The Bumpy Roads Towards The End of Pax-Americana?

As I write, the U.S. House of Representatives has just voted 228-205 to reject the mammoth $700 billion rescue package for the financial industry. Predictably, disappointed Wall Street is plunging. The financial meltdown is now such that the news of collapsing banks is no longer big news, not even when the 109 year old Washington Mutual collapsed last week, the biggest bank to fail in American history.

 

Much has been written about the dangers of the financial crisis turning into a prolonged economic crisis. Some see it as signaling the end of neo-liberalism or even as a symptom of declining American global supremacy. In his new book, Is There Hope For Uncle Sam? Beyond the American Bubble, the renowned Sociologist, Jan Nederveen Pieterse, a former colleague of mine at the University of Illinois at Urbana-Champaign, believes "the ‘American Bubble' has clearly burst. With the nationalisation of the last remaining investment banks," he argues, "American world hegemony [is] in decline for the first time in over a century." His book seeks to unravel the "interlocking relationships between American money, status and power, the historic development of the ‘American Bubble' and its roots in Dixie politics." He contends that "the decline can only be stemmed by dramatic new measures, such as a reintroduction of genuinely egalitarian New Deal-style politics and a complete rethinking of America's role in the international arena, attempting to address the roots of the problem. Nevertheless, the likelihood of these changes being accepted by the majority problematises America's position further and highlights the need for swift, effective action."

 

Several months ago, Fareed Zakaria, the Indian-born Editor of Newsweek International, published his intriguing book, The Post American World, in which he postulated that the era of Pax-Americana was drawing to a close as we enter a new era characterized by the "rise of the rest". "We are living through the third great power shift in modern history," he wrote in an essay summarizing the book. "The first was the rise of the Western world, around the 15th century. It produced the world as we know it now--science and technology, commerce and capitalism, the industrial and agricultural revolutions. It also led to the prolonged political dominance of the nations of the Western world. The second shift, which took place in the closing years of the 19th century, was the rise of the United States. Once it industrialized, it soon became the most powerful nation in the world, stronger than any likely combination of other nations." Now profound shifts are occurring in the global order, facilitated by the expansion of new large economic powers, symbolized by China and India, what he terms the "rise of the rest. At the military and political level, we still live in a unipolar world. But along every other dimension--industrial, financial, social, cultural--the distribution of power is shifting, moving away from American dominance."

 

The current financial crisis could be seen as part of this much larger story. How does the crisis look elsewhere in the world? In this posting I have collected recent commentaries from the well-known British newspaper, The Guardian, which critique the spectacular, indeed historic, failures of the Bush presidency that have acelerated the crises of American capitalism and imperialism. In later postings I will look at commentaries from other regions including Africa. P T Zeleza, Editor, The Zeleza Post

 

A Shattering Moment In America's Fall From Power By John Gray

 

The global financial crisis will see the US falter in the same way the Soviet Union did when the Berlin Wall came down. The era of American dominance is over.

 

Our gaze might be on the markets melting down, but the upheaval we are experiencing is more than a financial crisis, however large. Here is a historic geopolitical shift, in which the balance of power in the world is being altered irrevocably. The era of American global leadership, reaching back to the Second World War, is over.

 

You can see it in the way America's dominion has slipped away in its own backyard, with Venezuelan President Hugo Chávez taunting and ridiculing the superpower with impunity. Yet the setback of America's standing at the global level is even more striking. With the nationalisation of crucial parts of the financial system, the American free-market creed has self-destructed while countries that retained overall control of markets have been vindicated. In a change as far-reaching in its implications as the fall of the Soviet Union, an entire model of government and the economy has collapsed.

 

Ever since the end of the Cold War, successive American administrations have lectured other countries on the necessity of sound finance. Indonesia, Thailand, Argentina and several African states endured severe cuts in spending and deep recessions as the price of aid from the International Monetary Fund, which enforced the American orthodoxy. China in particular was hectored relentlessly on the weakness of its banking system. But China's success has been based on its consistent contempt for Western advice and it is not Chinese banks that are currently going bust. How symbolic yesterday that Chinese astronauts take a spacewalk while the US Treasury Secretary is on his knees.

