A Superpower in Decline: Is the American Dream Over?

Part 5: A Brighter Future?

One feels the despondency and timidity of political America in Washington. Tim Adams is sitting in the Hotel Willard InterContinental, a stone's throw from the White House. He says that the term "lobbyist" was coined at the hotel, where supplicants used to wait in the lobby for the president. Adams, who served as undersecretary of the treasury for international affairs in the Bush administration, is now a consultant to hedge funds -- the big fish.

Adams talks about how America lived beyond its means, how the budget has spun out of control, and how imperative it is to start thinking about a new tax system. Adams is well aware that the subject isn't popular in Washington, and certainly not in his party. Adams is a Republican. "Debates about the issues are difficult right before the elections," he says, adding that the opposition has become too accustomed to instinctively opposing every Obama proposal. "But they might not be happening for another two years. Currently, the debate on economic policy is paralyzed."

And then he says something that could sum up the entire dilemma of the Obama presidency: "The Democrats refuse to talk about budget cuts. The Republicans refuse to discuss budget increases. So the debate has come to a standstill."

Back in Florida, the Petersons, in their little house not far from the beach, are packing boxes and unscrewing their flat-screen TV from the wall. They've been working on a short sale -- selling the house for less than the balance on their mortgage -- for months, and the bank that holds their primary mortgage has agreed. They also have a buyer. Axel Jakobeit, the German real estate agent, brokered the deal. Now everything depends on the bank that holds the second mortgage, which will be left with nothing but its minimum share of $2,500 if the sale goes through.

Maybe the Petersons will have to move out of their American dream tomorrow, or maybe in a week. They plan to rent in the future. "Owning a house today is not what it seemed to be," says Marc.


A creative country doesn't stop being creative because of a crisis. A society that has produced universities like Harvard, Yale, Stanford or MIT, companies like Apple and Microsoft on the West Coast, and institutions like the Metropolitan Opera, Carnegie Hall and the Museum of Modern Art in New York doesn't suddenly become stultified. There are always new projects, even in the United States of 2010. There are startups, new companies and, of course, great thinkers.

But once a decline has gotten underway, it isn't easy to change direction. Many young companies in Silicon Valley don't last very long because they are unable to secure financing or find customers. The country seems lethargic in a very un-American way -- or perhaps it's just the new American way. The demonization of political opponents, the end of debates, the condemnation of intellect -- these are all ominous signs.

Americans are saving again, for the first time in a long time. The rate of personal saving as a percentage of disposable income, negative only a few years ago, has reached 5.8 percent. It could be a good sign, but it may also be an indication of rampant uncertainty.

There is no easy way out of the debt crisis. Obama could raise taxes and reduce the federal budget, but according to Reagan's former budget director, David Stockman, the country has become "fiscally ungovernable." If Washington can't help America, who then can help Washington and America?

One of the last hopes is the US Federal Reserve, the same institution that helped maneuver the United States and the global economy into the crisis in the first place. Despite the Fed already having reduced the prime rate to between 0 and 0.25 percent, the credit business still hasn't picked up. The Fed then sought to influence the markets in a different way by buying US treasury bonds and securitized mortgage loans, injecting $1.75 trillion in freshly printed cash into the market. The policy, known as quantitative easing, was met with enthusiasm on Wall Street. A second round, worth hundreds of billions of dollars, is expected to take place after the mid-term elections.

Ineffectual Fiscal Policy

The leaders of the international financial world have come together twice in recent weeks. Central bankers and finance ministers met in October at the annual meeting of the International Monetary Fund (IMF) in Washington, and last weekend at the summit meeting of the G-20 finance ministers in South Korea. Both times, Greenspan's successor, Ben Bernanke, used somber language to describe the economic situation and to defend his monetary policy.

Unemployment remains stuck at record high levels, a second collapse in the real estate market is not unthinkable, and the classic tools of fiscal policy, tax cuts or economic stimulus packages, are hitting a wall, Bernanke said. The calls for structural reforms are correct, he added, but the problem is that fundamental reform takes time. In the end, the only path out of the crisis leads through monetary policy, the Fed chairman said.

This sounds as if the United States had found a convenient way out of the debt crisis. But it's also a risky solution, both for the United States and the entire world economy. It can trigger processes that could gain momentum and spin out of control. Nobel laureate Joseph Stiglitz warns of the consequences of a flood of liquidity. "It's doing nothing for the American economy, but it's causing chaos over the rest of the world," he says.

