Down with Democracy?

The past 36 hours have witnessed a maelstrom of geopolitical and financial chaos to rival the most tumultuous days of September and October 2008.  The unlikely culprit?  Democracy.  The original article, for that matter--Greek democracy, for that matter.

For much of the past couple years, and increasingly in the last three months, world financial markets have been held hostage by the debt problems of a small Meditteranean nation that accounts of 0.5% of the world's GDP.  Whenever prospects for Greece looked better, stocks soared, bonds fell, the euro rose and the dollar fell, economists cheerily prognosticated on the likelihood of buoyant global growth over the coming months and years.  Whenever prospects for Greece looked worse, stocks plunged, bonds soared, the euro fell and the dollar rose, economists filled the airwaves with somber assessments of economic health and prophecies of impeding doom.  After the most most harrowing and pessimistic period yet, markets suddenly gained new faith in Europe at the beginning of October, and began a heady and exhilarating climb to new heights of optimism, capped off by an exultant surge last week as European leaders overcame their differences to agree on a dramatic and it seemed decisive solution to the Greek problem.  

But what goes up must come down, and Greek Prime Minister George Papandreou's announcement Monday night of a referendum pullled the rug out from under the market about as decisively as a terrorist attack on Wall Street could've done.  From Tokyo to New York, stock markets plunged, erasing their recent gains.  Bank stocks took what Obama would call a "shellacking."  US Treasury bonds rallied so fast that experienced traders were left dizzy and disoriented.  World leaders and economists erupted in furor--how dare he?  How dare he call a referendum?  Papandreou himself was suddenly sitting in the hotseat, facing a no-confidence vote and the defection of key party members, his government at risk of collapse.

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The Late Great United States: A Lament

Today, August 2, 2011, the US Congress managed to agree not to send the country headlong into bankruptcy.  While we may be glad that the threat of financial Armageddon was averted for the time being, it would be an understatement to call this a Pyrrhic victory, coming as it did at the cost of the last shreds of American credibility abroad and unity at home.  Indeed, perhaps someday this day will be remembered as a symbolic milestone in the decline and fall of the American Empire.  Certainly, whether you mourn or celebrate the end of American hegemony, it is an occasion that calls for a pause for sober reflection.  

It is a perhaps clichéd now to declare that we live in the twilight days of America's world domination; indeed, I suspect that just as the 20th century is now seen as the "American Century," the verdict of history will mark 2001, the turn of the century, as the turning point, the year when the engine of American economic growth sputtered to a halt, when America sought to flex its muscles in response to external attack and gained nothing from the exercise but the hatred of former friends, when a maverick Texan president decided to take the country on a glorious John Wayne expedition against the enemies of civilization that ended up as a ride into its own sunset.

Yet it was only the events of the past couple weeks that succeeded in bringing the fact of our decline home to me--the recognition that we live at the end of an era, on the cusp of uncertain and perhaps unhappy days.

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Delusions of a Prodigal Nation

We've all heard the news about the GOP's new "Pledge to America," which states, more or less, "We pledge allegiance to the Tea Party, and to the millions of voters for which it stands, and promise to do whatever it says."  No, it doesn't really say that, but of course, it's no secret that the Republicans are tripping over themselves to try to align themselves with, rather than against, the wave of far-right hysteria the Tea Party represents.  The basic message of this movement is to say, "No to taxes" categorically, "No to government spending" rather vaguely, and "No to deficits" as an afterthought.  Taxes, we are told, are at unacceptable levels--never mind that they are lower than they have been in decades (whereas the highest marginal tax rate under the conservative Eisenhower was 91%, now it's only 36%!).  And never mind that income inequality has shot to unprecedented levels, with the richest Americans increasing their incomes even in the midst of recession, and with the top 20% now accounting for 49.4% of all income, making it hard to see on what basis one could oppose higher marginal tax rates.  

So, we must balance the budget without increasing taxes, we are told.  This will be easy, the Pledge to America assures us, with a vague wave of its hand promising $100 billion in spending cuts by getting rid of wasteful government spending.  But that won't be enough--assuming that Congress does defy the Tea Party and let the Bush tax cuts expire for the top two income brackets, then, if we don't want to raise any more taxes, we will need $255 billion per year in spending cuts to achieve a balanced budget by 2015, which is pretty much a fiscal necessity.  How hard is it to cut $255 billion per year?  A new study by the Center for American Progress reveals the bleak answer.  

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