Newsweek: An Empire at Risk

[marmar]

An Empire at Risk
We won the cold war and weathered 9/11. But now economic weakness is endangering our global power.

By Niall Ferguson | NEWSWEEK
Published Nov 28, 2009


Call it the fractal geometry of fiscal crisis. If you fly across the Atlantic on a clear day, you can look down and see the same phenomenon but on four entirely different scales. At one extreme there is tiny Iceland. Then there is little Ireland, followed by medium-size Britain. They're all a good deal smaller than the mighty United States. But in each case the economic crisis has taken the same form: a massive banking crisis, followed by an equally massive fiscal crisis as the government stepped in to bail out the private financial system.

Size matters, of course. For the smaller countries, the financial losses arising from this crisis are a great deal larger in relation to their gross domestic product than they are for the United States. Yet the stakes are higher in the American case. In the great scheme of things—let's be frank—it does not matter much if Iceland teeters on the brink of fiscal collapse, or Ireland, for that matter. The locals suffer, but the world goes on much as usual.

But if the United States succumbs to a fiscal crisis, as an increasing number of economic experts fear it may, then the entire balance of global economic power could shift. Military experts talk as if the president's decision about whether to send an additional 40,000 troops to Afghanistan is a make-or-break moment. In reality, his indecision about the deficit could matter much more for the country's long-term national security. Call the United States what you like—superpower, hegemon, or empire—but its ability to manage its finances is closely tied to its ability to remain the predominant global military power. Here's why.

The disciples of John Maynard Keynes argue that increasing the federal debt by roughly a third was necessary to avoid Depression 2.0. Well, maybe, though some would say the benefits of fiscal stimulus have been oversold and that the magic multiplier (which is supposed to transform $1 of government spending into a lot more than $1 of aggregate demand) is trivially small. ........(more)

The complete piece is at: http://www.newsweek.com/id/224694

[dkf]

1. This is what worries me...

"In other words, there is no end in sight to the borrowing binge. Unless entitlements are cut or taxes are raised, there will never be another balanced budget. Let's assume I live another 30 years and follow my grandfathers to the grave at about 75. By 2039, when I shuffle off this mortal coil, the federal debt held by the public will have reached 91 percent of GDP, according to the CBO's extended baseline projections. Nothing to worry about, retort -deficit-loving economists like Paul Krugman. In 1945, the figure was 113 percent.

Well, let's leave aside the likely huge differences between the United States in 1945 and in 2039. Consider the simple fact that under the CBO's alternative (i.e., more pessimistic) fiscal scenario, the debt could hit 215 percent by 2039. That's right: more than double the annual output of the entire U.S. economy."

Sigh.

[Strelnikov_]

4. Cut the military we must. Raise taxes we must.

We can eliminate 2/3rds (probably 3/4+) of the military budget and still maintain a military that can provide a more than adequate defense. The 2/3 (3/4) we dump is what is needed to maintain empire. That is, be the cop for the global financial elite.

Most of the military budget is manpower. Let's get some benefit from the 'wonder weapons'. Dump the carriers, dump a good part of the standing military, maintain reserves and equipment stockpiles for an 'Army'. With subs, cruise missiles and 'smart' bombs no one will be successfully crossing the pond.

[dkf]

6. Can't cut the military until we free ourselves from oil

Why do you think they are out all over the place? To preserve our access to oil. aka The Great Game.

[Strelnikov_]

2. "United States succumbs . . . as an increasing number of economic experts fear it may,"

That does not sound good. I don't think I want that for Christmas.

[lxlxlxl]

3. oh god its nf...

will read it later, but he's pretty predictable

[SoCalDem]

5. We neither "won", nor "weathered"

The cold war ended with a whimper because it was just time for it to end.. We spent ourselves into the poor house for military junk we did not need, and never would dare to use..all to scare the USSR into doing the same, impoverishing both superpowers...for decades to come.

China huffed & puffed, but mostly sat on its ass, laughed at the USSR and the US rattling those sabers as we each shoved money down rat-holes.

We did not weather 9-11.. we gave unlimited power to our very own Caligula/Nero clones in the White House, and went on our merry way, shopping ourselves into mindless oblivion.

We willingly consented to be searched, whiffed, stripped shoeless..to have our belongings rooted through, our conversations listened in on, our emails read..cameras monitor our every move.

We cannot be "made safe". We made Osama into a giant bogeyman, instead of the weirdo criminal he really is.

If we had weathered 9-11, there would be a NEW WTC , along with a nice memorial park, instead of a big empty hole 9 years later. We would not have wasted bazillions of dollars creating more redundant agencies & departments.

Heads should have rolled at the Pentagon, the FAA, and Immigration.. Rice should have been FIRED, as well as Rummy..

Osama won.. we crashed our own economy, made our own travel nearly impossible to tolerate, we created more bureaucracy, when we already probably had too much..and the ones we had, obviously did not do their jobs very well, we managed to "lose" a major US city under water, and 5 years later, it's still in ruins, except for the Disneyfied parts.

While we're running around playing global whack-a-mole, the rest of the world has moved on..

[BeFree]

7. heh

We will spend billions in other countries fighting poor people to stop them from flying in our country.

Meanwhile we spend billions right here at home making sure the rich bankers are allowed to keep flying and keep taking money from poor Americans.

If ever there was a plan to ruin our country: this is it.