All of last week--more accurately, all of this year--has brought a steady stream of news of a financial catastrophe looming over the world’s most powerful nation, the United States. The crisis spread to Britain, then onto the rest of the world.
Northern Rock of Britain; IndyMac Bancorp; the Federal National Mortgage Association (more commonly known by its nickname Fannie Mae), the Federal Home Loan Mortgage Corporation (better known as Freddie Mac); the investment banks Bear Sterns and Lehman Brothers; Washington Mutual; and the world’s largest insurance firm and one of the world’s 20 largest companies, American Insurance Group (or AIG), have either gone bankrupt or gone to the US government in desperate need of a bailout.
Every single one of the world’s leading stock market indices last week registered steep falls and the volatility continued right to the end of the week.
In all this, one particular stock market index to watch is the Hang Seng of Hong Kong. The economy of the Chinese territory of Hong Kong is built largely around financial institutions and transactions and as such gives us a clearer picture of the degree of turmoil on world financial markets. In trading last Wednesday, the Hang Seng closed down over a staggering seven percent. Meanwhile in Moscow, all trading in shares on the Moscow Stock Exchange was suspended indefinitely on Thursday after the Russian Trading System (RTS) stock index fell by over 11 points for two successive days. Nouriel Rubini, Professor of Economics at New York University, told BBC World Service radio on Thursday, September 18 that “There is no light at the end of the tunnel... Reality is much worse than anyone had ever imagined.”
“More major bank failures are a certainty, including some very large ones,” commented the Wall Street Journal, one of the world’s two leading financial newspapers, in its editorial on Tuesday September 16.
In July, the Royal Bank of Canada had warned that from its estimates, more than 300 American banks will collapse within the next handful of years.
On Tuesday, Razia Khan, the regional research director for Africa with Standard Chartered Bank headquarters in London, told Radio France that the financial collapse on Wall Street will hit Africa hard as major North American and European investors find themselves unable to bring money to the African mines, telecom companies, banks and other investments that have been keeping the continent afloat in recent years. It will be interesting to see how much inflows of foreign currency are starting to dry up at the Western Union and MoneyGram offices in Nairobi as Kenyan residents in America and Britain start finding it too difficult to keep afloat and still be able to send money to family members back home.
In total, about 2.8 trillion US dollars in market value was wiped off the world’s stock value last week. Welcome to Black September, 2008. It is the most fascinating spectacle in recent decades. It is, in fact, history in the making. At the risk of sounding like a prophet of doom, this is, ladies and gentlemen, the beginning of the end of the USA as a super power - nothing that Senators John McCain and Barack Obama promise or actually do if elected will stop the reverse of America’s fall. This is a terminal decline.
The western world is not what it once was. From the seriousness and sense of purpose America had at the start of the 20th century, the country has rapidly degenerated into a wasteland of broken marriages, dysfunctional children, drug abuse, money as the all-in-all of life, spiritual emptiness, and a playful, indulgent attitude that renders them uncompetitive in the world economy. It is this materialism, combined with social breakdown and inner spiritual emptiness, that has created the conditions for the reckless borrowing, credit card debt, rash decisions by banks and now worldwide financial crisis that has made news all year round.
In the meantime, out toward the Pacific in the Far East of Asia, the West has met its match. A determined, driven, disciplined people in China, Japan, South Korea, Singapore, and Taiwan are competing with and usurping the previous dominant position of America and the English-speaking West. An America, whose economic fighting battalions include Lehman brothers and AIG--which are collapsing or under siege--cannot hope for much longer to respond to the threat posed by China in particular.
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