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Don’t loiter near the exit
Military debacle and economic decline haunt the Bush regime

When I was just a young possum in the school cadet corps there was a hoary old war story that we all knew. It was almost certainly apocryphal, but it ruefully expressed a nasty historic truth about the US role in the demise of the British Empire.


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Don’t loiter near the exit

Military debacle and economic decline haunt the Bush regime

1 April 2005

When I was just a young possum in the school cadet corps there was a hoary old war story that we all knew. It was almost certainly apocryphal, but it ruefully expressed a nasty historic truth about the US role in the demise of the British Empire. It went like this:

It’s World War I, 1917, and the US Army, splendidly accoutred, finally arrives on the front lines in France. Some American and British officers are drinking in the mess and the Americans, of course, are bragging. “We got this huge cannon”, said an American colonel “It’s so big, we test fired it in Texas and the sound was heard three days later in Washington”. “We had something even more remarkable”, a British lieutenant replied. “We had a bugle. We blew it in France in 1914 and it wasn’t heard in Washington until 1917”.

Once upon a time, many long decades ago, Britain was the manufacturing powerhouse of the globe. The British Empire was the biggest the world had ever seen, but while Britain’s pre-eminence as a manufacturer declined in the face of French, German and American competition, the need to guard the far-flung empire and its vital trade routes, at great expense, remained. Britain was able to sustain this imbalance between military muscle and economic clout because London was the world’s financial capital and Sterling was the accepted international medium for trade and exchange. But the money flowing in wasn’t invested in British industry, it was invested abroad. This provided a nice income stream, but the British elite were eating their own future.

It was the First World War that ended the days of wine and roses. To defeat Germany, Britain had to rely on the United States for most of its munitions. In exchange, Britain shipped its gold bullion to the US and sold British-held shares in American companies. Eventually Britain raised big loans in the US. The US coolly bided its time and only threw in its weight when Britain was near bankrupt. If the Yanks hadn’t entered the war in 1917, there’s no doubt Britain and France would have had to make a compromise peace with Germany.

The result? Britain “won” the war and expanded its empire still further by absorbing German colonies, but in reality it was a hollowed-out shell. The US had become the predominant global financial power.

Not surprisingly, the Yanks went on to repeat this lucrative exercise in World War II, and the result was swift and inevitable. By 1941 Britain was bankrupt and the remaining years of the war transformed it into an American client state.

It was just another example of the phenomena, well attested by history, that imperial powers go into terminal decline when their military muscle outstrips their economic clout, and now the US is exhibiting all the classic symptoms.

Once, (the time passed not so many years ago), the US was the manufacturing powerhouse of the world. It had its own substantial reserves of oil, and was isolated by the broad expanses of oceans with all the strategic security that implied. But over the last few decades the American capitalist class shifted most actual production of goods offshore, to the lowest wage hell-holes they could find, in spite of which profits from manufacturing declined and they’ve turned completely parasitic, increasingly relying on financial speculation and outright criminal scams.

The US is no longer the world’s manufacturing powerhouse and is completely hooked on imported oil. Even worse, it’s utterly reliant on foreign investors, particularly Asian governments, for the capital inflow to finance the consumer junk they’re going so spectacularly into debt to buy. How much in debt? Net US foreign debt is a staggering $3 trillion. The US balance of payments deficit is currently running at over $500 billion, requiring a capital inflow from the rest of the world of $2.5 billion a day to sustain it. The average US household is something like $20,000 in debt.

Meanwhile, the US is sliding further into a very expensive criminal adventure in the Gulf, dragging Australia with it. The Bushies are gambling on being able to guarantee a supply of the cheap oil on which the US depends – and on being able to sell what’s left to an oil-hungry world. It all looked so simple to the Neo-cons, but with the world looking on, it’s all gone horribly wrong, and now the US is as badly overstretched militarily as Britain was in 1940.

The fact that the US dollar is the world’s trading currency has allowed the US to get away with this parasitism for a long time, but they’re riding for a fall. Until now, the folks in Asia who actually save and actually produce things have been loaning money to middle class US consumers so they can splurge on Asia consumer goods. Will they ever get repaid? increasingly they’re doubtful. But now they have a choice, they can trade in the Euro. When the stampede towards the exit starts, this possum won’t be standing in the way.