General Assembly......
"Well," Brazilian President Luiz Inacio "Lula" da Silva began, standing outside the General Assembly Hall. Then he looked out the window and said: "He decided to talk about terrorism, but the issue that has the world concerned is the economic crisis." Cristina Fernández de Kirchner, the president of Argentina, said that the schoolmasters from Washington had dubbed the 1994 Mexican crisis the "tequila effect" and Brazil's 1999 crisis the "Caipirinha effect."
Is it only President George W. Bush, the lame duck president, whom the rest of the world is no longer taking seriously, or are the remaining 191 UN member states already setting their sights on the United States, the giant brought to its knees? UN Secretary General Ban Ki Moon referred to a "new reality" and "new centers of power and leadership in Asia, Latin America and across the newly developed world." Are they surprised, in these new centers, at the fall of America, of the system of the Western-style market economy?
"The partnership with the United States," the chancellor insisted again and again, "has a very special meaning for us Germans."
There was no mention of loyalty and friendship last Monday. Merkel stood in the glass-roofed entrance hall of one of the German parliament's office buildings in Berlin and prepared her audience of roughly 1,000 businesspeople from all across Germany for the foreseeable consequences of the financial crisis. It was a speech filled with concealed accusations and dark warnings.
Merkel talked about a "distribution of risk at everyone's expense" and the consequences for the "economic situation in the coming months and possibly even years." Most of all, she made it clear who she considers the true culprit behind the current plight. "The German government pointed out the problems early on," said the chancellor, whose proposals to impose tighter international market controls failed repeatedly because of US opposition. "Some things can be done at the national level," she said, "but most things have to be handled internationally."
Merkel had never publicly criticized the United States this harshly and unapologetically. In this regard, she enjoys the wholehearted support of her coalition government partner, the center-left Social Democrats (SPD). In a speech before Germany's parliament, the Bundestag, Finance Minister Peer Steinbrück of the SPD spoke of the end of the United States as a "superpower of the global financial system."
The banking crisis in the United States has shaken many things in recent days, not just the chancellor's affection for America and the respect the rest of the world once had for the US as an economic and political superpower. Since the US investment bank Lehman Brothers plummeted into bankruptcy two weeks ago, the financial crisis has developed a destructive force of almost unimaginable strength. The proud US investment banks with globally recognized names like Merrill Lynch and Goldman Sachs have all gone bankrupt, been bought up or restructured. The American real estate market has essentially been nationalized. And the country's biggest savings and loan, Washington Mutual, has failed and been sold at a loss.
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