Where To From Here?

(9:00PM EST – promoted by Nightprowlkitty)

Jeffrey Lieber asks this morning: “What Will Become Of My Beautiful America?“. I started to write a comment to Jeffrey’s essay, but it rapidly grew beyond reasonable limits for a comment and became this essay and the quote for discussion below.

I don’t think America’s really going anywhere, or even collapsing as many people fear.

I think that the “empire” of the imperialists may collapse, the political power structures may collapse, and maybe even the “system” that all us old hippies tried so hard in the sixties and seventies to undermine many even collapse, but America?

America is an idea. It’s not the banks or the investment houses or the insurance companies or the weapons manufacturers or the political parties, or any of that stuff. America is an idea. An idea and a set of ideals held by hundreds of millions of people. Can that idea and those ideals collapse?

There is an article this morning in the International Herald Tribune by David Leonhardt that may in fact “herald” the future  of America on the “international” stage, an article that talks of a potential “silver lining” in the dark clouds of despair and pessimism that make up the psychic weather in the dark sky so many are afraid is falling lately.

One of the things that happens though when thunderstorms peter out is that the sun begins to shine again in clear skies, and Leonhardt’s article this morning offers a glimpse of some rays of sunshine shining through some as yet unnoticed breaks in the clouds…

Here are a few quotes from his article to hopefully spark some discussion of what the uphill run of this roller coaster could look like after we barrel through the bottom of the hill…

A power that may not stay so super

AT the turn of the 20th century, toward the end of a brutal and surprisingly difficult victory in the Second Boer War, the people of Britain began to contemplate the possibility that theirs was a nation in decline. They worried that London’s big financial sector was draining resources from the industrial economy and wondered whether Britain’s schools were inadequate. In 1905, a new book – a fictional history, set in the year 2005 – appeared under the title, “The Decline and Fall of the British Empire.”

The crisis of confidence led to a sharp political reaction. In the 1906 election, the Liberals ousted the Conservatives in a landslide and ushered in an era of reform. But it did not stave off a slide from economic or political prominence. Within four decades, a much larger country, across an ocean to the west, would clearly supplant Britain as the world’s dominant power.

The United States of today and Britain of 1905 are certainly more different than they are similar. Yet the financial shocks of the past several weeks – coming on top of an already weak economy and an unpopular war – have created their own crisis of national confidence.

[snip…]

Whereas Britain lumbered under the weight of imperial overreach, as the historian Niall Ferguson has written, the United States will be shackled primarily by its financial overreach.

“Given the burden of debt that has accumulated, it’s hard to see the U.S. economy growing as fast as it did over the past few decades,” Ferguson said. “There is a profound mood shift occurring.”

But he added two caveats. The political language of both presidential campaigns makes clear that many voters, for all the current pessimism, still believe in the idea of American pre-eminence. So, apparently, do many of the world’s investors.

In recent weeks, the dollar has held its own. Stocks in every other major country are down about as much over the last year as they are in the United States, if not much more. America may not be a safe haven anymore, but it does seem to be safer haven.

Robert Zoellick, the president of the World Bank, said that he was recently speaking to a senior Chinese economist, who said that people in his home country – today’s rising economic power – don’t see the sky falling on the American economy. “They know its ability to turn around problems is really unmatched, historically,” Zoellick said, quoting the economist about the United States. “At the same time, they ask themselves, Will the United States get at some of the root causes that could determine its real strength over the next 10 or 20 or 30 years?”

This is not the first time in recent history that the economic position of the United States has appeared precarious. At various points between the mid-1970s and early 1990s, Europe and Japan each looked like the next great power. Neither turned out to be.

Japan suffered through its own burst bubble and spent years denying the depth of its problems. Europe proved unable to create engines of growth that could match the software, biotechnology or entertainment industries in the United States.

Taken to its extreme, the American preference for a faster, riskier capitalism led directly to the current crisis. But that preference also helps explain why America is weathering the crisis at least as well as other countries.