The world is waking up to the real America, said Hamid Omidi in Iran’s Kayhan, and it isn’t pretty. Infrastructure is literally crumbling all over the U.S., with bridges collapsing into rivers and tunnels cracking. The federal government, wallowing under massive debt, can’t pay for the necessary repairs. So it has resorted to war, “pretending that there is a global crisis to dominate other countries’ resources and to sell weapons.” But while economic panic was behind America’s “stupid and ferocious behavior in Iraq,” it hasn’t helped the U.S. economy. Instead, the dollar is weakening and investors are fleeing to other currencies. America is in decay.
That’s an overstatement, but America’s economic weakness is now undeniable, said Dmitry Shlapentokh in China’s Asia Times. In a humiliating slap to the Americans, for instance, Iraq recently awarded its new utility contracts to companies from China instead of the U.S.—a clear acknowledgment that U.S. economic management has been “wasteful, corrupt, and inefficient.” The fact is, America can’t project power against its enemies through its military alone—it must also coax its allies with largesse. Yet as the dollar weakens from the fallout of the subprime mortgage scandal, “the U.S. has started to lose its major weapon: the checkbook.”
A weak dollar is also bad for the rest of us, said Estonia’s Aripaev in an editorial. Since Americans can’t buy as much overseas with their diminished greenbacks, European companies are suffering. “Italian furniture manufacturers, German car manufacturers, French Champagne bottlers, and Spanish olive growers” are all feeling the crunch. Canada, though, is the hardest hit, said the Toronto Star. The U.S. is by far our largest trading partner, absorbing fully 80 percent of our exports. If the dollar continues to fall, or even just stays where it is, Canada could enter a recession. We can only hope that either the Bank of Canada moves to depress the Canadian loonie or the U.S. Federal Reserve steps in.
The Fed has already made matters worse, said William Rees-Mogg in Britain’s The Times. Last week, it imposed new accounting standards that require all banks that do business in the U.S. to disclose how they value their assets. The banks will now have to detail their holdings in not only those problematic subprime mortgages but other complicated financial instruments as well. It’s a good idea, in theory. But it comes at an inconvenient time. With banks already jittery, “the global banking system now faces the risk of a general flight toward cash” and other liquid assets “on a scale that has not been seen since the early 1930s.” British banks are already “showing signs of near panic,” and the new Fed rules only add to the insecurity. The banking crisis that began in the U.S. could yet spread around the globe.