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<nettime> The End of Empire - William Greider [text warez, Pit Schultz]

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   The End of Empire - William Greider                                             
   Date: Wed, 18 Sep 2002
     text warez <>                                                      

   The End of Empire - William Greider                                             
   Date: Fri, 20 Sep 2002  
     Pit Schultz <>                                                  


Date: Wed, 18 Sep 2002 21:04:39 +0200 (MEST)
From: text warez <>
Subject: The End of Empire - William Greider

The End of Empire 

# after america fell out off the heaven it had no easy time, 
# only terrorists attacks and sinistre dictators could draw the world 
# attention economy away from a severe chronical trade deficit disorder. 

The imperial ambitions of the Bush Administration, post-
text below


Date: Fri, 20 Sep 2002 03:30:12 +0200
From: Pit Schultz <>
Subject: The End of Empire - William Greider

"All propaganda must be popular and its intellectual level must be adjusted to
the most limited intelligence among those it is addressed to. Consequently,
the greater the mass it is intended to reach, the lower its purely intellectual
level will have to be. But if, as in propaganda for sticking out a war, the aim
is to influence a whole people, we must avoid excessive intellectual demands on
our public, and too much caution cannot be extended in this direction."
Hitler on Propaganda

- --------------------------------------------------------------------------------

The End of Empire


The imperial ambitions of the Bush Administration, post-
9/11, are founded on quicksand and are eventually sure to
founder, but for fundamental reasons not currently under
discussion. Bush's open-ended claims for US power--including
the unilateral right to invade and occupy "failed states" to
execute "regime change"--offend international law and are
prerogatives associated only with empire. But Bush's greater
vulnerability is about money. You can't sustain an empire
from a debtor's weakening position--sooner or later the
creditors pull the plug. That humiliating lesson was learned
by Great Britain early in the last century, and the United
States faces a similar reckoning ahead.

The US financial position is rapidly deteriorating, due
mainly to America's persistent and growing trade deficit. US
ambitions to run the world, in other words, are heavily
mortgaged. Like any debtor who borrows more year after year
with no plausible way to reverse the trend, a nation sinking
deeper into debt enters into an adverse power relationship
with its creditors--greater and greater dependency.

These creditors are both private investors and governments
from Europe and Asia; now none of them have any incentive to
disrupt their lopsided relationship with the superpowerful
leader of the world. After all, it works for them: Their
exports have unfettered access to the largest consumer
market in the world, producing trade surpluses and gaining
greater market share. Their capital, meanwhile, reaps good
returns on the loans and investments in the American
economy. But history suggests that with sufficient
provocation, the creditor nations will eventually assert
their leverage over the United States, however reluctantly.
That critical juncture is likely to arrive either because
the American debt burden has become so great that additional
lending would be too risky or because the creditor nations
want to jerk Washington's chain, perhaps to head off
reckless new adventures. Either way, it will be a humbling
moment for American triumphalism.

No one can know exactly what circumstances will prompt our
old friends to give a sharp elbow to Washington and Wall
Street--that is, refuse to lend more or threaten to withdraw
capital--but US finance is currently getting a small taste
of what it would feel like. Saudi Arabia (not the government
but its wealthy private investors) has pulled as much as
$200 billion out of US financial markets in recent months,
perhaps to diversify holdings but clearly provoked by the
Bush hawks, who are demonizing the Saudis as the "kernel of
evil" behind Islamist terrorism. An investment consultant in
Riyadh told the Financial Times, "People no longer have any
confidence in the US economy or in United States foreign
policy." Extracting $200 billion from US stocks and bonds
may have contributed to the weakening value of the dollar,
but by itself it is not a major blow. If Asian money or
Europe's were to undertake a similar exit, the financial
quake would send damaging tremors through virtually every
dimension of US economic life. If severe and sustained, it
could shut down economic growth and lead to a lower standard
of living.

