Naked Capitalism Link of the Day

Today's link: Decline and fall of the American Empire, at the Guardian:

The US is a country with serious problems. Getting on for one in six depend on government food stamps to ensure they have enough to eat. The budget, which was in surplus little more than a decade ago, now has a deficit of Greek-style proportions. There is policy paralysis in Washington.
The assumption is that the problems can be easily solved because the US is the biggest economy on the planet, the only country with global military reach, the lucky possessor of the world's reserve currency, and a nation with a proud record of re-inventing itself once in every generation or so.
All this is true and more. US universities are superb, attracting the best brains from around the world. It is a country that pushes the frontiers of technology. So, it may be that the US is about to emerge stronger than ever from the long nightmare of the sub-prime mortgage crisis. The strong financial position of American companies could unleash a wave of new investment over the next couple of years.

Let me put an alternative hypothesis. America in 2011 is Rome in 200AD or Britain on the eve of the first world war: an empire at the zenith of its power but with cracks beginning to show.

This is a hypothesis which I have held since at least 2001.  I think this is a tremendous country, which will continue to be a major player in the world economy.  But it will relenquish its position as the pre-eminent power in the world.  I don't think that China will take over the dominant role the U.S. has held, but that it will become the first, among many regional players.  The Eurozone, the U.S., China and eventually India will be the major players, with Japan, Australia, New Zealand, Russia, Brazil the OPEC states and the Scandinavian countries filling in significant second tier roles.  The U.S. will have to address serious energy and health care issues, along with dysfunctional politics and the draining wars, before it can right its ship of state.  But overall, I believe we are heading toward a lower standard-of-living relative to the rest of the world regardless of what happens.  That doesn't mean other parts of the world will have a much better standard-of-living than ours, but that we won't have such a significantly better SOL.  I think that is something we will be forced to accept, and there is nothing we can do to prevent it.