America: Declining Empire, Banana Republic, Or Failed State? 25 comments
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Not long ago, it would have been seen as something of a joke or the product of a warped mind to ponder whether the United States is a declining empire, a banana republic, a failed state -- or all three.
But these days, there are plenty of serious and intelligent commentators, including historians, ex-public servants, and journalists, who are not raving lunatics, but who are nonetheless disturbed by what they see taking place in this country.
Of course, the fact that the U.S. is on the road to ruin won't be news to those who have been regular visitors to Financial Armageddon and When Giants Fall or who have read my books, but for those who believe today's America is the same as it always was, the following excerpts will be a real eye opener:
"Niall Ferguson: U.S. Empire in Decline, on Collision Course with China" (Yahoo! Finance Tech Ticker interview by Aaron Task)
The U.S. is an empire in decline, according to Niall Ferguson, Harvard professor and author of The Ascent of Money.
"People have predicted the end of America in the past and been wrong," Ferguson concedes. "But let's face it: If you're trying to borrow $9 trillion to save your financial system...and already half your public debt held by foreigners, it's not really the conduct of rising empires, is it?"
Given its massive deficits and overseas military adventures, America today is similar to the Spanish Empire in the 17th century and Britain's in the 20th, he says. "Excessive debt is usually a predictor of subsequent trouble."
"America’s Banana Republic Economy" (Reuters Blogs post by James Pethokoukis)
Short version: The 2008 financial crisis and ensuing collapse in confidence drove investors to dollars and dollar-based instruments. And as the crisis has ebbed, investors are rebalancing back toward riskier assets.
Thus the falling dollar should rightly be interpreted as a sign of “new economic optimism,” argues JPMorgan Chase economist Jim Glassman.
Then again, perhaps future economic historians will look back at this stage of the dollar’s decline as the currency calm before the storm. Because at some point, investors may suddenly realize that America’s already somewhat devalued currency should not be trusted.
As Senator Judd Gregg, a New Hampshire Republican and noted budget hawk, said recently, “We’re basically on the path to a banana-republic type of financial situation in this country … You can’t keep throwing debt on top of debt.”
"America the Banana Republic" (Vanity Fair commentary by Christopher Hitchens)
The ongoing financial meltdown is just the latest example of a disturbing trend that, to this adoptive American, threatens to put the Land of the Free and Home of the Brave on a par with Zimbabwe, Venezuela, and Equatorial Guinea.
In a statement on the huge state-sponsored salvage of private bankruptcy that was first proposed last September, a group of Republican lawmakers, employing one of the very rudest words in their party’s thesaurus, described the proposed rescue of the busted finance and discredited credit sectors as “socialistic.” There was a sort of half-truth to what they said. But they would have been very much nearer the mark—and rather more ironic and revealing at their own expense—if they had completed the sentence and described the actual situation as what it is: “socialism for the rich and free enterprise for the rest.”
I have heard arguments about whether it was Milton Friedman or Gore Vidal who first came up with this apt summary of a collusion between the overweening state and certain favored monopolistic concerns, whereby the profits can be privatized and the debts conveniently socialized, but another term for the same system would be “banana republic.”
(Commentary by Syndicated Columnist Paul Craig Roberts)
The U.S. has every characteristic of a failed state.
The U.S. government's current operating budget is dependent on foreign financing and money creation.
Too politically weak to be able to advance its interests through diplomacy, the U.S. relies on terrorism and military aggression.
Costs are out of control, and priorities are skewed in the interest of rich organized interest groups at the expense of the vast majority of citizens. For example, war at all cost — which enriches the armaments industry, the officer corps and the financial firms that handle the war's financing — takes precedence over the needs of American citizens. There is no money to provide the uninsured with health care, but Pentagon officials have told the Defense Appropriations Subcommittee in the House that every gallon of gasoline delivered to U.S. troops in Afghanistan costs American taxpayers $400.
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Now, as the USA wills itself into destroying the Constitution, terrorizing the Middle Class and turning its currency into a symbol of dishonor and disgrace it is willing itself into demolishing the 3 foundations of its Empire of the Soul.
Once( or IF since the end is not yet) these foundations turn to rubble, the vastly corrupt and grossly self obsessed US Regime will face no restraints at all on turning the USA into the People's Banana Republic of America, for season.
The humiliation of the Nation will not end there, and very soon calling what remains of the polity once known as America a banana republic will be an insult to the very term banana republic. At that point there will be no shared purpose, binding memory or remembered legacy to keep the polity intact and then it will, because it must, fragment into 3 to 5 polities: not a failed state as much as a dissolved state.
