RGE - The Decline of the American Empire

Sintetizando, Roubini dice:
- Los enormes déficits gemélos (fiscal y de balanza de pagos) se han agigantado gracias a las políticas Bush (recortes de impuestos y guerras). El déficit total por balanza de pagos ha alcanzado los 700.000 mill de dólares, mientras que la déuda del gobierno USA es de 2,5 billones de dólares (de la que el 60% está en manos de extranjeros, incluidos bancos centrales extranjeros y fondos soberanos).
- el dólar perderá su hegemonía. Será poco a poco, ya que las distintas economías querrán diversificar su riesgo. Es probable que dentro de poco las materias primas se valoren en otras divisas o conforme a una cesta de divisas.
- a partir de ahora, los fondos extranjeros no se van a contentar con bonos del tesoro: querrán participaciones en las empresas USA que les den derecho a entrar en consejos de administración.
- China y Rusia podrían hacer caer el dólar y los bonos del tesoro USA, así que USA podrá seguir teniendo la supremacia militar, pero las otras dos potencias pueden esgrimir sus armas financieras.
- El declive USA no será abrupto, se desarrollará en unas dos décadas.


The Decline of the American Empire

Aug 13, 2008

Recent economic, financial and geopolitical events suggest that the decline of the American Empire has started. After the collapse of the Soviet Union there was a brief period where the world switched from a bipolar balance of two superpowers to a unipolar world with one economic, financial, geostrategic superpower, or better, hyperpower, i.e the United States. But by now three factors suggest that the US has squandered its unipolar moment and that the decline of the American Empire – as the US was in effect a global empire – has started.
Let us explain how and why...
First, the US squandered its power by relying excessively on its hard military power in the wars of Iraq and Afghanistan and in its unilateralist foreign policy – including economic issues such as global warming - rather than relying more on its soft power of diplomacy and multilateralist approaches to global policy issues.
Second, regardless of mistaken US policies the rise of other economic and financial powers – the rise of China, the recent resurgence of Russia, the process of economic and political integration in the European Union, the emergence of India, and the rise of other regional powers such as Brazil, South Africa and Iran – implies that the relative economic, financial and geopolitical power of the US will be reduced over time. We are indeed slowly moving towards a multipolar world where there will be a balance of Great Powers rather than the hegemony of a single hyperpower. While on military terms the US is still the only superpower even its military power is now restricted by imperial overstretch and its armed forces being bogged down in Iraq and Afghanistan; thus, Russia has now been able to flex its muscle in its Central Asian backyard and humiliated the US – not just Georgia – in the latest conflict on South Ossetia. For the Bush administration having supported Georgia by words only and show its impotence – or unwillingness - to support an ally in spite of the administration push to have Georgia join NATO shows the limits of the American power. The US is at fault for effectively letting Georgia start a reckless attack on South Ossetia. Russia has scary and dangerous neo-imperial goals but deeply flawed US foreign policy of encircling a paranoid Russia allowed the worst nationalist tendencies of the Russian bear to reemerge.
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. The last time around the current account started to go into negative territory in 1991 after a brief surplus during the 1990-91 recession. In the 1990s the growing US current account deficit was driven by a private investment boom – the internet technological revolution – and thus the accumulation of foreign liabilities of the US was driven by FDI and M&A activity, i.e the US accumulated foreign liabilities in the form of equity rather than debt. But since 2001 the further worsening of the US current account deficit was driven instead by growing fiscal deficits - especially in the 2001-2004 period – caused by unsustainable tax cuts and by the buildup of spending on foreign wars and on domestic security and since 2002 by the collapse of household savings and boom in investment in unproductive stock of housing capital that the housing bubble induced. And while the weak dollar is now inducing a modest improvement of the external deficit the looming sharp increase in fiscal deficits - that the current recession and financial crisis is inducing - will cause a return of twin deficits in the coming years. 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 trouble with these twin deficits is multi-fold. First, superpowers and empires - like the British Empire at its peak - tend to be net lenders – i.e run current account surpluses – and be net creditors, not net debtors; The decline of the British Empire started in World War II when the British fiscal deficits in the war and the current account deficits turned that empire into a net borrower and a net debtor both in its public debt and external debt. That financial switch into an external debtor and borrower position was also the reason for the decline of the British pound as the leading reserve currency. And the British twin deficits were being financed by a rising economic and financial power that was a net lender and a net creditor, the US.
Second, 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. This system of vendor financing – with these US creditors providing both the goods being imported and the financing of such deficits – has led to a balance of financial terror: if these creditors were to pull the plug on the financing of the US twin deficits the dollar would collapse and US interest rates would go through the roof.