More money means that the value of the dollar falls relative to other currencies. This is an advantage at first, because it makes exports cheaper and imports more expensive, making the US economy more competitive. But does US industry even make enough products anymore to allow it to increase sales to the global market? And what happens if the world loses confidence in its reserve currency and unloads its dollar reserves onto the market? The resulting dollar crash could plunge the global economy into the next abyss.

The Next Bonanza

More money also means more inflation, and the faster the money becomes devalued, the faster the debts are reduced. In early 2010, the IMF proposed that central banks commit themselves to a higher inflation goal of up to 4 percent.

No one knows how the experiment will end. "We are in the drug trial phase of monetary policy," says John Makin of the American Enterprise Institute. "We have some very nice ideas, but no experience to show whether they work." Former Labor Secretary Reich doesn't even think there are any good ideas at the moment. He believes that all the cheap money will flow into the next stock market bubble, and that companies, banks and hedge funds already sense the next bonanza coming.

Financial expert Tim Adams says that there is no alternative. "Nobody wants another stimulus package right now," he says. "It has been defined as a symbol of a state and government that overreaches. The Democrats are running away from it and the Republicans are condemning it. Everyone is talking about budget cuts now."

This, according to Adams, only leaves Fed Chairman Bernanke with the option of cheap money, knowing all too well that it won't be met with enthusiasm from politicians abroad. "The Europeans will probably have to carry a share of the adjustment costs at first, because their euro will gain value and their exports will become more expensive," says Adams. And once inflation spreads across the entire global economy, the assets of Germans will also decline.