 

Despite incessantly urging other countries to adopt its way of doing business, America has always had one economic policy for itself and another for the rest of the world. Throughout the years in which the US was punishing countries that departed from fiscal prudence, it was borrowing on a colossal scale to finance tax cuts and fund its over-stretched military commitments. Now, with federal finances critically dependent on continuing large inflows of foreign capital, it will be the countries that spurned the American model of capitalism that will shape America's economic future.

 

Which version of the bail out of American financial institutions cobbled up by Treasury Secretary Hank Paulson and Federal Reserve chairman Ben Bernanke is finally adopted is less important than what the bail out means for America's position in the world. The populist rant about greedy banks that is being loudly ventilated in Congress is a distraction from the true causes of the crisis. The dire condition of America's financial markets is the result of American banks operating in a free-for-all environment that these same American legislators created. It is America's political class that, by embracing the dangerously simplistic ideology of deregulation, has responsibility for the present mess.

 

In present circumstances, an unprecedented expansion of government is the only means of averting a market catastrophe. The consequence, however, will be that America will be even more starkly dependent on the world's new rising powers. The federal government is racking up even larger borrowings, which its creditors may rightly fear will never be repaid. It may well be tempted to inflate these debts away in a surge of inflation that would leave foreign investors with hefty losses. In these circumstances, will the governments of countries that buy large quantities of American bonds, China, the Gulf States and Russia, for example, be ready to continue supporting the dollar's role as the world's reserve currency? Or will these countries see this as an opportunity to tilt the balance of economic power further in their favour? Either way, the control of events is no longer in American hands.

 

The fate of empires is very often sealed by the interaction of war and debt. That was true of the British Empire, whose finances deteriorated from the First World War onwards, and of the Soviet Union. Defeat in Afghanistan and the economic burden of trying to respond to Reagan's technically flawed but politically extremely effective Star Wars programme were vital factors in triggering the Soviet collapse. Despite its insistent exceptionalism, America is no different. The Iraq War and the credit bubble have fatally undermined America's economic primacy. The US will continue to be the world's largest economy for a while longer, but it will be the new rising powers that, once the crisis is over, buy up what remains intact in the wreckage of America's financial system.

 

There has been a good deal of talk in recent weeks about imminent economic armageddon. In fact, this is far from being the end of capitalism. The frantic scrambling that is going on in Washington marks the passing of only one type of capitalism - the peculiar and highly unstable variety that has existed in America over the last 20 years. This experiment in financial laissez-faire has imploded.While the impact of the collapse will be felt everywhere, the market economies that resisted American-style deregulation will best weather the storm. Britain, which has turned itself into a gigantic hedge fund, but of a kind that lacks the ability to profit from a downturn, is likely to be especially badly hit.

 

The irony of the post-Cold War period is that the fall of communism was followed by the rise of another utopian ideology. In American and Britain, and to a lesser extent other Western countries, a type of market fundamentalism became the guiding philosophy. The collapse of American power that is underway is the predictable upshot. Like the Soviet collapse, it will have large geopolitical repercussions. An enfeebled economy cannot support America's over-extended military commitments for much longer. Retrenchment is inevitable and it is unlikely to be gradual or well planned.

 

Meltdowns on the scale we are seeing are not slow-motion events. They are swift and chaotic, with rapidly spreading side-effects. Consider Iraq. The success of the surge, which has been achieved by bribing the Sunnis, while acquiescing in ongoing ethnic cleansing, has produced a condition of relative peace in parts of the country. How long will this last, given that America's current level of expenditure on the war can no longer be sustained?

 

An American retreat from Iraq will leave Iran the regional victor. How will Saudi Arabia respond? Will military action to forestall Iran acquiring nuclear weapons be less or more likely? China's rulers have so far been silent during the unfolding crisis. Will America's weakness embolden them to assert China's power or will China continue its cautious policy of 'peaceful rise'? At present, none of these questions can be answered with any confidence. What is evident is that power is leaking from the US at an accelerating rate. Georgia showed Russia redrawing the geopolitical map, with America an impotent spectator.

 

Outside the US, most people have long accepted that the development of new economies that goes with globalisation will undermine America's central position in the world. They imagined that this would be a change in America's comparative standing, taking place incrementally over several decades or generations. Today, that looks an increasingly unrealistic assumption.

