Monday, September 29, 2008

Watching America Stumble

Items I've posted on this blog and elsewhere in recent weeks have focused on certain themes:

1. The United States of America is now in the first major spasm of its decline as the dominant nation of the world.

2. America has surrendered much of its strength, even its sovereignty, through its dependence on foreign lenders.

3. Globalization and the evolution of America's rentier class, the richest of the rich, has powerfully undermined that nation's future prosperity in the pursuit of immediate, temporary gain. These have resulted in the investment of America's wealth into growing its rivals economies, rivals that are now its major creditors and key lenders.

John Gray restated these points in an excellent article he wrote for yesterday's Guardian. If you're concerned about what lies in store for the United States (and if you're Canadian you have every reason for concern) you should read his piece, "A shattering moment in America's fall from power."

Here is something to keep in mind while you're mulling this over. After the bailout, if it goes through, the American federal debt this year will swell to $11.3-trillion. That omits unfunded liabilities such as Social Security and Medicaire which would triple that figure.

America's Gross Domestic Product - the value of everything made in the country, comes in at about $14-trillion. So, even leaving out the lion's share of the government's red ink, the deferred and unfunded Social Security and Medicare liabilities, Washington is getting awfully close to a full year's GDP in direct debt.

But it's not just Washington's debt that has to be fed out of that GDP. You have to squeeze in all the indebtedness of other levels of government and the private debt - you know, mortgages and the like. The best estimate of the total American debt (excluding Social Security and Medicaire) is $53-trillion.

And only a small part of that $14-trillion GDP can go to debt. A lot of it goes into direct spending - people have to eat, they have to put fuel in their cars, they have to send their kids to school; businesses need to pay their employees and buy supplies; governments need to pay for bureaucracies and buy tanks and jet fighters for their military, states have to maintain highways, cities have to pay their cops and on and on and on. At the end of the year the Feds alone have added another $400-billion in debt that just goes right on top of the pile along with the accumulated deficits anyone else is running.

Geez, ask yourself what the United States would look like today if it actually had to balance all of its budgets - individual, corporate, municipal, state and federal? I'll bet there would be massive, widespread poverty to the point of provoking dangerous social upheaval. Wouldn't that be a gruesome spectacle?

No comments: