Predicting the decline of the United States has been in vogue since the birth of American hegemony. Sputnik, Vietnam, stagflation, budget deficits, trade deficits and even the end of the Cold War all triggered predictions of the end of America. With the 2008 financial crisis, however, there seemed to be a sense that this time was different. Tomes with titles like The Post-American World and The End of Influence began to appear on bookshelves. Germany’s finance minister confidently predicted that the United States was entering its last days as a financial superpower. Serious commentators spoke about how a ‘Beijing consensus’ would supplant the ‘Washington consensus’. America looked as if it would disappear in a vortex of debt.
Fast forward to this year, and a funny thing has happened to American influence — it’s unbowed. The very suggestion that America may be strong enough not to need quantitative easing sent global financial markets into spasm last week. If America was coming off life support, then the subsidies for all kinds of financial packages would end. As one financial strategist told the New York Times, ‘The Fed isn’t just the US’s central bank. It’s the world’s central bank.’ This point was not lost in Britain, where government borrowing costs surged. It’s said that when America sneezes, Britain catches a cold. But even as America gets better, Britain can remain ill.
For those in Britain who are constantly told that the crisis ‘started in America’, this must all look rather strange. If the crash was an American disease, then shouldn’t Uncle Sam be worst affected? How come the US is now free of bailed-out banks, having sold them at a tidy $25 billion profit, when Britain looks like it will be saddled with zombie banks for another decade? And given that the Obama administration has spent the last few years deadlocked with a bickering Congress, how have the obstacles to growth been removed so quickly?
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