02/08/10 Stockholm, Sweden – A recent analysis by David Sanger describes how US financial weakness is translating into the decline of its international power. He begins with a stark look at how the US deficit is projected to rise to 11 percent of economic output, but then goes on to explain…
“… the second number, buried deeper in the budget’s projections, is the one that really commands attention: By President Obama’s own optimistic projections, American deficits will not return to what are widely considered sustainable levels over the next 10 years.
“In fact, in 2019 and 2020 — years after Mr. Obama has left the political scene, even if he serves two terms — they start rising again sharply, to more than 5 percent of gross domestic product. His budget draws a picture of a nation that like many American homeowners simply cannot get above water.
“For Mr. Obama and his successors, the effect of those projections is clear: Unless miraculous growth, or miraculous political compromises, creates some unforeseen change over the next decade, there is virtually no room for new domestic initiatives for Mr. Obama or his successors.
“Beyond that lies the possibility that the United States could begin to suffer the same disease that has afflicted Japan over the past decade. As debt grew more rapidly than income, that country’s influence around the world eroded.”
Sanger is concerned about the projections, and yet despite the coming crisis the largest, and perhaps most paralyzing, problem has been to turn “thought into political action.” Read more of his perspective in New York Times coverage of how deficits may alter US politics and global power.
Rocky Vega
Rocky Vega is publisher of Agora Financial International, where he advances the growth of Agora Financial publishing enterprises outside of the US. Previously, he was publisher of The Daily Reckoning, and founding publisher of both UrbanTurf and RFID Update -- which he ran from Brazil, Chile, and Puerto Rico -- as well as associate publisher of FierceFinance. Rocky has an honors MS from the Stockholm School of Economics and an honors BA from Harvard University, where he served on the board of directors for Let’s Go Publications, Harvard Student Agencies, and The Harvard Advocate.
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Decline of international power? Who cares? There’s too much save-the-world evangalism among the Revolting Elites who run this country.
Before America can escape the events suffered by Japan it needs to re-establish its identity; its “core competency” in the vernacular of 90′s business leaders. America needs to figure out what it does.
The vision of the 90′s was of an America that was a leader in the knowledge industry. America would become the designers of the world, the architects of applied technologies so valuable that other countries would pay us for ideas, happy to manufacture and sell them to others.
We no longer needed to make things, we were to be a nation of intellectual elites sought out by grateful nations in need of our knowledge.
We did nothing to execute on that plan. We did not emphasize education and higher learning. Instead other countries, who heard us talk about our plans, decided it was a good one and got into a race to the finish, the winner of which we freely admitted would inherit the word.
We are losing that race. If that dream is no longer achievable (and I personally think that it’s severely flawed) we need a new one.
And we need it now.