 

Having created the conditions that produced history's biggest bubble, America's political leaders appear unable to grasp the magnitude of the dangers the country now faces. Mired in their rancorous culture wars and squabbling among themselves, they seem oblivious to the fact that American global leadership is fast ebbing away. A new world is coming into being almost unnoticed, where America is only one of several great powers, facing an uncertain future it can no longer shape.

 

John Gray is the author of Black Mass: Apocalyptic Religion and the Death of Utopia (Allen Lane)

 

From The Guardian September 28, 2008.

 

Not So Much Bail-out As Rip-off By Nouriel Roubini

 

The US Treasury's purchase of bad debt will benefit shareholders at the taxpayers' expense-and worse, won't work

 

Whenever there is a systemic banking crisis there is a need to recapitalise the banking/financial system to avoid a destructive credit contraction. But purchasing toxic/illiquid assets of the financial system is not the most effective and efficient way to do this.

 

Such government-led recapitalisation ? via the use of public resources ? can occur in a number of ways: by purchasing bad assets or loans; an injection of preferred shares; an injection of common shares; a purchase of subordinated debt; an issuance of bonds to be placed on the banks' balance sheet; an injection of cash; credit lines extended to the banks and government assumption of government liabilities.

 

A recent IMF study (pdf) of 42 systemic banking crises across the world shows how different crises were resolved.

 

In only 32 of the 42 cases was there any government financial intervention of any sort; in 10 cases systemic banking crises were resolved without any such action. Of the 32 cases where the government did recapitalise the banking system, only seven included a programme of purchase of bad assets/loans (like the one proposed by the US Treasury).

 

In 25 other cases there was no state purchase of such toxic assets. Even in cases where bad assets were purchased ? as in Chile ? dividends were suspended and all profits and recoveries had to be used to repurchase the bad assets. Of course, in most cases multiple forms of government recapitalisation of banks were used.

 

But government purchase of bad assets was the exception rather than the rule. It was used only in Mexico, Japan, Bolivia, Czech Republic, Jamaica, Malaysia, and Paraguay. Even in six of these seven cases, purchase of bad assets such recapitalisation was combined with such moves as government purchase of preferred shares or subordinated debt.

 

In the Scandinavian banking crises (Sweden, Norway, Finland) which are a model of how a banking crisis should be resolved, most of the recapitalisation occurred through various injections of public capital rather than a government purchase of bad assets.

 

Purchase of toxic assets ? in most cases in which it was used ? made the fiscal cost of the crisis much higher and expensive (as in Japan and Mexico).

 

Thus the claim by the Fed and Treasury that spending $700bn of public money is the best way to recapitalise banks has absolutely no factual basis or justification. It is a total rip-off that will mostly benefit ? at a huge expense for the US taxpayer ? the common and preferred shareholders and even the unsecured creditors of the banks.

 

Even the late addition of some conditions is a fig leaf of dubious value, as they are totally vague and fuzzy.

 

With $700bn of public cash the pockets of reckless bankers and investors have been made fatter under the fake argument that bailing out Wall Street was necessary to rescue Main Street from a severe recession. The rescue could have been achieved with a cheaper and better use of public money.

 

Indeed, neither does the plan address the need to recapitalise those financial institutions. This could have been done via public injections of preferred shares into these firms; via required matching injections of tier one capital by current shareholders to make sure that such shareholders take first-tier loss; via suspension of dividends payments or via a an unsecured debt-for-equity swap.

 

All these actions would have implied much lower fiscal costs, and they would have been cheaper and shared the burden of responsibility more equitably.

 

For example if the private sector had done its fair share, only $350bn of public money would have been required; and of this $350bn, half could have taken the form of purchase of bad assets and the other half should have taken the form of injection of public capital in these financial institutions.

 

So instead of purchasing (most likely at an excessive price) $700bn of toxic assets, the government could have achieved the same result, or better, by spending only $175bn in the direct purchase of toxic assets.

 

And even after the government bail-out, banks that have not yet provisioned for such losses and writedowns will be even more undercapitalised than before. So this plan does not even achieve its basic objective.

