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Posted on Sustainabilitank.info on September 15th, 2010
by Pincas Jawetz (pj@sustainabilitank.info)

9/11 of 2001 caused nearly 3,000 death and plunged America into three wars, but we have a proposition that 9/15 – the day two years ago – when the House of Lehman Brothers collapsed – will prove being a much greater turning point in global history.

Indeed, 9/11 ended the US euphoria with the end of the Cold War against the now defunct Soviet Empire, but even though no Great Depression resulted from the Lehman Brothers collapse the suggestion is that the event pointed out that it is not military power, but economic power, that eventually gets the upper hand. This observation results from the simple truth that though the US is still the only military superpower, it is being constraint nevertheless by the lack of financing capacity of the military. If nothing else, the retreat from Iraq and Afghanistan comes because of the large expense of these wars. The US must make defense cuts if it is to avoid other financial cuts that might undercut much more seriously its preferred status among nations.

The US economy was once based on manufacturing and industry but now it was left to consumerism – and if nothing else – the US does not get anywhere close to the consumers numbers of a China, an India, and perhaps if that of the Islamic World at large.

With the large hole in its foreign trade, caused in large part by the outflow of money for imports of oil, the US is now aware of the power of China’s monetary reserves that have been called to help pay for the US financial excesses – be those from imports or wars.

What is worse, the world has learned to do well without a US order-making role, and the formerly budding South-South connections have bloomed into a real China-India-Brazil  trading pattern that might even lead to the displacement of the US dollar in this new international trade.

A Chinese hegemony in the Pacific is just a question of time, even though it is possible still to believe that for the time being there is a US-Chinese symbiotic relationship. But with the growth of further emerging economic powers – at first Brazil and India – then South Africa, Vietnam, South Korea, Indonesia, Turkey and others, eventually the US might find its role changing from the one Super-power to one of two, three, four, or five large powers.

The truth seems that the bloated figure of a Bin Laden has come and mostly gone. The idea that an extremist Caliphate is in the making is being undone now by the evidence that countries like Indonesia, Turkey, now even Saudi Arabia, and the Muslim population of India, the bloc of Central Asia countries, and in many ways even the changing Iraq and Afghanistan, are much less inclined to line up behind centralized Islamic militancy, even if propelled by nationalistic feelings, may point to the fact that much of the post-9/11 activities have been misplaced, and could have been handled much better had the US taken the path of disengaging itself from the dependence on the addiction to oil.

Clearly 9/15 was not the date of the start of the financial reduction of the stature of the US, but if a single date is needed by history to point at as the moment the changes in the global structure became evident, it will be 9/15 2008 rather then 9/11 2011.

In context of what we said above, I would like to point out an April 2010 published volume of which we heard from Dr. Amelia Santos-Paulino at a presentation at the UNU in New York. The book is titled – “Southern Engines of Global Growth.”

The book is a result of a UN University – WIDER research project and was published by the Oxford University Press and edited by Amelia U. Santos-Paulino and Guanghua Wan, and it deals with the spectacular performance of the Asian Giants – China and India and the further contributions of Brazil and South Africa under a CIBS hat.

In her presentation, and in the Q&A part, we also heard of other countries lined up to join this new emerging South, and the book and presentation will be subject of a further posting of ours. In this posting, all what I was trying to say is that these changes in the US and Global Economy, with all due respect to the people that died on 9/11 – their families and the whole grieving world – it is these changes in the economy following the emergence of China as the second Superpower, and further large economic powers from among the emerging South, this was rather the defining moment of real global change.

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Regarding the spread of the economic crisis – We learned that one of the UAE’s leading businessmen, Khalaf Al Habtoor, has said he doesn’t think the collapse of US financial services giant Lehman Brothers marked a turning point in the Gulf’s financial fortunes. Instead Al Habtoor, founder and chairman of the UAE-based conglomerate Al Habtoor Group, said the region was let down by poor management in the wake of years of unprecedented growth.

“I don’t think Lehman Brothers affected the Gulf,” he told Arabian Business in an interview. “Unfortunately several organisations in the GCC and the Arab world were not well structured – we were fragile already,” he continued.

We find these comments not to be in any contradiction to what we said above – they suggest rather that the Gulf State, and others,  effectively committed the same transgressions of going over-board, as the US and Lehman Brothers.

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