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1. If 1/3 sit in front of computers, of course low standard of living
lakechamplainer 11/01/2010
I think the main reason US standards of living have stagnated is the ocmputer, for several reasons 1. Simply put, if 1/3 of the workforce sits in front of the computer, 1/3 of the work force is not doing something productive - farming, making furniture, teaching, cooking, etc. 2. Computers are used by management to monitor employees, which limit productivity 3. Capital spent on computers, which is almost all not providing a real return on investment, is capital not put into productive use. There are some good uses for computers, for example on controlling/monitoring high speed, high quantity production or assembly or packaging lines, but these are the exception to the rule.
2. Florida
esperonto 11/02/2010
Goodbye to it. Florida was always a skid row state, coursing with drug addiction, prostitution, voodoo, mafia, Cuban terrorists, and hurricanes. You see the failure of this new suburban retirement planning, but in fact this is only a small superficial section of Florida. Much of florida has always been homeless, poor, police brutality, and skid row. You can search through youtube to see pictures of police cutting up the tents of homeless people, young kids beating up homeless. The dream was only a superficial segment of Florida, that excluded much of the population. That is the most naive thing of all. For a state with only a shallow sense of community and grift work for old retired rich people and down to earth, straight forward Mexican slavery with all the bells attached. To me the only wonder is that people only feel sorry for these oblivious home owners! This is shot in Saint Pete Florida, a relatively small city: http://www.youtube.com/watch?v=LrPdZmPB36U The reason they do that is not just about the physical act of removing homeless. Its psychological harassment to criminalize the minds of the tent owners. After their tents are cut up, their minds become more guilty, and they have more of a marked look. Normal people will realize they have been marked subconsciously. That is the mentality of the American South: guilty until proven innocent. I guess if I was a genius like these police I would understand that being smart and successful means being ruthless. Really smart people hate the poor and want to destroy them. When you are really smart and well pampered, nothing is better than killing the poor, destroying their homes in Palestine, or killing them in Afghanistan. When you are really intelligent, rich and successful, nothing is better than eating human flesh. Maybe you would care for a tomato instead: http://www.gourmet.com/magazine/2000s/2009/03/politics-of-the-plate-the-price-of-tomatoes I know, If I had some self respect and pride or patriotism, I could kill and enslave the poor with a clean conscious like normal sane people. Then I would only worry about some middle class home owners and take the idiotic European view of the "American Dream". If I believed in the God, I could enslave and kill like a real Christian.
3. American dreams are at loggerheads
sirajul 11/02/2010
A great article by Spiegel, and I like to thank Spiegel staff writers Klaus Brinkbäumer, Marc Hujer, Peter Müller, Gregor Peter Schmitz and Thomas Schulz for this thorough 6-part story on America's past, present and future. With the midterm elections holding today, and both Democrats and Republicans distancing themselves from the brand America, the country’s leadership, as hinted by the storywriters, is coming to an end. Indeed, American leaderships have had hands in the initiation of the losing, though not publicly. Many months before the actual changing of the America, a political swing is on the move. Its scope and extent remain unclear, yet the seeds of a new foreign policy have clearly been implanted. The earlier strategy, which treated diplomacy as a second choice and saw the military pre-emptive strike as America's fundamental right, has verified to be unsuccessful. Despite the consequences of who are going to be the actual rulers in America, the return of the ‘Right’ is alarming. ‘The demonisation of political opponents, the end of debates, the condemnation of intellect, these are all maybe ominous signs’ that the American dream is over.
4. computers
esperonto 11/02/2010
---Quote (Originally by lakechamplainer)--- I think the main reason US standards of living have stagnated is the ocmputer, for several reasonshttp://www.youtube.com/watch?v=FW02c5UNGl0 1. Simply put, if 1/3 of the workforce sits in front of the computer, 1/3 of the work force is not doing something productive - farming, making furniture, teaching, cooking, etc. 2. Computers are used by management to monitor employees, which limit productivity 3. Capital spent on computers, which is almost all not providing a real return on investment, is capital not put into productive use. There are some good uses for computers, for example on controlling/monitoring high speed, high quantity production or assembly or packaging lines, but these are the exception to the rule. ---End Quote--- Lets not forget computers control heart machines in hospitals, etc. I don't think computers can be blamed entirely. And you know farming and furniture making still go on, but as you know, capitalism has monopolies on small business. If IKEA makes furniture, how can I make furniture? If a giant corporation owns many hog farms, how can a normal person own a hog farm? Nevertheless, there are many people who are still farmers, furniture makers, etc. One thing that may have suffered is fine art. Painting, drawing, and many of the fine arts that were more prominent in the 1960s before computers are now completely passe. Also there is a "buy local" movement to counteract your problem of online shopping. At least where I live, people are encouraged to "buy local". I have seen it in other towns as well. I think the movies people watch decrease the standard of living. I was on a greyhound bus recently and it had movie screens in it that played an extremely stupid movie. Though I couldn't hear it, because I refused to put on the earphones, these monitors were reflected all around the bus in the windows at night. I was bombarded by one of the most stupid movies I have ever seen about someone who works in the house of congress who becomes Noah and builds an ark. I felt after I had seen its flickering mobs of bamboozled actors that my quality of reality had been reduced, even without hearing any audio. Its no wonder I have no TV and mostly watch older movies that have no special effects or CGI graphics. Definitely TV, Mass Media, and Hollywood films these days are reducing the population to very shallow reality. I have been very picky to choose only real socialist news and older movies with bad camera work and live action stunts where appropriate. Look at this for instance. I dont like the song so much, but this guy goes crazy. He jumps around with a kind of energy they don't have at all in these computer generated imagery movies. He does backflips off the wall. I am not even that old. This way before my time. http://www.youtube.com/watch?v=FW02c5UNGl0 Hong Kong films used to be like that in the 1980s. Stephen Chow for instance is extremely good. Many Kung Fu films are also quite good for this kind of humor action. A fat guy is often his side kick. The fat guy is maybe even as funny as him. He dresses up as a girl sometimes. http://www.youtube.com/user/tithya0youtube#p/u/206/hnMwKnkeYGY CGI just gives like magic powers to the director. It provides too much fantasy. The plots of these films get really stupid. I mean, Congressman transforms into Noah? Retarded. Still, some computer art is quite good, like this comical portrayal of Evelyn Rothschild and Rockefeller: http://www.youtube.com/watch?v=B7Tz8l-t1o4
5. Travel
esperonto 11/02/2010
---Quote (Originally by lakechamplainer)--- I think the main reason US standards of living have stagnated is the ocmputer, for several reasons . ---End Quote--- I have used computers for so much though. Once I got a job online in Turkey. I ended up going there for 9 months! All because I applied for a job online and emailed to a Turkish business owner. If it were not for internet, I would never have been in Turkey, so I can thank computer for that. Computer is very fun for me. I use it mainly to gather information. For instance, if it wasn't for the USA Esperanto website, I might not speak Esperanto. I did a mail order course with them for a certificate. It was by normal mail, but essentially I applied for it online here: http://esperanto-usa.org/ Educational tool unparalleled. Now I can read a book in Esperanto almost fluently.
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