Reckoning today from Rancho Santana, Nicaragua…
Not much action on Wall Street. The Dow barely moved yesterday. Oil is right at $100 a barrel. The 10-year T-note yield is still below 2%.
The Greeks are “toast,” says our colleague Chris Hunter. The Germans are fed up with them. It looks like they are going to push the Greeks into default…and out of the euro.
But the threat of a Greek default casts a shadow over all of Europe. The New York Times is on the story:
BRUSSELS – Moody’s Investors Service cut the debt ratings on Monday of six European countries, including Italy, Spain and Portugal, and became the first big ratings agency to switch Britain’s outlook to negative.
The move came a month after similar downgrades by Standard & Poor’s and Fitch Ratings. All three agencies cited the debt crisis and its ramifications for the region’s economy.
In a statement, Moody’s said the main reasons underpinning its decision were “the uncertainty over the euro area’s prospects for institutional reform of its fiscal and economic framework and the resources that will be made available to deal with the crisis.” It also cited Europe’s increasingly weak macroeconomic prospects, which it said threaten the adoption of austerity programs and the structural reforms needed to promote competitiveness.
Empires come and go. And in coming and going, they seem to be symmetrical. The way up takes about as long as the way down. The Roman Empire took hundreds of years to reach its peak and hundreds of years to go away. The Third Reich was supposed to last for 1,000 years, too. Instead, it lasted 12, with about 8 years of expansion and 4 years of contraction.
The British Empire got underway with the conquest of Scotland and Ireland. One hundred years after the Battle of Culloden, which crushed the clans and sealed Scotland’s fate, the Brits ruled half the world. But 100 years later, their empire was mostly gone…with the US having taken away the imperial crown.
The US empire could be said to have begun with the defeat of the South in the War Between the States. Or, perhaps with the invasion of the Philippines in 1899. It peaked in the early ’70s…when US wages reached a top. Or, maybe in the ’80s, when China began to compete with it and the US shifted from a creditor nation to a debtor. Now it is on the downward slope. In a few years, China will have the world’s biggest economy. A few years later, it will probably have the world’s dominant military force.
Will the decline be graceful and dignified? Or marked by bankruptcy, hyperinflation, war and shame?
John Kagan, writing in The Wall Street Journal, doesn’t think he will like it.
If and when American power declines, the institutions and norms that American power has supported will decline, too. Or more likely, if history is a guide, they may collapse altogether as we make a transition to another kind of world order, or to disorder. We may discover then that the US was essential to keeping the present world order together and that the alternative to American power was not peace and harmony but chaos and catastrophe – which is what the world looked like right before the American order came into being.
We don’t know what will happen. But we doubt we will like it either.
Still, we’re not silly enough to think that the path to imperial decay can be blocked by our own willpower. Here’s Kagan again, delusional:
…international order is not an evolution; it is an imposition. It is the domination of one vision over others – in America’s case, the domination of free-market and democratic principles, together with an international system that supports them. The present order will last only as long as those who favor it and benefit from it retain the will and capacity to defend it.
He seems to think that if an imperial power spends more money on its military industry it will somehow resist the tides and the winds. All of imperial history argues that he’s wrong.
When an empire’s time is up…it’s up.
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