The threatening implications are seldom discussed with any
clarity or candor, but the numbers are not secret. The US
economy's net foreign indebtedness--the accumulation of two
decades of running larger and larger trade deficits--will
reach nearly 25 percent of US GDP this year, or roughly $2.5
trillion. Fifteen years ago, it was zero. Before America's
net balance of foreign assets turned negative, in 1988, the
United States was a creditor nation itself, investing and
lending vast capital to others, always more than it
borrowed. Now the trend line looks most alarming. If the
deficits persist around the current level of $400 billion a
year or grow larger, the total US indebtedness should reach
$3.5 trillion in three years or so. Within a decade, it
would total 50 percent of GDP. Instead of facing this
darkening prospect, Bush and team regularly dismiss the
worldviews of these creditor nations and lecture them
condescendingly on our superior qualities. Any profligate
debtor who insults his banker is unwise, to put it mildly.

The specter of America's deepening weakness seems counter-
intuitive to what people see and experience in a time of
apparent continuing prosperity--and contradicts everything
they are told by authoritative voices. But the quicksand is
real. We are already in up to our knees.

Deep-running tides of history have been steadily undermining
America's economic hegemony for decades. In the years after
World War II, as Japan, Germany and many other shattered
nations recovered prosperity and acquired world-class
production, the US economic position naturally became
relatively smaller and less dominant. This shift was
achieved in part by America's own self-interested
stewardship, leading the non-Communist world and reviving
global trade, spreading investment capital and technology
through US multinationals and injecting economic demand in
overseas markets with cold war military spending. The
postwar economic order succeeded brilliantly, on the whole,
dispersing economic power more broadly among the leading
industrial nations and causing those nations' economies to
be more intertwined through globalizing finance and
production. Interdependence is not the problem, since it
would provide a healthy foundation for maintaining a
peaceable planet. The problem is that US leadership acts as
though the changes never happened.

Instead of reformulating global governance to share power
and burdens more broadly, a multipolar system that matches
the economic reality, America still acts as if it runs
things--alone. And America pays dearly for the privilege,
both through its bloated military spending and by accepting
the lopsided trade deficits. Both are implicitly regarded in
Washington as the burdens of leadership--defending the world
against terrorism on any frontier, upholding the global
trading system by serving as "buyer of last resort" for
other nations' exports. Our sinking condition as a debtor
nation was not inevitable, in other words, but a function of
hubris--the reluctance among US governing elites to give up
on the past glory and adjust to the new realities.
Dependency might have been averted years ago if US
leadership had awakened fully to the financial implications
and compelled major trading partners to do the same--that
is, to join in adjusting the global trading system so the
United States would no longer carry alone such burgeoning
trade deficits. Under the original terms of the General
Agreement on Tariffs and Trade, for instance, it is legal
for a nation to impose emergency general tariffs to correct
a dangerous financial imbalance flowing from trade.

If the United States took such a provocative step, however,
it would ignite fierce global opposition and also expose
decades of triumphant propaganda. Washington would have to
confess to voters that globalization had become a negative
proposition for the national balance sheet. Above all,
facing reality would require US elites to resign their
inherited role as the singular superpower that runs things--
and begin sharing that power with other nations. Neither
political party wants to face such a painful retreat on its
watch. Besides, for politicians and policy-makers, it feels
good to run the world.

In theory, this problem might still be corrected, but only
in theory, because it is impossible to imagine such a
dramatic policy reversal from Washington without some great
crisis to provoke it. American leadership has instead become
increasingly delusional--I mean that literally--and blind to
the adverse balance of power accumulating against it.
Presidents from both parties (Clinton no less than Bush)
have embraced the notion that additional trade agreements
will eventually solve the US problem by eliminating tariffs
and other trade barriers. We have thirty years of evidence
to prove the contrary. The gap between imports and exports
keeps growing larger right along with each new agreement.