Third, while it is unlikely that China, Russia and other powers would suddenly pull the rug from under the US feet – as such action would lead to a sharp appreciation of their currency and negatively affect their export led growth model – relying excessively on the kindness of strangers – especially that of your strategic rivals – is extremely risky. Since almost 100 percent of all US fiscal deficits since 2001 have been financed by non-residents – as US residents net holdings of US Treasuries have been flat since 2001 - by now the total stock of US Treasuries held by non-residents is getting close to 60 percent. And the foreign financing of the US current account deficits has also become more risky: less FDI and equity, more debt, more short term debt, more debt held by official political actors – central banks and sovereign wealth funds – , less debt held by foreign private investors, and more debt held by politicals rivals rather than allies of the US. This change makes the US vulnerable to such rivals using the financial terror weapon – dumping US assets and or reduicing their financing of the US twin deficits – in situations of geostrategic tension.
Suppose Russia flexes further its muscle in its backyard – under the pretense of defending abused Russian minorities in Ukraine, the Baltics and other former Soviet Union or Iron Curtain countries. Then Russia could use its financial power – the ability to dump hundreds of billions of dollar assets – to exert both financial and military influence. So could China over time if trouble in Taiwan or other disputed Asian territories become big geopolitical issues. Russia and China are already winning the new war for the control of commodities and ressources through their investments in Africa and Latin America - in the case of China – and its domestic and foreign control of energy and pipelines in Central Asia in the case of Russia. China and Russia are indeed winning the new Scramble for Resources.
Fourth, the foreign creditors of the US are getting tired of financing the US in the form of low-yielding US Treasuries. Thus the switch of such reserve holdings to SWFs that are planning to make large equity investments possibly with actual control of corporate firms and financial institutions that are desperate for capital to recapitalize themselves. But this desire of our creditors to get equity investments – the gems of the US corporate world - rather than low yield debt instruments is hitting the political backlash of financial protectionism as the UNOCAL- CNOOC, the Dubai Ports cases and the likely protectionist reform of the CIFIUS process of approving FDI in the US suggest. But a country that needs to borrow from abroad 700 to 800 billion dollar a year to finance its external deficit cannot afford to be too choosy on the ways – equity rather than debt – that its lenders and creditors want to finance those deficits. The first rule of good manners if you are a guest is that you don't spit on the plate from which your host is feeding you. But in its creeping financial protectionism the US thinks it can dictate to other countries the form and the terms of the financing of its twin deficits. This attitude will not be allowed by such creditors to last much longer.
The ensuing decline of the US dollar as the main reserve currency will take time and will not occur overnight; but it is inexorable given the relative fall in US economic, financial and geopolitical power. Already Russia is flexing its muscle and pushing for an international role of the ruble; the euro is rising as a major reserve currency; central banks and SWFs will slowly but surely start to diversify away from dollar assets especially as the Bretton Woods 2 regime starts to unravel; and even the RMB may become the dominant currency in Asia in the next decade as capital controls are slowly removed in China. It will take little time – if the secular decline of the value of the dollar continues – for oil and other commodities to be priced in currencies other than the dollar or in a basket of currencies.
All these changes in the economic, financial, reserve currency and geopolitical role and relative power of the US will not occur overnight. But the trend is clear. The rise of the BRICs and other emerging market economies; the continuation of the process of economic and political integration in Europe; the US policy mistakes in economic, financial and foreign policies will steadily erode the power of the American Empire. This process will not be sudden and will take a couple of decades. But the trend is clear: the brief period of unipolar power of the American hyperpower is now over and a new age of balance of great powers is starting in the world. Also, the rise of non governmental actors – multinational corporations, NGOs, terrorist groups, non-nation state powers, failed and unstable states, non-traditional global players – will radically change the traditional balance of power as the power of nation states will shrink relative to that of other global players.
Whether the decline of an hegemonic power providing global public goods – security, free trade, freer mobility of capital and people, inducements to free markets and democracy, better environment, peace – will lead to a more stable world with many powers multilaterally cooperating on these global economic, financial and geopolitical issues; or whether the absence of such stable hegemonic power will lead to a more unstable world characterized by conflicts – economic, political and even military – among traditional nation states, great powers and non-traditional actors is an open and difficult issue. But it is certain that the decline of the American Empire has started.

the rise of China, the recent resurgence of Russia, the process of economic and political integration in the European Union, the emergence of India




¿Y en que se queda ese ascenso si se hunde el principal cliente de dichos 'neotitanes'?, a saber: China (factoria/maquiladora de ultramar baratera) e India (call center baratero y factoria de software económico).

