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US overextended? Consequences and concerns

We're The Great Old Ones Now

11:29 / 09.09.03

Bush wants $87bn for Iraq.

The request would raise the cost of the Iraq war to the US to $150bn, dwarfing the $9bn US contribution to the first 1991 Gulf war, and pushing the country's budget deficit beyond half a trillion dollars.

The US is in deep debt to itself, and arguably faces a future crisis in pensions and medicare when Baby Boomers start to retire. (Story at CNN). (Story at Financial Review). The London Financial Times recently began an editorial on the Bush administration's budget as follows:

President George W. Bush’s compendious US federal budget for 2004 went on sale in government bookstores yesterday. Too bad they do not have a fiction department to put it in. (Via WSWS).

Can the rest of the world sustain the consequences of a collapse of the US's balloon? Consider the possibility that there are many, many more sub-Enron situations, where companies inflate their revenues and conceal their debts - even in ways which are legal. It might be appealing to sit back and anticipate a time when the total domination so beloved of the Project of the New American Century becomes a ghastly overreach and overspend - certainly, howevermuch one admires America, the present administration makes it a little harder to love - but the reality is potentially diastrous.

Does anyone know if there's work being done on a world after a US financial collapse? The breakdown of China is freely considered, I know that, but the almost-ludicrous notion of a US forced retreat from Hyperpower status hasn't crossed my path much.

Pros, cons, consequences, and any reading matter anyone feels relevant.

13:13 / 09.09.03

A pro, obviously, is that all those evil fuckers running things over there won't have the cash to go killing all the foreigners they're so scared of. The look on their faces would be worth the global chaos alone. I sort of think that this explains why the UN/EU is now being so 'immature' as I think I heard one US source put it. It seems like very wise geopol to me, make the competition wear itself out on hugely costly and unpopular wars, then in ten fifteen years find yourself on top of the pile. sorted. we'd much rather have the french in charge you know. second best cheeses.

13:24 / 09.09.03

I'm not aware of any work being done on this, but then I haven't been looking...

It might be the case that (as has happened with similar cases in the past) the realisation that overextension has occurred lags behind the actual overextension - that perceptions of the US as hyperpower are longer-lasting than its actual status as such (though what exactly would determine its being downgraded to a superpower I am not sure). I imagine it wouldn't happen all at once, anyway.

One con might be that, without the threat posed by the US, lesser powers would begin jockeying for position in a way that would quickly lead to conflict. If that conflict were to be relatively unregulated, all sorts of nasties could happen (i.e. even more nasties than happen at the moment, and over a much wider area). Alternatively the UN might pull its socks up and become a more effective force, but without a lead this might take some time.

A pro might be that we are spared the militarisation of space (hugely costly).

13:57 / 09.09.03

For those of us who have isoaltionist sympathies, a loss of American hegemony means that the argument that America needs to police the world will fall, and we can potentially be a shining beacon of hope for the rest of the world. Unfortunately, it might be because the rest of the world would be under terrible stress and chaos. (As opposed to pristing paradise it is today, I know, but worse than that)

Some political theories predict that, as U.S. loses its power, a major war will ensue. So, what's a major war? It might be a nuclear war. These, of course, can be very short, but I suppose it would be long enough for Khaologan23ris to enjoy the look on the neocons faces when the world goes up in flames. There is some consolation in that some (but not all) of the theories predicting a major war during the fall of a great power also don't seem to be able to account for America's continued hegemony in the world.

Does anyone know if there's work being done on a world after a US financial collapse?

This might be part of the neocons' purpose in trying to democratize the rest of the world. If we can make some real headway in bringing those uncivilized, barbarous dictatorships closer to a state of freedom and democracy, then the next power to emerge after the U.S. may be a little more tolerable.

14:21 / 09.09.03

And there was me thinking that the neocons only support democracies when they know their place.

I think that US overspend is interesting as it fragments right wing US support for the imperialist policies of the current administration. I think it is too early to really be talking about a US economic collapse though. In fact, that sort of event is really beyond planning in many ways, unless there is a gradual shift of power.

