Hegemonic Crisis

Abstract

US global hegemony is in decline. The Wall Street crash of 2008 was another signal of the significant erosion of US economic power and the epic change in the global balance of power. The US has been living beyond its means for some time and while it was able to delay paying its liabilities to the world, the financial crisis in the first decade of the twenty-first century has clearly indicated a crisis situation in the global financial and trading system. Before 9/11, the Cold War turned the US into the world’s largest debtor nation, a situation which deteriorated considerably with the invasion and occupation of Afghanistan and Iraq in 2002 and 2003. The US deficit reached US$1.3 trillion in the 2011 fiscal year, putting more pressure on the federal government to increase its large national debt and become more dependent on overseas borrowing from China, Japan and other countries. The predicted gap between spending and tax revenues is likely to reach US$6.5 trillion by the end of the decade. President Obama’s military budget was nearly US$1 trillion, which included the cost of maintaining ‘750 US military bases in 50 nations and 255,000 service member stationed abroad’ (Margolis 2010). In August 2011, for the first time Standard & Poor’s downgraded the US credit rating to AA+; it gave further momentum to the deepening financial crisis of the US, with more states and cities facing bankruptcy.