Don't misunderstand
According to British commentator Christopher Hitchens, "the US financial crisis is the most recent example of the trend that threatens to put this country on a par with Zimbabwe, Venezuela and Equatorial Guinea." "No!" counterattacks Nicholas Kristof, the influential New York Times columnist: "It is rapacious income inequality that puts the United States on the same level as banana republics like Nicaragua, Venezuela and Guyana." But Russian Prime Minister Vladimir Putin disagrees with both: "The United States is a parasite that lives off the global economy." Meanwhile, far-right Republican presidential pre-candidate Mitt Romney says that the real problem is that "the United States is about to cease being a market economy." For his part, US President Barack Obama wishes that his country had a AAA political system to match its former credit rating.
Following the shameful brinkmanship displayed by all parties involved in the talks on raising the US borrowing ceiling, the downgrading of its credit rating, and its plummeting stock markets, it is all too easy at the moment to conclude that the United States is finished, or at least soon will be.
But such a conclusion would seem to be largely erroneous, however obvious and tempting it may seem.
Firstly, take Wall Street, the Pentagon, Hollywood, Silicon Valley, its university system, and other sources of power, which all remain as solid as ever. The stock exchange has fallen, and there will be budget cuts that will affect the armed forces, but even so, the United States' advantage over its rivals is still so huge that the cuts will not dislodge it from pole position. For example, the country's coastguard has more ships than all those in the world's 12 largest navies. Let us not forget that the US spends more on defense than any other nation, by far. And in other strategic areas, US superiority remains unchallenged.
Secondly, absolute power is not what really counts. What matters is power relative to that of one's rivals. The United States may be declining in terms of absolute power, but its competitors too have their problems, and are facing internal and external political and economic threats.
Thirdly, when the world has succumbed to financial panic and investors are looking for a safe place to put their savings, where do they go? To the United States. When the world's stock markets are in freefall, the appetite for US Treasury Bonds is insatiable. In fact, demand for US bonds was such that their price fell to a new record. No problem. Investors knew that despite the minimal returns, their money would be safe in the US, and that they would be repaid. Surprising, isn't it? We are talking about the same government and the same bonds whose solvency is being seriously questioned. Not even Standard & Poor's lowered credit rating has triggered capital flight.
The world's financial markets clearly do not agree with those who say that the disgraceful wrangling in Washington over debt limits has irreparably damaged US credit ratings. Such arguments sound great in editorials and on radio talk shows, but those who know about money pay them no mind whatsoever. Investors make decisions, they don't talk. And their decisions show that they believe that the United States remains the most secure place on Earth.
Finally, the impact of these radical and destructive ideas will be minimal and transitory. The rise of groups with extremist ideas who suddenly seem to set the political agenda or exercise undue influence has been seen before: they come, and they go, often as quickly as they appeared. It is a common feature of US political life; look at McCarthy, Ross Perot; the Tea Party is no different.
Is the United States facing huge problems? Yes. Is it weakened? Yes. More than other countries? No. Will it continue to be the most powerful country in the world in the foreseeable future? Yes.
