Monday, August 18, 2008
Roubini: The Decline of the American Empire
I could not agree more.
1) Military overstretch
2) Rise of other powers (see above)
3) "Third, and more important, the US squandered its economic and financial power by running reckless economic policies, especially its twin fiscal and current account deficits."
"By now the US is the biggest net borrower in the world – running current account deficits still in the 700 billion dollars range – and the biggest net debtor in the world with its foreign liabilities now over 2.5 trillion dollars."
"the last time the US was running large twin deficits in the 1980s the main financers of these deficits were the friends and allies of the US, i.e Japan, Germany and Europe as the US external deficit was against these economies. Today instead the economic powers financing the US twin deficits are the strategic rivals of the US – China and Russia – and unstable petro-states, i.e Saudi Arabia, the Gulf States and other shaky petro-states."