Then,in my view, there will be a new generation with a new resolve who will rediscover "life, liberty, the pursuit of happiness" as the most radical political and civic idea ever conceived. They , together with the remnant that still in secret cherishes and yearns for the defunct Constitution and the Bill of Rights and the legacy of America the nation that once was, will unite to form a new Nation from the fragments.
There will be a regeneration, a reconstitution; there will be a second chance; there will rise a New America. It will again be a "shining city on a hill".
Why should America and Americans get a second chance? Because there is, eventually justice; because Americans gave so many other people, so often, in so many other places a second chance.Both good and evil have consequences. The evil the Regime is doing will kill. The good ordinary Americans once did for so many for so long will create a new life after death.
On Oct 23 08:14 AM User 353732 wrote:
> America was never a physical empire; it was an empire of mind and
> soul; built on the remarkable and thoroughly radical notion of life,
> liberty and the pursuit of happiness for all people in all places.
> America became a global power because it shed blood and spent vast
> treasure to liberate rather than subjugate. In believing in something
> much greater and more magnificent themselves, Americans became great
> and magnificent.
>
> Now, as the USA wills itself into destroying the Constitution, terrorizing
> the Middle Class and turning its currency into a symbol of dishonor
> and disgrace it is willing itself into demolishing the 3 foundations
> of its Empire of the Soul.
> Once( or IF since the end is not yet) these foundations turn to rubble,
> the vastly corrupt and grossly self obsessed US Regime will face
> no restraints at all on turning the USA into the People's Banana
> Republic of America, for season.
> The humiliation of the Nation will not end there, and very soon calling
> what remains of the polity once known as America a banana republic
> will be an insult to the very term banana republic. At that point
> there will be no shared purpose, binding memory or remembered legacy
> to keep the polity intact and then it will, because it must, fragment
> into 3 to 5 polities: not a failed state as much as a dissolved state.
>
>
> Then,in my view, there will be a new generation with a new resolve
> who will rediscover "life, liberty, the pursuit of happiness" as
> the most radical political and civic idea ever conceived. They ,
> together with the remnant that still in secret cherishes and yearns
> for the defunct Constitution and the Bill of Rights and the legacy
> of America the nation that once was, will unite to form a new Nation
> from the fragments.
> There will be a regeneration, a reconstitution; there will be a second
> chance; there will rise a New America. It will again be a "shining
> city on a hill".
>
> Why should America and Americans get a second chance? Because there
> is, eventually justice; because Americans gave so many other people,
> so often, in so many other places a second chance.Both good and evil
> have consequences. The evil the Regime is doing will kill. The good
> ordinary Americans once did for so many for so long will create a
> new life after death.
In the life of nations, when
"...plenty of serious and intelligent commentators, including historians, ex-public servants, and journalists, who are not raving lunatics, but who are nonetheless disturbed by what they see taking place in this country."
We must be very close to a revival. The malaise will pass.
If we had bananas we would find a good use for them.
On Oct 23 08:14 AM User 353732 wrote:
> America was never a physical empire; it was an empire of mind and
> soul; built on the remarkable and thoroughly radical notion of life,
> liberty and the pursuit of happiness for all people in all places.
> America became a global power because it shed blood and spent vast
> treasure to liberate rather than subjugate. In believing in something
> much greater and more magnificent themselves, Americans became great
> and magnificent.
>
> Now, as the USA wills itself into destroying the Constitution, terrorizing
> the Middle Class and turning its currency into a symbol of dishonor
> and disgrace it is willing itself into demolishing the 3 foundations
> of its Empire of the Soul.
> Once( or IF since the end is not yet) these foundations turn to rubble,
> the vastly corrupt and grossly self obsessed US Regime will face
> no restraints at all on turning the USA into the People's Banana
> Republic of America, for season.
> The humiliation of the Nation will not end there, and very soon calling
> what remains of the polity once known as America a banana republic
> will be an insult to the very term banana republic. At that point
> there will be no shared purpose, binding memory or remembered legacy
> to keep the polity intact and then it will, because it must, fragment
> into 3 to 5 polities: not a failed state as much as a dissolved state.
>
>
> Then,in my view, there will be a new generation with a new resolve
> who will rediscover "life, liberty, the pursuit of happiness" as
> the most radical political and civic idea ever conceived. They ,
> together with the remnant that still in secret cherishes and yearns
> for the defunct Constitution and the Bill of Rights and the legacy
> of America the nation that once was, will unite to form a new Nation
> from the fragments.
> There will be a regeneration, a reconstitution; there will be a second
> chance; there will rise a New America. It will again be a "shining
> city on a hill".