 

The treasury plan also does not explicitly include an HOLC-style programme to reduce the debt burden of the distressed household sector. Without such a component, the debt overhang of the household sector will continue to depress consumption spending and will exacerbate the current economic recession.

 

Thus, the treasury plan is a disgrace: a bail-out of reckless bankers, lenders and investors that provides little direct debt relief to borrowers and financially stressed households and that will come at a very high cost to the US taxpayer. And the plan does nothing to resolve the severe stress in money markets and interbank markets that are now close to a systemic meltdown.

 

It is pathetic that Congress did not consult any of the many professional economists that have presented ? many on the RGE Monitor Finance blog forum ? alternative plans that were more fair and efficient.

 

This is again a case of privatising the gains and socialising the losses; a bail-out and socialism for the rich, the well-connected and Wall Street. And it is a scandal that even Congressional Democrats have fallen for this treasury scam that does little to help millions of distressed, debt-saddled home-owners.

 

From The Guardian , 2008.

 

America Has Terrible Headache, But It Seems Like No One Wants To Cure It By Gary Younge

For the election to make any sense in such a crisis, the assumptions of the past 30 years must be thoroughly challenged

 

There is common sense; and there is good sense. Common sense represents the received wisdom of years and the widespread opinion of the day. It may be rooted in fact, fiction, rumour or reality. On one level it doesn't matter. So long as it is commonly held, then, in essence, common sense becomes a fact of life.

 

Good sense, on the other hand, represents those durable truths and stubborn facts that outlive their unpopularity. The fact that it is right does not necessarily mean that it is not marginal. It persists for the simple reason that prevailing conditions underpin its relevance even when prevailing opinion ignores it.

 

At times the two coincide, at others they collide. At different moments in different places, burning witches, a flat earth, eugenics, slavery, smoking in restaurants and corporal punishment in schools were all common sense. But they were never good sense.

 

"Common sense is not something rigid and stationary," wrote the late Italian Marxist Antonio Gramsci, who crafted the distinction from Mussolini's prison. "It creates the folklore of the future, a relatively rigidified phase of popular knowledge in a given time and place." Good sense, he argued, was often concealed in common sense, but emerged primarily in times of crisis and transformation.

 

We find ourselves in one such crisis now. As markets plunge, banks fail and traders panic, the core principles that have underpinned western economic and political culture for a generation have been thoroughly discredited. Less than a month ago the invulnerability and inviolability of unregulated global capitalism was common sense. The system that leaves half of the world living on less than a dollar a day, with some so impoverished that they are eating mud cakes and selling their children into bondage, was apparently working well. To suggest otherwise was to be dismissed as extreme.

 

But such orthodoxies can collapse even faster than markets. By the end of last week the US treasury secretary Henry Paulson was literally on one knee before Nancy Pelosi, Democratic speaker of the House, begging her to save the bailout deal. Later George W Bush warned of the entire American economy: "This sucker could go down." Suddenly, government intervention in markets, reining in executive pay and placing controls on the flow of capital are good sense.

 

While the gravity of the crisis is clear, the prospects for transformation remain remote. The fact that this meltdown took place during a presidential election should be fortuitous. It ought to provide the two candidates with an opportunity to lay out different visions of how they would tackle the situation at a moment when the nation is intently focused on politics. If ever the country needed leadership, it is right now. And here are two men vying for it.

 

Yet the financial crisis has, for the most part, made the presidential campaign seem less relevant, not more. The credit crunch and the election are taking place as though on a split screen. There is a connection between the two - Barack Obama has bounced back as a result of people's attention being refocused away from lipstick and pigs and back on to their mortgages, retirement accounts and jobs. But it is not a substantive one. For while the crisis has changed the electoral conversation, nobody is seriously looking to this conversation for new ideas, let alone a solution.

 

The notion that there might be alternatives to rapacious capitalism have been all but banished from the public square. That limited discourse leaves us with limited options. Those who claimed that the government was the problem now cast it as not just the ultimate, but the sole solution. Good sense demands a thoroughgoing reappraisal of a system that's in a state of collapse; common sense requires we subsidise it in perpetuity for fear that it breaks down. That sounds like nonsense.

 

"If you beat your head against the wall," Gramsci once wrote, "it is your head which breaks, and not the wall." Right now the American public has a terrible headache. And it doesn't seem as if this presidential race is going to cure it.

