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The Catastrophic Collapse of American Leadership
To: paul caron

Of possible interest...

The Catastrophic Collapse of American Leadership

William Pfaff

Paris, January 29, 2009 -- The American participants in this year's World
 Economic Forum in Davos have been the first to confront the full international blowback to the U.S.-created world economic crisis. The crisis has devastated 
America's reputation for intellectual innovation and practice in global finance, its business leadership, and its domination of applied and academic economics -- all promoted at the Davos Forum for decades. Last Friday a Wall Street Journal front-page 
headline said: "European capitalism gets a halo."

U.S. leadership has devastated something even more important: the American 
reputation for competence, and with it, the justification for 
America's six-decade role as world leader.

The Davos meeting has been one of the main channels by which a 
Europe long identified with interventionist and regulated social- and 
Christian-democratic business values was reluctantly persuaded to 
accept American ideas and business and financial principles and 

American comment on the crisis until now has certainly been self- 
critical (except in certain Wall Street institutions cut off from 
human reality), but for the most part there has been little 
willingness to assume responsibility. The overall position has been 
that "we all made mistakes," and it's time to move on.

A few financial community Cassandras of the recent (or not so 
recent) past have been recalled and congratulated (or given their 
jobs back); much has been said about "how [ital] could [unital] we 
have missed this or that signal;" but on the whole a curtain has been 
drawn, and most would agree with Donald Rumsfeld's incantation that 
"stuff happens."

That alibi (or renunciation of responsibility) may work at home but 
not abroad. The head of Morgan Stanley Asia told the opening Davos 
discussion that 2009, globally, "may be the first year since world 
war II when gross domestic product actually contracts."

The International Monetary Fund has nearly doubled its estimate of 
bank failures this year; the International Labor Organization says as 
many as 40 million people could lose their jobs. Losses linked to bad 
U.S. loans could reach $2.2 trillion this year, according to the 
IMF. This is twice the estimate the IMF offered just two months ago.

There is more bad news to come, signaled at Davos. The political, 
national, and psychological consequences have yet to be fully 
appreciated. This crisis implies something else important: The U.S. 
reputation for world leadership has crashed and burned.

At the start of the Bush administration years of vainglorious, 
ignorant and failing interventions in world affairs, there was great 
initial enthusiasm among Americans, believing the nation once again 
in the lead of a crusade to moralize the world by destroying evil and 
installing "freedom."

Even as that policy was failing, critics of the administration were 
(and remain) mostly inclined to support the general line of fighting 
"terrorism." They believed that under more intelligent Barack Obama 
management in Afghanistan and Pakistan it was a defensible policy, 
consistent with the country's postwar leadership in the Korean War, 
the Cold War, the Indochina intervention and Vietnam war, and now the "clash of civilizations" – each gratifying an American self- 
conception as leader of the forces of freedom in what ex-President 
Bush, in his farewell speech, described as the great struggle between 
global good and global evil.

Distraction was provided for much of the world by the economic boom 
Alan Greenspan proudly presented as "beyond history." A new economic order had been created by Americans that already had made the industrial world rich, and was confidently predicted to bestow the same blessing on everyone else. Francis Fukuyama's assessment that history was coming to a happy ending was thought only a little off in its timing.

But not only the economy has crashed. It's now necessary to come 
to terms with the fact that the cold war was not won by America, but 
lost by Communism's internal corruption. That America's Asian 
conflicts were actually all defeats: Communist China, Korea, Laos, 
Cambodia, Vietnam, Somalia, Lebanon, Iran, Iraq (an estimated 95 
thousand civilians killed in Iraq, 15 thousand coalition soldiers and 
police, including 4,229 Americans; and the outcome still in doubt). 
The war against terror has been a bloodbath with mainly civilian 
victims, two free-standing Asian states wrecked, and probably more to 

The immediate disaster, evident at Davos, is that the American 
economic model of deregulated market capitalism, dominant today in 
the U.S. and the rest of the industrial world, cited as a vehicle of 
human progress, proves under examination to have been in significant 
part an affair of swindle, personal enrichment, looted third world 
nations, international and national crime conspiracies, bank robbery 
and Ponzi schemes, criminal real estate practices, environmental and 
institutional rip-offs, and official corruption.

Stuff does indeed happen, when greed is good and power better.

© Copyright 2009 by Tribune Media Services International. All Rights 

This article comes from William PFAFF

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