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Opinion: Global economic meltdown worse in many ways than Cold War

October 2nd, 2011 Posted in Opinion

By Jakob Asplund

The United States has been the engine of the world’s economy for decades, but that engine is now stalling, creating an ever-growing threat.

It is almost as if the global economy has become today’s Cold War. Instead of a nuclear arms race, we find ourselves in a money race. And just as there are no winners in nuclear war, there are none in today’s financial climate.

Those blaming the current commander-in-chief for the world’s financial condition, think back to what really happened 10 years ago and what it did, not only to the U.S. but to the entire world.

What began following 9/11 was far more damaging than Osama Bin Laden or Al-Qaida could ever have accomplished. As economist Joseph Stiglitz said in an article for Project Syndicate, George W. Bush chose to finance the wars in Afghanistan and Iraq entirely on credit. Stiglitz, a Columbia Business School professor and former Clinton administration adviser, said this is the first time in history this has been done.

In the 10 years since 9/11, the United States has had a massive military rearmament to support those two wars. Osama Bin Laden is dead, Saddam Hussein is no longer, and the Taliban is more and more desperate as their numbers decrease. In Libya, Muammar Gaddafi seems to be on his last legs, and Bush’s “axis of evil,” no matter how ridiculous it sounded back then, doesn’t seem so evil anymore.

Despite all this, are we that much safer? And more importantly, was this safety worth it?

The reason I raise this question is the difference between the estimated $60 billion the current wars were supposed to cost, according to the Bush administration, and the $3,000 billion to $5,000 billion actually spent, according to Stiglitz, or a much more modest $1,300 billion, according to a recent congressional report. Tax cuts and the expenditures for fighting the two wars hollowed out whatever surplus was there when Bush took office from a Democratic Clinton administration that had balanced the federal budget.

Today, the United States and Greece are the two frontrunners for financial scapegoating, on two completely different levels, of course. These two are closely shadowed by Portugal, Spain and Ireland. However, southern Europe will continue receiving support from the European Union; Spain has, for instance, shown ability to make cutbacks before. As for Greece, many would like to throw the country out of the European Union monetary cooperative, but the effects might be similar to those of the first missile being launched. Everybody seems to be on edge, sitting, waiting for something to tip things overboard.

Meanwhile, European financial jitters regularly rock U.S. markets, which have fallen more than 10 to 12 percent over recent months.

What also makes the United States’ situation the most troublesome is that it’s not only the government that owns enormous amounts of money, but also We the People. According to the U.S. Treasury, the U.S. debt is about $14.7 billion, or $131,526 per taxpaying citizen.

Amidst all this, China, which owns a massive amount of U.S. debt, is a constant concern. The longer it takes for the U.S. government to pay back its loans to China, the more dependent we become on foreign currency. Interest costs alone go as high as $3.71 billion today, according to the U.S. Treasury.

Another tough challenge for the U.S. comes from within. As long as Congress stays polarized, negotiations take too long. In times of economic crisis, it is important to have a determined executive political control.

At a time when civil wars rage all over Africa, as Japan rebuilds after its tsunami-nuclear catastrophe, and Europe anticipates more expensive electricity as Germany liquidates its nuclear power program, it would feel a little safer if the world had what used to be the only superpower back on its feet.

Instead, we have an American façade with plenty of holes in it. A few months after the financial disaster that broke out in 2008, Barack Obama took over in the White House. His stimulus package for the banking industry and the over-debated (get over yourself, America, and just go with it!) health-care reform have Republicans seeing red. This—along with an increase in unemployment and interest rates nearing zero—creates a hazardous landscape where someone can easily slip. When this happens, I do not think we will be seeing bailouts or countries like Iceland struggling with buying tomatoes for their McDonalds’ hamburgers. We will see a COMPLETE shift of wealth and power to Asia, which has already begun.

The Cold War is over, but a more challenging one now grips the world. The growing worldwide tension is similar to the Cold War in that something, sooner or later, will have to give. It seems everybody is waiting for that one thing to tip it all over and, if it does, I am changing from American to Chinese. This is, by the way, coming from a Swede.

TP

Tags: 911, Cold War, financial crisis, global economy