 

For this election to make any sense at this juncture it must challenge the assumptions of the past 30 years that have led America to this place. They are assumptions that have been aggressively promoted by the Republicans in general, and George Bush in particular. But to gain traction they had to be first conceded and then embraced by the Democrats. The result is an American self-image rooted in unrivalled military superiority and economic might now stands in stark contradiction to a more tawdry and tattered reality. Add the credit crisis to defeat in Iraq and problems in Afghanistan and what you are left with is a sub-prime nation - overextended both militarily and economically, living large and beyond its means.

 

It will be the task of whoever wins on November 4 to manage America's decline in status and power and a consequent further deterioration in Americans' standard of living. This process will be painful and could be protracted. Little wonder, then, that nobody wants to talk about it. Instead they keep talking of America as the shining city on the hill, without realising that the city they are referring to is bankrupt and the lights are about to be cut off.

 

It was clear from Friday night's debate that neither John McCain nor Obama really know what to do. The little that they will commit to are things they agree on. Both stand at the mercy of events and the market.

 

That does not mean it is irrelevant who wins. The difference between them on this issue may be marginal, but for now they are the margins within which we live, and in which many will have to survive. Back in 1932, in the midst of the Great Depression, many commentators lamented the lack of difference between Herbert Hoover and Franklin Roosevelt. One satirist wrote a searing piece about an imaginary match-up between Franklin Hoover and Herbert Roosevelt. "Given later developments, the campaign speeches often read like a giant misprint, in which Roosevelt and Hoover speak each other's lines," wrote Federal Reserve chair, Marriner Eccles. Whatever slight difference there was rhetorically would prove to make a huge difference in reality during a vital period. It makes as much sense to elect McCain as it would have done to re-elect Hoover.

 

McCain's response to government coffers depleted by the bailout isn't to rescind his tax cut but to freeze spending on everything but defence, veterans and entitlements - a military financial complex. Obama has conceded that his plans to expand access to healthcare, education and to make America energy-independent will have to be trimmed. Finally, the American political class has embraced a redistributive agenda. The trouble is they are about to divert public money from the poor to the bankers and financiers.

 

"Capitalists can buy themselves out of any crisis, so long as they make the workers pay," said Lenin. It is rarely regarded as common sense to quote him in polite company. Yet as a description of what is taking place right now, it is the most sense I've heard in a long time.

 

From The Guardian September 29 2008

 

The End of Voodoo Economics By Ian Williams

Wall Street ideologues have been gambling our money and screwing us all. Now is a chance to correct their excesses

 

As the all-too-often selectively quoted Adam Smith actually said: "All for ourselves, and nothing for other people, seems, in every age of the world, to have been the vile maxim of the masters of mankind."

 

No one can say that current events are a one-off. The get-government-out-of-business brigade, the masters of the universe, have in their three decades of unbridled power produced the savings and loan bail-out, the Mexican bond bail-out, the Asian currency crisis, the Enron and other related scandals, the tech bubble, the Long-Term Capital Management collapse and rescue, a wage freeze for working Americans and now this.

 

And the irony is that these vile people who are now graciously agreeing to pocket a trillion dollars of taxpayers' cash have been arguing for three decades that government has no business in business, least of all in pension provision. In their famous phrase, it would pose a "moral hazard" for ordinary Americans to think that their government would look after them if in old age their income or their health failed them.

 

Those who have engineered these serial disasters, which have inflicted more damage on the US and world economy than Osama bin Laden and al-Qaida, have not been pursued into the hills of Bora Bora. Governments have reduced their taxes as they reward themselves with more and more salary, bonuses and stock options. If the shares of the company they manage take a dive, they backdate their options. If the company fails, they take a golden parachute. And when all else fails, they come to the taxpayers, top hat in hand.

 

There is one small consolation. What if these guys had achieved their desire, shared with John McCain and George Bush, to privatise the social security system? Just think of the social and economic disaster they could have wrought given all those trillions of dollars to play with.

