Tuesday, September 14, 2010

A Letter to America

This is audacious. How dare any one tell America how to be?

I guess it is like the famous fable about telling the King that he is naked. If I were a King, I would take great offense if one of my minions accosted me to draw my attention to my nudity.

I have always said to my American friends that unlike them, the rest of the world knows and thinks about what is happening in America. Conversely, Americans know and care very little about what goes on beyond their state.

America, if you were a King this is what I would have to declare to you, “Your Majesty thou art naked”. As an international public intellectual, I owe this to America.

The inexorable decline of America began with the invasion of Iraq. America’s precipitous invasion of Iraq has demeaned irretrievably, its moral standing as the leader of the free world. Then came the hunt for Bin Laden in the mountains of Afghanistan.

The two wars opened the floodgates for spending and the deficit burgeoned. Private debt has been on the rise too. Americans families acquired a voracious, insatiable appetite for personal debt. From essential debt such as collage loans to buying a plasma screen on credit.

While China was out building a über modern foundation for a 21st century economy America was busy chipping away to build a tunnel between Wall Street and the US Treasury. The idea was to destroy regulation and let the markets figure it out. This is because a former movie star and governor who beat Jimmy Carter to the presidency told them that government regulation was anti American.

So what did America get? They got the sub prime mortgage. Then they created a massive housing bubble. Banks reeled in poor Americans to take out mortgages they could not afford. Through complex and I would add idiotic fraudulent accounting, debt was swapped around as assets and before we knew it, the entire global financial system was careening out control.

Businesses are contracting and re-structuring on a new template. In the short-term credit is drying up. Sale of new homes is at an all time low, but thank God foreclosures are slowing down. American’s cannot consume ad libitum. And America cannot continue to spend money on imported good and produce nothing.

Here is a simple example; back-to-school dollars go to imported clothing and school supplies, including laptops, iPods, sneakers and even toys coated with lead. Hence a dollar spent by an American consumer does not translate into a dollar of domestic production. So how will the jobs return? I guess by more tax cuts to the wealthy and marching on Washington.

The GOP is digging in to continue the Bush tax cuts. And the tea party is on the march. They are angry and want to take America back. I think America is in a grave intellectual crisis. I am not sure that delegitimizing Obama’s presidency will provide any relief to America’s terminal dis-ease.

Conservative NYT columnist David Brooks wrote yesterday “The surging Republican Party has a story, too. It is a story of virtue betrayed and innocence threatened. And David Brooks adds “These statist forces are more powerful than ever in the age of Obama”.

GOP, the tea party and Glenn Beck are frothing in the mouth about small government and cutting Federal spending. I am not sure that any body could grow government bigger than the hundreds of billions of dollars Bush and the GOP spent in Iraq and Afghanistan.

GOP is talking about releasing the power of markets and unlocking the power of America’s ingenious creativity. Sarah Palin and her apostles claim to be the body and soul of America’s enduring principles of freedom and entrepreneurship and markets.

But here is what David Brooks had to say.

“The social fabric is fraying. Human capital is being squandered. Society is segmenting. The labor markets are ill. Wages are lagging. Inequality is increasing. The nation is over consuming and under innovating. China and India are surging. Not all of these challenges can be addressed by the spontaneous healing powers of the market”.

America, it is time to reinvent.

The GOP will have to learn to be more intellectual rather than operate through angry marches and harping on old and failed economic models. America needs a national conversation. America needs to move beyond the partisanship and the pettiness of talk show radio hosts and start to solve some real problems. The fundamentals of both the social and economic order in America are deeply flawed and the nation is headed only one way – down.

I am not sure that an intelligent conversation is possible in America, especially after the tea party revolution delivers Congress to the GOP. .

If you think the US economy is too big to fail, I think it is to big to save.

And yes, the King is nude.

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