We are going to ignore fairy tales for the moment from all sides. Terry Gilliam’s “Brothers Grimm” disappointment comes to mind, despite the current fracas. The most charitable comment we can make is that it was no “Brazil”. Besides, HRC will be spending a whole hour Sunday facing down the “toughest interview on television” (which also happens to be Cheney’s favorite appearance, so there you go).
We thought tonight instead to muse again on the hoary historians’ question of “When did the British Empire really begin its decline?” (note “begin”). As usual, this is all pretext to make a short comment on a contemporary news item crossing the wires tonight. We still are mindful of J.R.R. Tolkein’s famous disclaimer in his later introductions that he detested allegory whenever he sensed it and LoTR is without it. We proceed in that spirit as well — and include analogy.
Regarding the British, a variety of explanations are offered in History 301 level undergraduate courses, as many know. One of the most common is that British decline never really actually happened. What occurred? Germany’s relative rise in the 1880s-1900s and the diffusion of the “Industrial Revolution” (especially in America). These are inevitable and natural events that changed the British power equation — more than a precipitous so-called British decline. Another school, most prominently led by Correlli Barnett, claims that British missteps in elite education post 1850 (the Oxbridge leadership elite emphasis on ‘liberal classical education’ versus German/American technical emphasis), social liberalism and a failure to understand the net benefits and drains of the Empire (such as India) led to a devastating series of progressively worse policies. The result? Total collapse in 1940. (This is the date when Churchill had to undergo in Barnett’s phrase ‘the audit of war’ and realize that Britain was bankrupt.)
What to make of America today? As mentioned, we do not intend an analogy, allegory or even direct comparison to the British case. One further disclaimer. It would be too dramatic (and cheap) to point to a single event today and bootstrap a grand historical arc such British declinism. That larger American story has been told by many since Paul Kennedy’s “Overstretch” declinism of the 1980s. Hoards of new acolytes came on board after 2001 — here and elsewhere.
Still, the more or less bankruptcy of Citicorp, Countrywide, Merrill Lynch and other core pillars of the American financial scene likely will merit more than a footnote in a future Shanghai lecture hall. Already, Americans sense the wind in the boughs; the unspoken sense of American insolvency drives much of Ron Paul’s improbable political surf ride. Even other traditional campaigns resonate on it, from Edwards across the board. No less a platform than the redoubtable “Economist” gloomily concedes “America’s Long Slog” regarding the current economy. From the larger historical vantage point of in Western financial history (the book to read is by Charles Kindleberger) and its direct correlation to world power status suggests that the “Economist” is looking at the trees and missing the forest.
Citigroup is putting the final touches to its second big capital-raising effort in as many months, seeking up to $14bn from Chinese, Kuwaiti and public market investors.
Under the proposal being discussed, the bulk of the money – roughly $9bn – would be most likely to come from China, people familiar with the negotiations say. The Kuwait Investment Authority would contribute about $1bn, while $2bn to $4bn would be raised through a public placement of shares.
The formula is still being adjusted and there could be last-minute changes, the people involved say. It is also possible other investors will participate.
The deal underscores the depth of the problems faced by banks that suffered heavy losses in the US subprime mortgage crisis. It would follow an injection of $7.5bn into Citigroup by the Abu Dhabi Investment Authority in late November . . . The deal highlights China’s growing importance as an exporter of capital. The Chinese government has emphasised a policy of investing abroad to keep the ample liquidity in China from feeding a bubble in shares and property.
“They want to recycle money as there is too much in China,” says Fred Hu, a China-based managing director at Goldman Sachs. “Because of capital controls, only the government can take the money and put it offshore.”
Still, since we are talking about the plutocratic masters of the universe, one can’t be too gloom and doom for long. “If you raise too much you can always give it back,” said one banker. Perhaps. We’ll defer to the Paul campaign to expound on the public financial disaster we have created.
In Japan, after their real estate boom collapse in 1990, it took almost 11 years even to begin recovery. They called the 1990s “The Lost Decade”. Whatever will the wags at Weekly Standard come up with today?