People follow leaders: I don't see anyone following the US now, but neither do I see an alternative nation state worthy of being a leader.
I think we are seeing the end of National hegemony. I suspect the US will be the last. The ability to project power led the British to its Empire, and more importantly, to "Sterling hegemony".
Likewise we are seeing the end of the Dollar hegemony that is a consequence of US ability to project power.
I think we will see the end of the nation state other than as a statement of cultural Identity.
This is a consequence of the tectonic changes being wrought by the pervasive spread of the Internet and the connectivity to which it gives rise.
It follows that I don't see any of the outcomes you propose.
I see a "Global Community" consisting of an infinite network of networks: a partnership of partnerships, and cooperative of cooperatives, wherein individual citizens "self organise" within agreed frameworks.
Consensual: cooperative; mutual; without "profit" and "loss" but with mutual creation and exchange of value, in all its forms rather than the "anti-value" financial systems created out of thin air by deficit-based.
A "chaordic" emergent order rather than an order imposed by military force.
A Hegemony of the Commons, in fact.
Joking aside, nicely stated. There are going to be a lot of people resistant to these long term transitions, and a lot of challenges that will lead some to go to or beyond brinkpersonship, but eventually things will settle out this way.
In the meantime, it will be interesting to watch how the States reacts to being a bankrupt country. Will they get rid of 300 or 500 or 750 of their military bases around the world?
It is no longer the same world that would get a cold when they sneezed.
There has been a 55 cent negative swing in the dollars value in the last 5 years. It seems to be actually getting to the point where their exports will actually benefit from this decline in value.
There has been a greater negative swing in the american morality as well in the last 5 years, and 55 years as well...it was an era when the world could have benefited from real leadership, but we got more of the same with amplified conniving, and modern greed, and high tech marketing to ease the insertion, down the throats of the masses. Never underestimate their intelligence, always underestimate their knowledge.
Frank Delaney ~ Ireland
How is it that at the same time that the United States is the world's bully, yet it know one is following at the same time?
So is the United States all powerful, or is utterly incapable of making even the weakest state do a damn thing? The cognitive dissonance involved in making the US Government responsible for all the evil in the world, yet at the same time declaring US foreign policy impotent and incapable of eliciting compliance from any state is dumbfounding.
Has the Bush administration fucked up, big time?
Yes, in no small part because they want to impose rules on other, yet not follow them themselves.
Is the US responsible for maintaining much of the current international infrastructure?
Of course, it is called the Washington Consensus after all.
And once you start dismantling the multilateral economic institutions that the United States supports and call into question the US committment to neo-liberal economics, you've exacted such a large portion of the world's export market (note I say export market, not economy) that the whole thing is damaged.
And if the dollar is no longer the medium through which international commerce is conducted, is there another currency that can fill that role? Is the Euro really up to being the currency of choice in international transactions? If not the Euro, then what? And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg
the whole thing is damaged
Just about sums it up.
The dollar is finished, and as you say, what is the alternative?
Nothing deficit-based is my answer to that. We have to go back to first principles. A new Bretton Woods, rebuilding the system from the ground up.
Is the Euro really up to being the currency of choice in international transactions?
The unambiguous answer to that is, quite simply, yes.
The euro still has a smaller chunk of international trade transactions and reserve holdings than the dollar, but its financial markets are actually now bigger and deeper than the dollar's.
The euro equity markets are larger than the dollar's by total market capitalisation; the euro bond market is larger than the dollar one (measured by new emissions) and new markets like carbon trading are done in euros.
All the dollar has going for it right now is inertia. It's a huge factor, usually overwhelming (see how the pound sterling is still the reference currency for a number of commodities to this day) but the fact is - there is a credible alternative to the dollar, so, if there is a serious dollar crisis, the switch might be quite brutal, because everybody will know where to go (the inertia is driven before anything by the need for common conventions and rules that are known to all and are reliable). The euro is a reliable currency, backed by a serious central bank, a sound economy (with surpluses, to boot), and it's the only choice available if you want to avoide the dollar. In the long run, we're all dead. John Maynard Keynes
So it makes it easy to get into foreign debt, but it does not cause it. In the long run, we're all dead. John Maynard Keynes
Bush's escapade in Iraq and Afghanistan has destroyed that particular aspect of dollar hegemony. The dollar is edging down now because it's obvious to everyone that the gamble has failed, Iraq has been lost, Iran cannot possibly be invaded successfully, and there is nowhere else to go.
The Euro's soft power can't compete directly with US militarism. So I wouldn't expect a massive overnight shift to the Euro. The economic fundamentals may be strong but not only are they not perceived as being strong - thanks to the relentless propaganda from the FT and the Econo - but the Euro zone is perceived as being militarily vulnerable to both Russia and China.
So what I think is more likely to happen is that the drift will continue without major shifts. A subprime meltdown could change that, or a coup or major terrorist attack on the US. But otherwise the Euro will continue to climb and the dollar will continue to fall at least while Bush is in office.
I'd guess $2.50 to the £ by the end of 2008 at the very least, and possibly even $3, with the Euro edging ahead of the pound even further.
And, yes Sterling, and subsequently, the Dollar have been global reserve currencies ultimately backed by the ability to project power globally.
But money/currency may always involve - irrespective of any "official" currency - a consensual two way process.
If both parties agree - then it's money - whether "IT" is cowrie shells, salt, gold, whatever.
In my opinion energy units are the most obviously fungible value units across borders, and land/property rental units the most obvious value units domestically.
For a monetary system all that is then required is a generic accounting system/transaction engine and a suitable guarantee mechanism for bilateral credit.
In essence, the result is the International Clearing Union proposed by Keynes at Bretton Woods.
If people are prepared to accept energy units as currency, then what the government does is a matter of indifference.
Except that you will still have to pay your taxes in the governments currency. And that is backed by violence and jails. And money from the government will be in the governments currency. That gives the governments currency an advantage over any alternative currency. And then there is of course inertia.
I just realised that I dreamt last night that Sweden had changed to euros and old swedish bills were useless. Pretty, but useless. Dreams are odd things.
so, if there is a serious dollar crisis, the switch might be quite brutal, because everybody will know where to go (the inertia is driven before anything by the need for common conventions and rules that are known to all and are reliable)
That's the point though, unless there are proactive measures, the collapse of the dollar is likely to be as you said brutal. And because it has the power of inertia, any event that precipitates such a crisis of confidence to cause an exodus from the dollar will likely be dramatic, and rapid.
And a rapid collapse of the dollar will create vaccuums that tax the ability of the euro to come in and provide stability. So even if the euro is a viable alternative to the dollar in the long term, can it handle the shock of a crisis?
And what happens when the US export market drys up, and suddenly all those products previously sent to the US have no place to go? Can the Chinese economy survive that shock, or does it experience a rapid contraction? And if China gets the flu, how many other states get pneumonia as a result?
I think that a transition is going to have to happen, it's a matter of how rapidly it occurs, and at what cost. I think that even the Right realizes this, and they're preparing for that eventuality. The Left has not. And unfortunately, bad ideas that provide order trump no ideas at all.
And that's a huge point that I'm trying to make. And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg
We've quoted several times the BNP (British National Party) about peak oil and how thye are waiting for it as the trigger to move their ideas to a higher level of popularity. In the long run, we're all dead. John Maynard Keynes
