Wednesday, October 15, 2008

Arms Race Update - Security Fallout of US Meltdown

The Great Wall Street Caper crash has spread around the world and in some troubling spots the locals are getting decidedly anti-American. One of them is Pakistan.

There's some speculation that China is about to capitalize on America's fiscal blunders to extend its own sphere of influence while its rival is in disarray.

Pakistan is said to be on the verge of debt default, a crisis that has sent President Zardari off, not to Washington, but to Beijing looking for a rescue in the form of a $6-billion bailout. In a world where trillion dollar bailouts are now a fact of life, $6-billion doesn't sound like much but it can sure buy an awful lot of influence with a country such as Pakistan.

From the Washington Post:

"The Pakistanis like to call the Chinese their all-weather ally, and the U.S. their fair-weather friends," said Daniel Markey, senior fellow at the Council on Foreign Relations. "This kind of loan could be seen as self-serving by the Chinese, and continue that impression."

The paper reports that, in Pakistan, "the climate of crisis and public anger over domestic bailouts in the United States and Western Europe have made even a modest infusion from its Western allies politically difficult."

With American intelligence agencies calling Afghanistan a "downward spiral," a move by Pakistan away from the West and toward China's sphere of influence cannot help but jeopardize America's position in the region.


penlan said...

The anti-American sentiment has been growing steadily, as you know, ever since Bush invaded Afghanistan & then Iraq. This whole financial meltdown is the straw that has finally broken the camel's back, so to speak. This is the end of the U.S. as a so-called global "friend". And the end of the power of influence it's had for a very long time.

The Mound of Sound said...

I tend to agree with you that America's traditional influence abroad is in a state of flux.

The global scope of the Wall Street/derivative/credit default swap meltdown presents an array of unforeseen problems for the United States.

Pretty much every nation is affected, even smaller states such as Pakistan. In this "small state" category there are many with governments or populations already hostile to or suspicious of the United States. A lot of these same states already have homegrown economic problems but it's going to become absurdly easy for their leaders to begin blaming their own economic failings on American greed and even easier for already anti-American populations to believe it.

Bear in mind that many people in the Third World are already being hammered by high energy and high food costs and I mean really hammered. The idea of America adding to their economic misery is bound to have unpleasant repercussions.

Then there's China which, with $1.9 trillion in foreign reserves, is poised to exploit this American whirlwind by acting as saviour of these impoverished but often resource rich nations (how can they be both? See, Niger) by making low-interest rescue loans.

The mind reels.

Anonymous said...

Some of us have known for a long time just what China is capable of and is willing to do to move forward and all with the help of out sourced Western Companies and America's incessant borrowing from China. Now I you think for one minute the wealthy of this world give a darn what is happening in this world? Think this is emotional drival? NOT!!

The Mound of Sound said...

AM, I really would urge you to get your hands on a copy of Kevin Phillips 2005 book, "American Theocracy" which explains in clear detail how the wealthy gorge themselves into their own demise, taking their dominant nations down with them.

China is doing nothing but playing its cards well, cards that have been dealt to it by the United States.

Well before I created this blog two years ago I was writing about this. It struck me then that if China had plotted to achieve what America essentially did for them, it would have been diabolical. As it is they've taught us that capitalism actually prefers, hands down, the milieu afforded by a totalitarian state over a democracy.

It's quite remarkable that any of this should take us by surprise.