>
> Why should America and Americans get a second chance? Because there
> is, eventually justice; because Americans gave so many other people,
> so often, in so many other places a second chance.Both good and evil
> have consequences. The evil the Regime is doing will kill. The good
> ordinary Americans once did for so many for so long will create a
> new life after death.
Nothing in the faces and attitudes of the majority surrounding me allows me to believe this.
Bread and circuses abound, we are Rome.
On Oct 23 09:10 AM Tony Petroski wrote:
> In the stock market, when everyone knows something will happen, something
> else happens.
>
> In the life of nations, when
>
> "...plenty of serious and intelligent commentators, including historians,
> ex-public servants, and journalists, who are not raving lunatics,
> but who are nonetheless disturbed by what they see taking place in
> this country."
>
> We must be very close to a revival. The malaise will pass.
>
> If we had bananas we would find a good use for them.
We have been apathetic since we averted the cliff in the 80s.
Now, not only are we apathetic, we are under the influence.
Of mind altering drugs - legal, prescribed and black market - for goodness sake we medicate hyper children and give Viagra to men that are too fat to see their johnsons.
Of propaganda - the swine flu scare and "global warming" (while the temp has fallen for over a decade) are the ultimate proof of this
Of the non-working and non-motivated and those that feel a "just" nation feeds those too lazy to feed themselves.
Of decades of kick the can
I wish I had faith in American morals, ingenuity and work ethics.
Sadly, as an employer, I have seen the truth.
On Oct 23 08:14 AM User 353732 wrote:
> America was never a physical empire; it was an empire of mind and
> soul; built on the remarkable and thoroughly radical notion of life,
> liberty and the pursuit of happiness for all people in all places.
> America became a global power because it shed blood and spent vast
> treasure to liberate rather than subjugate. In believing in something
> much greater and more magnificent themselves, Americans became great
> and magnificent.
>
> Now, as the USA wills itself into destroying the Constitution, terrorizing
> the Middle Class and turning its currency into a symbol of dishonor
> and disgrace it is willing itself into demolishing the 3 foundations
> of its Empire of the Soul.
> Once( or IF since the end is not yet) these foundations turn to rubble,
> the vastly corrupt and grossly self obsessed US Regime will face
> no restraints at all on turning the USA into the People's Banana
> Republic of America, for season.
> The humiliation of the Nation will not end there, and very soon calling
> what remains of the polity once known as America a banana republic
> will be an insult to the very term banana republic. At that point
> there will be no shared purpose, binding memory or remembered legacy
> to keep the polity intact and then it will, because it must, fragment
> into 3 to 5 polities: not a failed state as much as a dissolved state.
>
>
> Then,in my view, there will be a new generation with a new resolve
> who will rediscover "life, liberty, the pursuit of happiness" as
> the most radical political and civic idea ever conceived. They ,
> together with the remnant that still in secret cherishes and yearns
> for the defunct Constitution and the Bill of Rights and the legacy
> of America the nation that once was, will unite to form a new Nation
> from the fragments.
> There will be a regeneration, a reconstitution; there will be a second
> chance; there will rise a New America. It will again be a "shining
> city on a hill".
>
> Why should America and Americans get a second chance? Because there
> is, eventually justice; because Americans gave so many other people,
> so often, in so many other places a second chance.Both good and evil
> have consequences. The evil the Regime is doing will kill. The good
> ordinary Americans once did for so many for so long will create a
> new life after death.
Did you see that Yankees-Angels game last night? Wow!
On Oct 23 10:18 AM TeresaE wrote:
> I wish I had your blind faith.
>
> Nothing in the faces and attitudes of the majority surrounding me
> allows me to believe this.
>
> Bread and circuses abound, we are Rome.
Beginning with the geopolitical dimension, arguably much of the pessimism being expressed by Mr. Panzner and several persons commenting on his article derives from an unrealistic expectation for the future of the US; an expectation seriously undermined recently by current events alluded to in the article. No nation can expect to be far and away the undisputed preeminent economic, social and political world power for all time and the US position during the 30 years following WW II was in large part a reflection of the centuries long eclipse of China and India, on the one hand, and the impact of the two World Wars on Europe and Japan, on the other. It is not a sign of moral decay or a just cause for recrimination or falling into a funk that other nations will increasingly share in some measure the prominence and relative prosperity that the US enjoyed in the immediate post WW II period. History will judge the US (and its people will prosper or decline) on how wisely the US gives and shares leadership in the world and deals with its own internal economic, social and political issues in the future; not on whether it was able to cling to the trappings of some imagined preeminent world status.
Like the UK before it during the 70 or so years following the Franco-Prussian War, the US will continue to be the first among equals (even though the emphasis in that phrase will be somewhat more on the ‘equals’ part) for the foreseeable future. There is no reason why its citizens should not remain economic, cultural and political leaders; only that others will (as they should in a better world) share these roles to a somewhat greater degree. There are many examples (Venice, the Netherlands, France, UK etc) of nations which have continued to flower and whose citizens have continued to prosper and grace the world with their insights and accomplishments after losing unchallenged predominance as a world power.
Turning to the economic dimension, there is no secret that by 2006/7 an unimaginably large world wide credit bubble with its epicenter in the senior investment banks and near banks of New York, London and Zürich had become unstable. Residential mortgage debt was merely one part of the base of an inverted pyramid of substantially unsecured (i.e. ephemerally insured or hedged) debt the upper layers of which were composed of various iterations of secularized debt and derivative instruments. This inverted pyramid had grown in a unique economic environment created by the willingness of China and Japan to continuously recycle their massive trade surpluses with the US into purchases of low interest US Treasuries (and the willingness of the US to accept this ‘bargain’ to power a consumer based economy by unrealistically low interest rates), the frantic search for new sources of profit by banks and their institutional customers in this artificially low interest environment, the creative use of information technology to create, market and purportedly hedge or insure exponentially growing mounds of secularized and derivative debt to feed the aforesaid appetite for profit and a regulatory environment that had left it to the free market to deal with these forces and was increasingly afraid to upset a precariously balanced mess. Appreciating finally that this situation was unsustainable, the US Fed and Treasury began coordinated actions in 2008 (especially in July) to slow and stabilize this process as a prelude to what they hoped would be an orderly resolution (requiring several stages) of the bubble and reform of the system that had allowed it to come into being. The UK and other nations followed suite.
Also very troubling was the fact that the prosperity of the 2002 – 6 period in the US was in significant part for the population at large based on consumer debt and for the financial sector based on generating and servicing the debt pyramid describer above. This is just another though telling indication of the hollowing out of the US economy and the decay of its productive foundations. My comments are already too long and I will not therefore touch on the other aspects of the ‘hollowing out’ challenge that must be addressed in due course except to state that that challenge can also be met in my opinion. Somehow returning the economy to its state in 2005 must not be the ultimate goal of public policy in the US.
Obviously the ultimate resolution of the bubble (a problem the US shares with the UK, Japan and several Western European economies) itself will not be quick, easy or painless but it must be as orderly and practical consistent at each stage with the goal of its ultimate resolution. That resolution (a process that must be coordinated among all the G20) will involve some monetizing of the debt, some reflation of asset value (the byproduct of government stimulus and seen in the stabilization and market recovery since March), some carrying of the debt by the banks and government and some default and bankruptcy in the bank and near bank sector. Government policy and actions at various stages of this process will change significantly but must be designed to forward the process and not tip the economy into hyperinflation or deflationary depression.
It is vital for US citizens to appreciate that the US shares this economic dilemma with the UK, Japan and to some degree several other Western European economies. Russia and much of Eastern Europe have their own set of major economic and political challenges as do much of Latin America and the Islamic world.
In conclusion, too often US citizens allude to the fall of the Roman Empire and suchlike as a metaphor for their current challenges and the causes of these challenges. If the UK, France, Germany, China and Japan could rise quickly from the destruction and chaos of WW II why can not the US and other advanced economies and nation states meet the challenges of globalization and current financial imbalances.
On Oct 23 04:33 AM Michael Clark wrote:
> Socialism for the rich and poverty for the rest of us.
>
> That's state capitalism. In fascist states, the government and the
> capital class cooperate for their own survival; and to hell with
> everyone else.
When USD falls off a cliff - think $150,000 can of Coke - the riots will be in full swing.
Unless you have physical gold in your basement vault, the hard drive or printout showing how much gold you have in some far away vault will be worthless since the will be no way to take delivery.
Part of the reason/answer was the Marshall Plan.
We often pay to resurrect things after we tear them up.
The rest of the world seldom cares or does anything similar.
Instead, they totally exploit their military, economic and political advantages, and often seize all the conquered territory.
I would not count on a Marshall type plan for ourselves, either self initiated or from others.
On Oct 23 05:52 PM Russ Wetherill wrote:
> Is it really that bad? Really? End of the empire? Please. The US
> didn't collapse during the Great Depression, it didn't fail during
> WWII, and we even survived disco. If we can survive disco, we can
> survive anything!