In that case, we would probably see the US trying to hold on to power as it can and to eventually support international institutions when it can't. The global disruption caused would surely depend very much on the specifics of the collapse. TBH, I don't think that the costs of the Iraq war are nearly big enough to support this kind of hypothesising on a serious level, interesting as it is.

14:37 / 09.09.03

It would be very worrying if it were to happen.

As it did in the 1930s. Britain rode out the US depression relatively unscathed, however, others were jockeying for position and tooling up for war. Perhaps the persistence of US power is due to the fact that, although it may be poor occasionally, it is always potentially rich. It is a fair distance away from likely areas of serious conflict (ballistic missiles and hijacked airliners notwithstanding) and has natural resources and a large population that can kick back into action as soon as war creates a demand.

We're The Great Old Ones Now

15:57 / 09.09.03

[shrug]

I didn't say it was likely, I said it was possible. There's no point hypothesising when it's already happening, is there? And I'm also not suggesting that Iraq alone is going to drain the nation, although certainly blowing $87bn isn't going to increase the amount Bush has to spend on public services, and it has consequences for the occupation - suddenly, the US Administration openly needs to turn a financial profit from it, or look profligate and overly-involved in issues in a far-off land when there are pressing ones at home. Condie's already out there claiming there will be a dividend.

Spending $87bn when you're cutting taxes by $350bn brings the total to $437bn, and you know what they say: $437bn here, $437bn there...

I was also thinking of an article (book?) I read not so long ago by a serious economist who was of the opinion that US productivity estimates were padded by the method of reporting - if I understood correctly. Factor in a few more scandals and suddenly it looks far less impossible and far more worrying. Would the US call in its loans? Raise trade barriers? It's a truism that when Wall Street catches a cold, the world sneezes.

At the same time, of course, it also raises the possibility of greater multialteral involvement - either as a preventative or as a cure, which is potentially positive, as is the chance of reigning the more scary excesses of corporate power.

By the same token, though, there would presumably be problems about energy and environment - in times of financial crisis, it's easy to fall back on more messy, simpler fuels such as coal...

ONLY NICE THINGS

21:43 / 09.09.03

This might be part of the neocons' purpose in trying to democratize the rest of the world. If we can make some real headway in bringing those uncivilized, barbarous dictatorships closer to a state of freedom and democracy, then the next power to emerge after the U.S. may be a little more tolerable.

Sorry, did I miss that meeting? Does anybody see any democracies resulting from the actions of the right-wing USA? Would that be the right of Iraqis to self-determination to be phased in by when the money runs out?

Dude.

The idea of US isolationism has always been a hilarious one. If you are consuming a disproportionate amount of the world's resources, you are unlikely to be able to define "isolationism" as merely sitting back and not attempting to ensure that that level of hyperconsumption can go on unchecked. The US has to be involved in world affairs for as long as it needs energy and food; it's just a question of how it chooses to involve itself.

22:10 / 09.09.03

Well, one could argue that a lot of Eastern European countries became something closer to democratic after the fall of the USSR, bankrupted largely by the expenditure of matching US military power. Not to mention the US' checking Stalin's progress west across Europe after he'd defeated Germany.

But of course, that was a while back, and I reckon your average neocon would blindly argue against such intervention these days.

US isolationism has been around since the country was born. It wasn't until the end of the nineteenth century that the US became anything of an international power, so it was once a valid policy. Why it is still regarded as viable in some quarters is beyond me too -- what will happen when the rest of the world is in flames? They'll have a pretty hard time of it making a living selling corn syrup and Microsoft Windows to each other.

But there you go.

13:29 / 10.09.03

what will happen when the rest of the world is in flames? They'll have a pretty hard time of it making a living selling corn syrup and Microsoft Windows to each other

Sales of fire extinguishers and flame-retardant blankets to the rest of the world will be 'tied' to clauses requiring the purchase of corn syrup and Windows (even in cases where generic equivalents can be produced locally at a lower cost).

23:16 / 10.09.03

By the way, that $87 billion price tag? About $55 billion short.