Overextended hegemon, of course, which preceded the fall of every previous empire.
First, nice of the rest of the world to pamper us so. Begs the question, though, as to why they would do it.
Second, one reason I think this situation is possible is the USD has served as global reserve currency, propping up the value of the dollar. Any other currency would have fallen through the floor by now, the overconsuming nation forced to raise interest rates to attract foreign funds flow, which would in time (via recession and declining living standards) correct the over-consumption. But since we print the world's reserve currency, we can get away with it (the dollar trades in permissible ranges, interest rates stay low, citizens, corporations, and government gets to over-consume).
Right now, with all the financial chaos, the dollar has strengthened significantly (resulting in falling interest rates). In times of panic and trouble funds flow from abroad into Treasury bonds as a safe haven, a security that, given the full faith and backing of the U.S. government (and the 12-14 trillion dollar economy that stands behind it), will never default. But to buy treasuries, you have to first sell your euros and pounds and yen for U.S. dollars, and that steady and at times rising demand props up the dollar. We don't have to jack up our interest rates compared to the rest of the world to attract the funds that finance our various deficits (in fact our rates are discounted compared to most of the world). So we can get away with it (overconsumption).
An important aspect of this dollar hegemony is oil. Most of the world's oil is sold in dollars. As above, to buy a barrel of oil you have to sell your euro or pound or yen for dollars before transacting with the supplying nation. This, too, is a countervailing force versus the weakening force represented by over-consumption. We get away with it.
Part of the reason we get away with it is our federal government, rather than invest in internal infrastructure, education, and universal healthcare, instead spends astronomical sums on the "security state" -- both to impose order on the rest of the world via tremendous military might (from nuclear weaponry to counter-insurgency torture techniques), and internally via COINTELPRO-like propaganda and disruptive operations that quell and contain all true dissent. The net result is, at least for the 20% of Americans at the top of our society (and especially the top 1%), they get to consume far more value than they create. By force and subterfuge, of course, but most choose to remain blissfully unaware of the immoral means (awareness is hard to come by considering the constant propagandizing blather that spews forth daily from our major media).
(Note that Hussein started trading Iraqi oil in Euros in late 2000...)
USG foreign policy is in major part about punishing those that show signs of opting out of neo-liberal arrangements that benefit (primarily) this "owning class" at the top (this the legacy of Nitze, Kennan, et alia). We don't invade Panama, escort a leader out of Haiti at gunpoint, mine the harbors of Nicaragua, or march into Baghdad because anyone in the know perceives them, in themselves, to be a genuine threat. It's all about crushing the example of alternate models. The capitalist says Greed is Good in one breath and whispers apathy is better in the next -- all the more easy to exploit those when they have no hope for a better future! We've spent the last 50 years crushing hope and extorting behavior conducive to preserving the privileged position of the well- positioned few.
The US has about 50% of the world’s wealth but only 6.3% of its population. In this situation we cannot fail to be the object of envy and resentment. Our real task in the coming period is to devise a pattern of relationships which will permit us to maintain this position of disparity without positive detriment to our national security. To do so, we will have to dispense with all sentimentality and day-dreaming, and our attention will have to be concentrated everywhere on our immediate national objectives.
We need not deceive ourselves that we can afford the luxury of altruism and world benefaction. We should cease talks about such vague and unreal objectives as human rights and raising of living standards and democratization. The day is not far off when we are going to have to deal in straight power concepts. The less we are then hampered by idealistic slogans, the better.
--- George Kennan, PPS 23, 1948
Bush's greed and incompetence has resulted in some unraveling of this status quo paid for in blood and treasure; how far it unwinds remains to be seen. But, since our government long ago devolved into a system that extorts tremendous costs from a swindled public in order to give benefit to a well-positioned few, most of the pain to be experienced during the coming Great Unwinding will be born by us, Joe Sixpack and the Hockey Mom's, who blissfully will swoon to the next demagogue who points fingers at everything but the real cause. Meanwhile the privileged class fly to Fiji for the holidays...
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