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by Jurgen Rose
Friday, Jun. 26, 2009 at 2:48 AM
"From July to September 2008, China reduced its investment in the US real estate banks Fannie Mae and Freddie Mac. The US tgovt needs .5 billion in foreign credits day after day..The greatest debtor of the world cannot force the law of trade on its creditors any more.."
DECOMMISSIONING A SUPERPOWER
By Jurgen Rose
[This article published in: Ossietzky, May 2009 is translated from the German on the World Wide Web, http://www.linksnet.de/artikel/24390.]
In Yale professor Paul Kennedy’s masterpiece “The Rise and Fall of the Great Powers” published before the end of the Cold War, the Atlantic hegemonial power is warned on the background of an analysis of the 500-year history of economic change and military conflicts. “Prosperity” is usually necessary, the scholar said, to support military power and military power is usually necessary to gain and ensure prosperity. But when a large part of the resources of the state is diverted from the creation of prosperity and goes instead to military objectives, national power is weakened in the long term. This is also true when a state strategically overextends itself – for example by conquering extensive territories or waging costly wars. Such a state runs the risk that potential advantages of the outward expansion will be overshadowed by the massive costs of the adventure – a dilemma that becomes acute when the impacted nation enters a phase of relative economic decline.
The accuracy of Kennedy’s prognosis – made more than twenty years ago – is amazing. The Bush junta maneuvered the superpower (indispensable according to its own claim) into this situation, namely into a state of wanton strategic overextension and rapid economic decay – Iraq and Afghanistan could be named along with General Motors (GM) and American International Group (AIG).
The moment when the hour of truth approached for Bush & Co. can be dated rather exactly. After a disgusting anti-Chinese Tibet-propaganda campaign was started on the eve of the Olympic games, Peking showed how the global hierarchies of power have changed. From the middle of July to the beginning of September 2008, China gradually reduced its investment in the US real estate banks Fannie Mae and Freddie Mac. As the second largest creditor, Japan joined the Chinese action. The US government that needs at least .5 billion in foreign credits day after day is in the debt trap. The Chinese threatened to exchange even more of their gigantic currency reserves of trillion into euros drying up the capital inflow on which the US depended like junkies on drugs.
On September 8, 2008, the Bush administration capitulated and nationalized the two bankrupt banks in a costly bailout of 0 billion. The Chinese had forced the most serious intervention of the American state in the economy since the Great Depression in the 1930s. “A western defeat of historic dimensions,” the transatlantic front page of the Hamburg DIE ZEIT paper lamented in amazement. In fact, international politics is geo-economics, as Paul Kennedy explained right at the outset.
However “unconditional surrender” which the sole superpower always denied its adversaries in the past was in no way in question for the US. Its answer was war, this time as a worldwide currency-, financial- and economic war, not with military force.
Lehman Brothers was the trigger. Ice-cold and with full awareness of the inevitable consequences, the Bush people got rid of the bankrupt bank. The bankruptcy of the investment bank was the 9/11 for the world financial system. As from the debris of the World Trade Center and the Pentagon, under the rubric of the “Global War on Terror,” the opportunity grew into an unscrupulous military projection of power. The financial-terrorist attack on Wall Street provided the chance to perpetuate a geo-economic constellation from which the US profited parasitically since the end of the Second World War. Explained in a simplified way, this system was based on the rest of the world producing commodities, goods and services and exporting them to the US where they were consumed. The producers themselves had to supply the credits for US consumption, a consumption on credit. Formulated in an exaggerated way, the producers paid for their own expropriation!
Many people were held to be stupid for a long time but everyone could not be brainwashed forever. In the last years, the global hierarchies of power began to quickly shift to the disadvantage of the empire. Russia came on strong in Georgia. Venezuela’s Hugo Chavez mocked the US. Iran’s Ahmadinejad proved resistant to pressure. With its hard euro, the European Union developed an alternative world currency. Already acting as a future superpower, China with its enormous dollar reserves became a rival that was increasingly an existential threat to the hegemonial dominance of the US.
The present crisis has now given the American empire a breathing space and considerable positional gains. Several striking indicators reveal the time for its dissolution was calmly calculated in the Oval Office. “The global economic crisis also has positive effects for international politics. An oil price that fell from 0 a barrel to under drastically cuts down the possibilities of oil-producing rivals and opponents of the US like Russia, Venezuela and Iran. At the beginning of January 2009, the neo-conservative US political scientist Francis Fukuyuma (“The End of History”) put more coal on the fire when he explained: “Russia acted with great strength when it marched into Georgia in August 2008. However since the oil price fell to under a barrel, the country has been weakened externally and internally. China’s influence was based on its double-digit growth rates. The economic crisis will drastically intensify the social tensions. China’s government will have all its hands full in putting down rebellions. At the moment the West is caught in a serious economic crisis. That authoritarian regimes are not better is soothing somehow. At the end of January 2009, the head of the International Monetary Fund, Dominique Strauss-Kahn, was even clearer when he answered the question whether the US was the winner of the crisis: “The power of the United States could be temporarily strengthened. Up to now the dollar has not crashed but has even gained value.” In fact, professional pessimists in the economics editorial departments of corporate media paint horror scenarios on the wall from the end of the euro to the breaking apart of the European Union.
The present joy of the relative crisis winner on the Potomac will be moderate and short-lived. The financial-political running amok gives the empire a breather, nothing more. In the long run, the geo-economic hierarchies of power may not be reversed any more. Washington risked a suicidal nuclear war with China and Russia. Given the fantastic trillion in debts of the state and private parties in the US, the greatest debtor of the world cannot force the law of trade on its creditors any longer. For cost reasons, Barack H. Obama already announced withdrawal of part of the US occupation force from Iraq and reducing the US military budget ten percent. The first black US president will enter history as the first de-commissioning commissioner of the sole world power. Good luck, Mr. President!
Jurgen Rose is a lieutenant in the German army and offers his personal perspectives in this article.
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