The End of the American Century

After last Christmas 13 banks have fallen down in America. The Systemic Crisis has wiped off all the once-so-great Investment Banks. Last two, Morgan Stanley and Goldman Sachs submitted to FED's control and turned to normal Business Banks two weeks ago, and Bank of America bought off the falling Merrill Lynch. America is trying to tie down loose cannons before the storm strikes at full power.

Still the merging of two giant banks was like tying two loose cannons together in a situation where sailors haven't yet even seen the biggest waves. US Government tries to bailout the falling financial system by loading the dead weight of worthless loans to saving boat. It doesn't work.

The core of the Crisis are chronic structural problems of macro-economy. US Economy begun to sail towards disaster already three decades ago. United States is no longer a productive economy, as it was in 60's when two thirds of GNP came from industrial production; making and importing of goods.

Nowadays two thirds of GNP comes from consumption instead of production, and this Great Spending has been financed by loans. US Economy has been buffed up and overweight at the same time when her proportion and share of the World's Economy is reducing. The bottom of the ship has been rotten for a long time, and no one has really done anything to fix it.

US Economy shall crash and it can not be avoided anymore. After government take-over of Fannie Mae and Freddie Mac, the public debt grew above 20 000 billion (20 trillion) dollars. No state can stand under such weight when sum of interests of this huge debt is more than 600 billion in year, and annual national balance of economy is -800 billion (The World's military spending is 'only' c. 1 200 billion in year). So, in current speed, the US debt grows 1 400 billion every year.

If entire US annual GNP would be put together to pay this huge debt, there would still be 20 500 dollars of debt left to be paid by each American person (Including young children, sick, and disabled). Let's imagine that United States would go bankrupt, and there would be only one third of the current GNP left (the real productive value of US Economy) and it all would be put to pay the debt. In such case every single American would still have 51 000 dollars debt left to be paid, plus their private debts. The Financial Crisis we see today has launched a trap, that destroys people's consumption power; Soon the trust is gone and you can not have any credit. The Great Spending Feast that has lasted for three decades is about to end.

European economic research institute LEAP estimates that after the fall of American Economy, there will be at least 7 - 10 year long depression in entire North America before the regional economy finds back to the way of growth. Similar statements have said many experts, e.g. Warren Buffet. It takes a long time before a New Economic System can be build up of the broken pieces of current American Economy. When that happens, the Dollar will be gone in the history and is replaced by common North American currency.

The fall of America is inavoidable. US has a massive challenge ahead; She has to submit to new situation, where World Economy is no more run from Washington and USA will no longer be the World's leading Superpower or military might. The American Century is about to end.