 

With the sudden affection for government ownership and assistance now globalising its way consensually from Washington, will we see a new, social-democratic age of government involvement in industry? Probably not soon. But as Churchill said, this surely deserves to be beginning of the end of the Washington neoliberal consensus that George Bush's father called voodoo economics. Bill Clinton, Tony Blair and even Gordon Brown all succumbed to that old black magic ? and looking at Barack Obama's economic advisers, there is a more than even chance that he, too, is under its spell.

 

Clinton introduced tough love for working people, with welfare reform and lifetime caps, since it was clear that if you had no job it was your fault, not that of the titans of industry who had offshored your job or preferred to play the tables with sliced-and-diced derivatives of derivatives rather than use the capital for industrial and infrastructural investment.

 

Clinton famously quibbled about what "is" meant. It is much more productive to consider what the "market" is, not least when it falls from McCain's lips. As the negative example of Soviet-style economy suggests, it is difficult to beat the market when you are talking about the free exercise of consumer choices for goods and services and the consequent allocation of capital for providing them. But in the US, no one blinks when governments ban or regulate sales of tobacco, alcohol or drugs, let alone gambling or sexual services.

 

The financial markets, with increasing deregulation, have become a heady combination of sex and gambling. The Wall Street ideologues have been gambling our money and screwing us all, as investors, pensioners, workers and taxpayers.

 

There has been some understandable chortling as the British and American governments override their free-trade platitudes to nationalise companies, whether Northern Rock or AIG, Fannie Mae or Freddy Mac. But the plan Goldman Sach's alumnus Hank Paulson is proposing now is not nationalisation. It is a strings-free handout to his former colleagues on Wall Street.

 

However, there are opportunities in this crisis. Don't just take over the lemons left squeezed to the pips. Take equity shares in the whole companies. Maybe the proceeds could go to a sovereign wealth fund, to invest in manufacturing and infrastructure.

 

Above all, if the high priests of finance invoke government assistance, then now is the time to finish the job that Roosevelt started, Truman propounded and even Nixon considered: a universal single-payer healthcare system in the US. If AIG, one of the world's biggest insurers, is effectively now nationalised by the US government without debate, then who can argue? Nationalise the health insurance companies.

 

At the very least, now is the time to set up a comprehensive and effective regulatory system, and to ensure that if the taxpayers pick up the tab for executive excesses, the executives pick up more of the tab for taxes. Over to you Obama ? and for that matter, Gordon Brown. Are you with the vile or the victims?

From The Guardian September 26 2008

 

 

The Time Has Come For A Final Report On The 43rd President Of The US By Timothy Garton Ash

The man who set out to reinforce unbridled American power has weakened it in all three essential dimensions

 

As the two men who would succeed him train like Olympic athletes for tomorrow's foreign policy debate, pause for a moment to complete your final report on the 43rd president of the United States. What would you say?

 

I would sum up his two terms in four words: hubris followed by nemesis.

 

Remember the mood music of eight years ago. The greatest power the world has ever seen. Rome on steroids. An international system said to be unipolar, and Washington's unabashed embrace of unilateralism. The US as "Prometheus unbound", according to the neoconservative commentator Charles Krauthammer. Wall Street investment bankers bestriding the financial globe as Pentagon generals did the military globe and Harvard professors the soft power one. Masters of the universe. Personifying that hubristic moment: George Walker Bush.

 

And now: nemesis. The irony of the Bush years is that a man who came into office committed to both celebrating and reinforcing sovereign, unbridled national power has presided over the weakening of that power in all three dimensions: military, economic and soft. "I am not convinced we are winning it in Afghanistan," Admiral Mike Mullen, chairman of the Joint Chiefs of Staff, told a congressional committee earlier this month. Many on the ground say that's an understatement. The massive, culpable distraction of Iraq, Bush's war of choice, leaves the US - and with it the rest of the west - on the verge of losing the war of necessity. Here, resurgent in Afghanistan and Pakistan, are the jihadist enemies who attacked the US on September 11 2001. By misusing military power, Bush has weakened it.

 

Economically, the Bush presidency ends with a financial meltdown on a scale not seen for 70 years. The proud conservative deregulators (John McCain long among them) now oversee a partial nationalisation of the American economy that would make even a French socialist blush. A government bailout that will total close to a trillion dollars, plus the cumulative cost of the Iraq war, will push the national debt to more than $11 trillion. The flagships of Wall Street either go bust or have to be salvaged, with the help of government or foreign money. Most ordinary Americans feel poorer and less secure.

