Though it was widely expected at least a week before, the world was nevertheless shocked by Standard & Poor's decision to downgrade the US credit rating. Though Europe's sovereign debt problems are much more severe, with Greece, Ireland, Portugal, Italy and Spain making headlines, the US debt crisis is causing unprecedented turmoil.
It's not only because the US is the world's largest economy with links to almost every country and big business around the globe. One would assume that America matters more because its debt is in its own currency, which in turn is a global benchmark, and also due to its political clout as the sole superpower.
Actually, it is all these factors combined, in addition to another very important reason: America is still ‘The Dream', and if the dream turns into a nightmare it's the end of the world.
The American Dream tended to be perceived as mainly economic: unrestricted opportunity in a large economy that's a textbook of free market capitalism. But that dream was political as well, with a tradition — though short in historical terms — of the ultimate democracy and individual rights.
That political dream became the envy of ‘old' democracies, to the extent that some would refer to it in campaigns for political change in Europe. Political freedom, that entails transparency and openness, made economic freedom unrivalled. The curve of political and economic idealism was up till the late eighties.
With the collapse of the socialist bloc and America assuming its new role as the main pole of the world, the curve seemed to have peaked. Is it going down now? Maybe. Is that a trend, or just a fluctuation? It looks like a trend. And for that, America matters more.
Whether you accept it or not, the US is the world's ‘anchor' despite all the rhetoric about others seeking to replace it at the helm — or even share its position. Economically, China is not poised to lead even if its economy became the world's largest — it's dependent on sound US and European Union economies.
China is not willing to shoulder leadership responsibilities; it only wants to reap the fruits of being a superpower. Attempts by old colonial powers in Europe to copy the American-led invasion of Afghanistan and Iraq ended up a big failure. Look at the French-led military intervention in Libya.
If industrial capitalism beamed from Britain, financial capitalism is an American trademark. The global financial crisis started in America four years ago, reverberating around the globe and pushing the whole world economy into recession. That is not over yet, and patchy reforms are not capable of reviving the ‘system'.
Economic malaise
The economic malaise coincided with a political recession that has been in the making for three decades. Let us not forget that political violence, or ‘terrorism', was seen in America during the eighties, long before what happened in Norway recently. That was an early sign of the ills of politics.
Norwegian ‘terrorist' Anders Behring Breivik didn't target immigrants — Muslims, Russians or Polish — but targeted his own government's buildings and young members of the ruling party — like the Oklahoma terrorist who blew up a federal building.
The world's socio-political system is deteriorating to the extent that many forces are seeking far-fetched ways of change. Since the late eighties, political parties in Europe and the West in general are clustering around centrist politics — sometimes you can't make a distinction between right and left.
This has created a huge vacuum in the mainstream political sphere. Far-right, and the unnoticed far-left, parties are not filling this vacuum, and people try to find a way.
The media is making that somehow violent. If political recession turned into a depression combined with an economic one, this is the perfect recipe for violent chaos. Europe might be the most suitable environment for breeding that awful trend, exactly as it suffered more from the financial crisis starting in America.
Where is all this leading us now? Can the world detach from America (or as economists say ‘decouple') and find its own way? I don't think it is practically possible. Moreover, no other country or power is capable of ‘innovating' a way out this financial mess as is the US.
The traditional American dream might be coming to an end, but the world is not dreaming differently. Let the cycle take its full turn, and the remedy will most likely come again from across the Atlantic.
America matters for the future as it mattered before and it matters now.
Dr Ayman Mustafa is a London-based Arab writer.
