Sunday, May 8, 2011

5 reasons why US is going to go downhill

Frequent International Interferences
The frequency with which US is involved in fighting other countries since 2001 is very high. Iraq, Afganistan, Pakistan and now Libya. The costs are huge, but the benefits in terms of oil is greater for USA. But the skepticism of the world on its activities is increasing all the while. The conspiracy theory on the attack on the pentagon, the non-provability of Weapons of Mass Destruction in Iraq, Contradicting claims of the US and North Korea on the torpedo that sunk the South Korean ship, Doubts if Osama Bin Laden was actually killed by a US raid,etc are helping build the skepticism on what US says.

Spill Out of Crises
The European debt crises in Ireland, Greece and expected crises in Portugal and Spain have brought the attention of the economists to the debt amounts of the countries and see a realistic picture of US debt. They have started questioning the assumptions and no longer see it as rational in blindly justifying US debt as something godly and always safe. The US crisis itself has forced the US economists to relook at the US debt and justify themselves being called rational. S&P's negative outlook on US sovereign debt is just the beginning of being rational. Faith of and on the dollar has diminished and is expected to further diminish. No one has yet able to think a perfect currency/thing which can be used to measure against all other currencies. The only possible solution that seems close to come to place in a few years time maybe the equivalent of the SDR(Special Drawing Right) of the IMF. It is equivalent to the basket of freely convertible currrencies. But in the coming scenario, Yuan may be added to this basket sometime in the current decade when China allows complete convertibility. The complete faith on the US Dollar is going to come down. The draw down of the US Dollar forex reserves is also going to play a major role in the downhill of US.

More internet availability and accessibility in the world in helping others know of the torture faced by US victims in Guatemala and the killing of two unarmed Pakistanis by a CIA contractor. Not to mention, the widespread news of wikileaks and videos of violent human rights violations by US soldiers in Iraq is there for all to see. Add to this, the ease and fastness with which conspiracy theories  are spread.

Weapons Technology
One of the main strengths of US has been its military muscle. The world's dependency on that is reducing. China is growing rapidly in weapons technology with the development of the anti-satellite missile, the anti-aircraft carrier ballistic missile, the stealth aircraft and of course, their own aircraft carriers. Japan has initiated developing its own fighter aircrafts and it is expected to reach the market in the coming years. India is planning on ICBMs(Intercontinental Ballistic Missiles) and the Brahmos is world's leading cruise missile. The FGFA program with the Russians for the development of the fifth generation fighter aircraft is also supposed to be leading edge. With money always acting as a crunch to all the countries, most of these countries will be willing to sell the products to 'their' allies. The market share of US is going to go down. Compared to the other countries, US cannot fight on price too.

Rising Developing Countries
The rise of the BRICS countries and their collective power to say 'No' to US to bulldoze its way in trade agreements and climate change conferences at the cost of others shows reduced US ability to force others. The recent mention of British PM David Cameroon wanting the next IMF head to be from Asia also shows the way things are going in the world.

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