 

The decline in soft power - the power to attract - is also dramatic. The Pew Global Attitudes Survey has recorded a precipitous worldwide fall in favourable views of the US since 2001. The map is chequered, of course, but the distaste extends beyond policies of the Bush administration to things such as "American ways of doing business", and "American ideas about democracy". Iraq has been central to this collapse of credibility and attractiveness. When Bush denounces Russia for invading a sovereign country (Georgia), as he did again at the UN on Tuesday, a cry of "humbug" goes up around the world. Now American-style free market capitalism is taking a further hit, while some of the alternative models are looking better.

 

Last weekend, five former US secretaries of state - two Democrat, three Republican - gathered for a panel discussion on the future of foreign policy, televised by CNN. Asked by Christiane Amanpour what should be the biggest concern for the new president, Colin Powell replied: "To restore a sense of confidence in the United States of America." Madeleine Albright added that the world of 2009 would be full of issues "that can only be solved in cooperation with other countries". And, Republican and Democrat, they chorussed "close Guantánamo".

 

Even George Bush now seems to concur with this criticism of George Bush - and I don't just mean speculation that the father is privately critical of the son. Eight years ago, president Bush the younger hardly seemed to know what the word "multilateral" meant. In the course of his farewell address to the UN general assembly this week, he used the word "multilateral" 10 times.

 

Obviously not all this mess can be blamed on Bush: he's not responsible for the epochal rise of China, nor for jihadist terrorists' long-term hatred of the west.

 

But a great deal of it can. At the Truman Library in Independence, Missouri, you can still see the painted glass sign that president Harry Truman placed on his desk in the oval office: The Buck Stops Here. (On the back it says: I'm From Missouri.) The buck stops there. The contrast between the president from Missouri and the president from Texas is painful. Judgment, prudence, vision, patience, honesty - every quality that the 33rd president so signally possessed, as the US remade the world after 1945, has been signally lacking in the 43rd.

 

Iraq, the US's greatest strategic blunder in at least 30 years, is Bush's fault. The buck stops there. And the more we learn about it, the clearer it becomes that it was pursued with a mixture of self-deception and lies. The reporter Ron Suskind has a new book out in which he recounts how, in the runup to war, British intelligence secured unique access to Saddam Hussein's head of intelligence, Tahir Jalil Habbush.

 

Habbush told them what turned out subsequently to be the truth: that Saddam had ceased his programme of weapons of mass destruction, but would not admit it, because he was obsessed with keeping regional enemies such as Iran in a state of fear and uncertainty. That version was corroborated by Saddam's foreign minister, to whom French intelligence had originally secured access.

 

The Bush-Cheney White House ignored both reports, preferring what turned out to be the fabrications of a German intelligence source codenamed Curveball. Curveball indeed. Some of Suskind's reporting has been questioned, but the basic story is not in doubt. The Bush-Cheney White House pressed ahead to war on a fraudulent prospectus, suppressing and distorting very important contrary evidence. As a senior member of the administration told Suskind: "We're an empire now, and when we act we create our own reality." Hubris has rarely been better expressed.

 

Something similar happened with the vertiginous unreality of hyper-leveraged Wall Street investment banking over the past decade. The financiers' motto, too, could have been "We create our own reality". Again, nemesis follows hubris as the night the day. The White House was not directly responsible for what looks like wild financial irresponsibility, but it was responsible for not supervising and regulating it - something even John McCain is now at least implicity admitting. The buck stopped there.

 

As for the decline in American soft power, that is something for which George Bush was directly to blame. His arrogance, his unilateralism, his insensitivity, his long-time denial of the need for urgent action on climate change: all fed directly into the plummeting credit of the US around the world. It would have been a different story with a different president.

 

For years now, we have seen those who hate the US abusing and burning effigies of Bush. The truth is, the anti-Americans should be building gilded monuments to him. For no one has done more to serve the cause of anti-Americanism than GW Bush. It is we who like and admire the US who should, by rights, be burning effigies. But now, at last, we live in hope of a better America.

 

From The Guardian September 25 2008

Average: Select ratingPoorOkayGoodGreatAwesome

Your rating: None