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Cualquier parecido con China y los bonosmierda de deuda americana es sólo coincidencia. Lo digo literalmente, creo que suponer el relevo del mando 'global' cara a manos chinas es mucho suponer. Ahí tenéis su economía comenzando a sufrir las consecuencias de las materias primas disparadas y la caída del consumo en Occidente. EEUU en los años de decadencia británica no era una plataforma para deslocalizaciones; era una potencia industrial en toda regla y con una cultura floreciente, sin olvidar su magistral innovación tecnológica a lo largo del siglo pasado. Vamos, que su fuerte no era ofrecer mano de obra baratita sin derechos laborales para multinacionales apátridas ni hacer copias baratas aka homenajes de coches, aviones, videojuegos y demás cacharros.

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Estados unidos ya tenia un deficit del 10 por ciento hace ya 30 años y no por eso dejo de ser la 1a potencia mundial, y ha pasado por crisis much opeores q esta y no ha dejado de ser 1a potencia mundial, los q escriben cosas asi yo creo q solo pretenden vender unos pocos libros aunqe ojala tubieran razon.

Si! todos esperabamos esta correccion.... pero aun es muy pronto para establecer una tendencia secular en caida libre. Lo que tenemos que buscar en los proximos meses es evidencia si los destinos de sus exportacioens e importaciones empieza a cambiar. En paises como Malasia y Tailandia (que es como hablar de China porque siguen un tipo fijo mas cercano a cambios en el RMB) ya se ven un cambio en los destinos de exportaciones hacia Africa y Oriente Medio.

No creo que los chinos aspiren a cometer los mismo errores que USA ha cometido. Un mundo distinto en epocas distintas... vamos a algo mas multipolar.


De acuerdo pero Fray Guillermo resume el siguiente punto que es muy acertado!


No tienen una gran base innovadora pero la pueden comprar o contratar, como hizo USa con los cientificos Nazis que se trajo tras la guerra y todo lo que pesco posteriormente. Lo que importa es que China, Rusia y otros pueden imprimir billetes contra el horizonte futuro de consumo de su poblacion. Lo interesante sera ver como lo hacen sin aplicar politicas fiscales redistributivas.

Por fondos extranjeros lease no solo China, sino Singapur/temasek, las monarquias petroleras y Rusia.

La entrad de estos fondos es fundamental! La CIA/CNBC ya se ha pronunciado que hay que abrir las puertas...y estos solo hablan sobre caballos ganadores. Cualquier sentimiento nacionalista por el congreso, lo tendran que tratar con sus psiquiatras.. por supuesto Boeing, Lockheed Martin y otras quedaran exentas...

Luego estan los ricos de estos paises y la oferta USA como estilo de vida: Palm Beach, Miami, Los Angeles, NY etc... que es a lo que aspiran los nuevos y viejos ricos, yuppies y otros aspirantes de estas economias. Ni que decir de la infraestructura educativa y de salud a la que podran acceder. No me cabe duda que si no van por su voluntad se los traeran para comprar esas grandes casas y mansiones de los "jumbo loans".

En los 70-80 USA fue refugio de elites centro y sudamericanas. Los Asiaticos era en su mayoria refugiados... ahora lo dejan de ser y entran como propietarios...matando el mito del tio o la tia rica de America que se caso con el Marine.













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Y lo siguen siendo, ¿a dónde huyen los 'oligarcas' enemigos de la revolución Bolivariana? Incluso en países 'estables' como México, EEUU sigue siendo destino habitual de inversiones en ladrillo amén de servir como 'gran mall', colegio y destino habitual de vacaciones, tanto en verano como en invierno etc etc. Conozco bien el caso de las clases medias-altas y altas mexicanas. Es costumbre enviar a los hijos a estudiar al norte (las universidades locales son para pobres -públicas- y para chusma clasemediera -privadas-). Muchas de estas familias tienen propiedades en Estados como Florida (que es mucho más que Miami) o California. Es habitual que hagan escapadas a diversas urbes norteamericanas para hacer compras, o bien, pasar las vacaciones de invierno en sitios como Aspen (saben vivir bien). El vecino del norte les sirve incluso como Hospital cuando enferman. Quizás ahora le toca turno al empresario de Chongqing.

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