Elite opinion, after years of offering various faulty
explanations for the persistent trade deficits, has now
decided they do not matter. The new conventional wisdom
describes the national economy's indebtedness as unimportant
bookkeeping because the exchange actually benefits all--
foreign capital invests more in the United States, and we
return the favor by buying more of their stuff (and they
lend us the money to do so). In fact, the long-running
"trade wars," in which Washington demanded that Japan, Korea
and others open their markets to American goods, are over--
principally because major US multinationals are no longer
interested in pursuing them. In every sector (save steel and
textiles), the American companies have made peace with their
foreign rivals, joining them through mergers and alliances
or moving production into the foreign markets and
withdrawing from competition. If you are an American
multinational with feet planted in many countries, it may be
true that US indebtedness will have no consequences. But for
homebound citizens, whose fate depends solely on America's
balance sheet, the debt obligations are real.

For their own reasons, the major trading partners are
reluctant to disrupt the status quo. The current arrangement
allows them to have it both ways--gaining a greater share of
markets under the shadow of US hegemony. Privately, they
recognize that the US economic position is steadily ebbing.
But it seems wiser to let the Americans keep their delusions
for now. The space for self-interested maneuvering is much
greater if the United States carries the burdens and costs
alone. Despite occasional whining, Japan and Germany are not
eager to claim a prominent share in global leadership (both
once had a go at running the world and it ended badly). Far
better to prop up the United States financially without
forcing awareness of the shifting power. Their reluctance
resembles the American attitude early in the last century,
when it was the ascendant economic power but did not wish to
become a "Great Power" itself, with responsibility for
maintaining world order. Instead, the United States propped
up Britain for many years as the failing empire sank into
unsustainable debt. British power was fundamentally eclipsed
in 1914, but the United States provided the financial
nurture to keep it upright, as a kind of dummy leader in
world affairs, until after World War II. Washington
decisively pulled the plug in 1956, when Britain (along with
France and Israel) invaded Egypt to capture the nationalized
Suez Canal. It was the last gasp of British colonialism, and
Washington disapproved. By withholding an IMF loan to
London, the United States crashed the pound, forced Britain
to withdraw from war and its prime minister to resign in
disgrace. The Brits were finally relieved of their

It is most unlikely, of course, that the US drama will play
out in a similar way--we are far too big and powerful by
comparison--but Britain's humiliation might serve as a
cautionary tale for power-drunk American statesmen. Other
nations, when they feel their global market power is
sufficiently stronger and we have become still weaker, might
organize a transition of gradual adjustments that allows the
United States to climb down gracefully from its long-held
role. This would be very difficult to accomplish, however,
without a real blow to the US standard of living, not to
mention national pride.

More likely, the United States and the global system are
going to encounter harsh bumps and ugly surprises. Japan,
which has the most to lose if the United States taps out as
"buyer of last resort," suggested privately a few years back
that it would accept a discreet ceiling on its trade
surpluses with the United States--a "managed trade" deal the
free-market Americans rejected on principle. Richard Medley,
a global financial consultant with inside connections in
Tokyo, told me afterward, "One of the Japanese strategies is
to keep us from doing anything rash for the next decade and
a half--until they have become self-sufficient in Asia and
can go along without us."

The European Union, meanwhile, is patiently assembling the
economic girth and institutional confidence to act as the
leading counterpoise to Washington. That is the essential
idea of the euro--a competing world currency other nations
can use for trade and as a reliable storehold of wealth. As
the euro establishes its durability and comes into wider
usage, the dollar will no longer be the only option. At that
point, it will be easier for Europe or others to exercise
their financial leverage against the United States without
damaging themselves or the global financial system as a
whole. Europe is not quite there yet, but the euro is rising
and so is European anger. The Saudis' financial withdrawals
this summer may be a hint of what Americans can expect--
episodes of veiled pressure until Washington gets the

The Bush warriors' reckless American unilateralism can only
hasten the day when the creditors' conclude that they must
assert their leverage over us, perhaps in order to defend
peace and stability in the world. How will Americans react
when they discover that "U-S-A" is a lot less muscular than
they were led to believe? Assuming Americans do not really
yearn to become latter-day Roman legions, many people may be
relieved to learn the truth. Stripped of imperial illusions,
this country could concentrate on building a different, more
promising society at home. But while we can hope that the
transition ahead will be gradual and without national
humiliation, it's more plausible that America's brave new
imperialists will plunge ahead blindly, until one day they
encounter their own intense reckoning with the bookkeepers.


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