The term "sick man of Europe" was coined to describe the declining situation of the Ottoman's by Tsar Nicholas I of Russia in 1853. The Ottoman territories were being swallowed by rival world powers, increasingly falling under the financial control of the European powers and the Ottomans had lost territory in a series of disastrous wars. The Ottomans Empire, who for nearly three hundred years dominated the European geopolitical scene fell into debt, came to be continuously manipulated by rival powers and fumbled in a state of gloom, anarchy and decline eventually losing all independence. Nicholas I of Russia described the Ottomans as 'a sick man - a very sick man, a man who has fallen into a state of decrepitude, or a sick man ... gravely ill.'
The Economic situation, political prowess, geopolitical maneuverability and independence were all seen as indicators which clearly the Ottomans had drastically lost over a period of 100 years and declined in.
The current global financial crisis has all the hallmarks of the USA being the new 'sick man'. Below are a few factors:
1. The US is drowning in a sea of debt which the credit crunch crisis has brought to the forefront. The US generated nearly $14 trillion in 2007, however the national debt – this is money the central and federal governments owe to the US public and the world through the bonds they have issued - stands at $10 trillion. The US citizenry have a huge appetite for imports and as a result consumer debt stands at $11.4 trillion. The debts of US companies amounts to $18.4 trillion. This makes the US indebted to the tune of $40 trillion – nearly 75% of what the world produces.
When confidence in the ability of the American government to repay the debt dwindles, this will make those indebted nations to demand their money back, which will lead to, amongst other things, speculative attacks against the American government.
If there was a State in the world, which was able to manoeuvre in the economic climate and highlight this debt, then like the Ottoman Islamic State, America will find that it is under the scrutiny of these nations and not able to exert all its policies as it sees fit..
2. The US trade deficit continues to balloon, the amount the US imports compared to the amount it exports – in essence the money the US owes to the world stands at $555 billion. The financial crisis which began in the US raises a pertinent question about the sustainability of such high levels of consumption and then how the debt that sustained such consumption will be funded.
Western values of consumerism and greed are exacerbating the trade deficit; additionally American economic policies over the last few decades which has weakened America's industrialised base, hence restricting America's ability to produce goods and services cheaply. This mean America will still rely heavily on China, India, Russia and other states for imports of cheap goods to keep inflation domestically under control.
3. Both wars in Afghanistan and Iraq are costing the US $1 Trillion a year. This makes the $700 bailout looks like loose change! With Afghanistan now in the balance after nearly seven years of war and no signs of US victory in Iraq the US faces the very series problem in funding these struggles. Much of the recent Strategies such as the Surge have been built on "bribing" tribal leaders with large sums of money; with the availability of easy money no longer viable, this will impact on policy in Iraq and Afghanistan.
US spending is not sustainable
The US like the Ottomans has now found itself in a precarious situation where foreign nations are actually funding it. The US budget is not sufficient for the nations consumption patterns as a result the US resorts to selling Bonds to the world which it will repay over a period of 10 – 30 years in the hope the US economy will by the time the Bonds mature have generated sufficient wealth to repay them. 66% of US debt is held by foreign entities, whilst 44% of this is held by China and Japan. China has accumulated over $1.2 trillion in dollar reserves due to this. Described as China's "nuclear option" China could trigger a dollar crash if it decided the dollar was not worth holding and switched to Euros at a time when the US currency is already breaking down through historic support levels.
The US attempted to win both the conflicts in Afghanistan and Iraq through propping up initially unpopular governments. The failure to achieve any significant control in both nations has led to the US to throw money at elements within the Sunni faction as well as the bribes it already gives to elements of the Shi'ah establishment. With the US economy teetering on the brink of meltdown the continuity of such a policy of printing money in return for loyalty is questionable and would have huge implications for US future success in these nations.
The US is also facing numerous political challenges in regions of the world which only a decade ago it completely dominated. In the Middle East apart from needing the help of regional surrogates the region is gradually shifting from being a uni-polar region in which the US enjoys uncontested hegemony to a multi-polar region. The US is facing more competition from China and Russia over access to Middle East oil. The US is now increasingly competing with India and Japan as well as the European Union for the lion's share of the regions black gold.
The US is currently suffering from a severe fever, where the remedy continues to be more and more expensive intervention by the nation's doctors who are unable to stem the panic spreading to all. The US has only $1.7 trillion in notes and coins in circulation where the money will come from to repay US debt in the years to come, alongside a falling dollar places the US in a situation where it is now reliant upon foreign nations to bail it out. These are remarkable times as the world is witnessing the direct impact of American imperial hubris and overstretch. We may be witnessing a change in the global balance of power.
via Global Issues by Adnan on 16/10/08
http://samotalis.blogspot.com/
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