The American Crisis Requires a New European Global Commitment


By Carlo Pelanda (September 15th 2008)



(Modified and translated by Marie Plishka)



The current crisis will not destabilize the global market.  But there is another one on the horizon that could do it.  The global system of governance centered on the United States is rapidly losing its regulating capacity and its drive in international affairs.  So much so that one can hypothesize that both America’s reign and the globalized market will cease to exist by 2015.  The problem is that there is not yet another system to replace the one we have known for 70 years.  We have to learn to see the new reality to find new solutions.


The tail of the financial crisis in America has caused implosions more extensive than expected that it has managed to surpass the Federal Reserve’s barrier of defense.  Thankfully, the magnitude of the disruptions is inferior to the ability to manage them.  The world will be able to absorb the crisis even though the crisis has created “black holes.”  But the key to a successful exit from this crisis will depend both on the quality of the political management and on the coordination of the central banks and the states.  Nevertheless, America is going to find herself very weak after the crisis.  This crisis, in fact, is aggravating another problem that has been present since the end of the 1990s.  America’s model based on opportunity is fading because the structural growth is not sufficient to sustain it.  In fact, Alan Greenspan had to create bubble after bubble to spur economic growth.  By doing so, he had to separate “confidence” and “stability.”  But economic performance is compromised if the two are too far removed from one another.  America can no longer rely on bubbles for economic growth, especially after this current bust.  Therefore, it will no longer be able to drive global growth.  The hypothesis of “decoupling” is false in that many other economic regions do not have a driving force equivalent to America, and we are able to see it in this crisis: if America imports less and is weak, the rest of the world would be adversely affected.  First problem: the world would be lacking an economic powerhouse.  The second problem is worse.  America’s power has become too small to contain the emergence of new authoritarian powers.  China and Russia are not interested in disrupting globalization, from which they draw their wealth.  Particularly not China.  Their priority is to defend their regimes by reducing both America’s sphere of influence and its pressure to democratize.  Moreover, they need to fuel nationalistic pride, via expansion, to maintain consensus for the regime.  They are succeeding at an impressive rate.  Dozens of dictators, from Iran to Venezuela, are growing bolder and more aggressive because they know they will be protected by either Moscow or Beijing.  The dissuasive American power imploded at the global level.  It is very likely America will no longer have the power to regulate the economic and geopolitical behavior of the majority of the nations.  This will weaken the “Western governance” of the world, governance based on economic balance and order.  The authoritarian capitalist models will implode on their own due to their intrinsic instability and will contaminate a global system less capable of repair.  Without America as the pillar in the global system, the group of democracies that rule the global economy will no longer have sufficient influence.  The cycle of capital will not find the necessary confidence.  McCain or Obama will be able to reconstruct part of America’s global strength, but not all of it.  And perhaps America is tired.  At some point in the future we will have an ungoverned world headed towards chaos.  For the first time since 1945 we face the collapse of the American pillar.  Solutions?  Only one solution is taking the steps to restore global governance based on western rule.  Europe should integrate America’s yielding power and create with her a symmetric alliance and a common market system.  Then should come the push for the integration of the euro and the dollar.  This solution would provide the new pillar of world order.  But this plan requires a Europe that in a few years transforms itself from and introvert into an extrovert, from being driven to being the driver.