Further, according to the same source, the Chinese are keen to spend their soon-to-be devalued mountain of dollars on hard assets, such as iron ore mines, etc.

If this is true then we are in a whole new ball game.

No US President could get away with telling the US people that he wants to follow. The US people expect to lead…

I was kinda thinking myself that Obama’s speech could have been for the masses, whereas we will have to judge him by his deeds. Yet there is a position between leading and following. Obama gets high marks for inclusiveness and a collaborative approach. This is what Wallerstein has been recommending for the US for years now as reflecting the realities of power as well as being pragmatically sensible. I guess we’ll see how Hillary handles things.

I notice that Satyajit Das on LNL said that the Americans would be going to the market for $1.8 trillion, about four times previous loan raisings. He said that there was no automatic reason why the Japanese and Chinese would show up with their cheque books.

The basic problem is that Obama has not renounced the inflated language of a former hegemonic power. In his address, he said to the world: “Know that America is…ready to lead once more.” The world wants the United States to participate. It precisely does not want the United States to lead. I don’t think that Obama really understands that yet.

I think things are going to be quite a bit different by 2030, and probably in ways that will challenge any lingering ideas of automatic ‘progress’.

Brian: we’ll see. I remain an optimist, and still do so despite the events of the past year.

That was about 50 years ago, but seems like the blink of an eye. OTOH the way Brisbane and our ‘lifeworld’ was way back then seems like about 200 years ago.

I think things are going to be quite a bit different by 2030, and probably in ways that will challenge any lingering ideas of automatic ‘progress’.

It’s true that while the US is the world’s reserve currency they can make others pay for their consumption – what de Gaulle called the “extraordinary privilege” of paying their debts in their own currency (of which, of course, they can print as much as they like). The trouble is that this approach – debauching your currency to make your past IOUs to foreigners worthless – is as good as a default in its effects. Done just once, it would very rapidly lead to the greenback losing its reserve status.

So either way, PJK is right on this – it looks like the end of the US’ ability to shape the structure of world finance to its own advantage.

.And if you ask why will they keep buying US bonds , as LO mentioned what else would these countries buy of comparable safety?

Murph, I’ve listened to the interview maybe half a dozen times. Keating was factoring in the notion that the Americans would have to cop a fair dose of inflation and was concerned about these ‘safe’ bonds halving their value over say 4 or 5 years.

But certainly the Chinese in particular have a stake in keeping the American consumer economy afloat so they can sell their stuff.

But the risk of sovereign default in Europe was something Tony Jones mentioned as being spoken about in Europe. The Japanese, as I understand it, in the 1990s kept throwing money at the problem to find that it didn’t work. Apart from them being in deep sh*t again now, it seems that the Brits are not well-placed.

Behemoth, there are some dreadful but realistic scenarios from about 2030 over contestation over water and failing food production capacity, for example in the arc from Pakistan to northern China and the grain belts in North America, which I’m almost bound to post about this year sometime. My ambition is to live until 2030, when I’ll be 90 to see how things are shaping up. There’s a fair chance that I’ll be happy to move on then.