America's president, as the political scientist Richard Neustadt once noted, may be the most powerful man in the world, but he has only one real power: the power of persuasion.
That's why US presidents are so keen to get in front of the TV cameras and address the nation from what Americans refer to as the "presidential pulpit." Barack Obama was back at the pulpit on Monday afternoon, as the world's stock exchanges plummeted. "No matter what some agency may say, we've always been and always will be a triple-A country," asserted the president. It had taken Obama three days to make a statement on Standard & Poor's decision to strip the United States of its top credit rating.
But Obama convinced no one. Even while the president was speaking, the Dow fell below 11,000 for the first time in nine months.
...The debate is transforming Obama's problem into one for the entire US. "Can America still lead?" asks Washington Post columnist E.J. Dionne Jr.. Millions of people around the world had hoped in vain that Obama "would restore the United States to a position of responsible global leadership," Dionne writes. "America's friends overseas know that the debt crisis was instigated by Obama's opponents. Yet they worry now about how strong Obama is, whether he will draw lines and if he can seize back the initiative."
Indeed, the rest of the world is displaying its uncertainty in a relatively open manner. Christine Lagarde, the new head of the International Monetary Fund, has warned that the fundamental belief in America's economic strength could be permanently undermined. Others can't resist showing schadenfreude. In a strongly worded editorial, Xinhua, China's state-run news agency, advised American leaders to show "some sense of global responsibility." Russian Prime Minister Vladimir Putin went even further, publicly accusing the US of "living like parasites off the global economy."
In a more ominous article, Spiegel Online ponders whether the world is going bankrupt.
Muddling through, postponing, playing down -- the motto of the crisis managers on both sides of the Atlantic has sent alarm bells ringing in stock markets. Britain's Economist magazine is warning of a double-dip recession in the US, a second downturn just three years after the last one. Many economists have been pointing out that last week's panic resembled the fear that swept financial markets after the collapse of US investment bank Lehman Brothers in September 2008.
Then as now, banks stopped lending each money. Then as now, banks' cash deposits at the central bank doubled within days. The European Central Bank reacted by assuring banks of unlimited liquidity in the coming months. It was an emergency measure that led to short-term relief but sparked anxious questions among bankers and stock market players. How long can the central bank keep up its market-soothing liquidity operations before it finally loses its credibility, the most important asset of a central bank? Is the financial crisis about to escalate? And will the world then be bankrupt?
...The scale of new borrowing is less of a problem than the inability of governments to find a credible strategy for reducing their debts. In the US, the government and opposition have been locked in a dispute over whether the deficit should be removed through tax hikes or cuts in social spending. In Europe, the solvent governments of the northern countries are refusing to underwrite the debt of the struggling Mediterranean countries.
The West faces a dual crisis that has engulfed its most important political leaders. President Barack Obama has failed to mend a gaping rift in US society and to outmaneuver the conservative Tea Party rebels. In Europe, it has become more evident with each European Union summit that German Chancellor Angela Merkel, rather than being in control of the crisis, is being driven along by it.
The West hasn't been this weak since World War II, and never before has a crisis paralyzed Europe, America and Japan at the same time. The problems of the leading industrial nations aren't just sapping the political influence of the so-called Free World, they are also threatening the global economy.