US power is faltering

In the 1920ies and 1930ies world power moved from Europe (Great Britain) West accross the Atlantic. It was not until the 1950ies that everybody understood that European power had collapsed and that the USA was racing ahead. The 1956 Suez crisis caused the world to realise what the new power realities were. Exit Europe. All eyes on the USA and the new contender, Soviet Russia and world communism.

Right now we can see a similar power shift. In the stage of the 1920ies and 1930ies shift of power, when the UK needed US capital to develop the economies of its empire in the Middle East and Asia. The new global financial power is China. And it has started to openly flex its muscle: "Two Chinese officials at leading Communist Party bodies have given interviews in recent days warning, for the first time, that Beijing may use its $1,330bn (£658bn) of foreign reserves as a political weapon to counter pressure from the US Congress. Shifts in Chinese policy are often announced through key think tanks and academies."

And a key US Policy maker is taking heed (HT Parapundit). David Walker, comptroller general of the US recently warned:

"The US government is on a ‘burning platform’ of unsustainable policies and practices with fiscal deficits, chronic healthcare underfunding, immigration and overseas military commitments threatening a crisis if action is not taken soon"

The fiscal imbalance meant the US was “on a path toward an explosion of debt”.

The recent waves made by the US sub-prime mortgage crisis only underscore the words of the US comptroller general. European and Asian banks are underwriting US consumption. The US saving rate is close to zero. The US does not have the capital to develop its own infrastructures, let alone the infrastructures of societies in the Middle East. Moreover unfettered Third World immigration is straining US education, transport, health and many other infrastructures. Its economy is strongly consumption driven and this consumption is fuelled by credit. Meanwhile China is sitting on a mountainous treasure, much like Fafnir, Sigurd's Dragon.

The US government and the Federal Reserve must make economies. But these cutbacks will cause a recession and unemployment. Together with a disastrious foreign war this will make US internal politics unstable and depressed in the next decade. Think of the post-Vietnam era, but then much worse.

After 1990, the US was the only power and we lived in uni-polar world. We are moving back into a bi-polar world and I would expect local powers to become restless as well. Similar to what happened in the 1920ies when Japan and Germany tried to fill the British power vacuum with military adventurism and warrior ideologies.

Countries that could play such a role are Iran, Turkey and Egypt, for the Middle East. Iran has already allied itself in the SCO with Russia and China for such a role.