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America Faces the Music in Davos

Posted on Feb 1, 2009

The American participants in this year’s World Economic Forum in Davos, Switzerland, have been the first to confront the full international blowback to the U.S.-created world economic crisis. The crisis has devastated America’s reputation for intellectual innovation and practice in global finance, its business leadership and its domination of applied and academic economics—all promoted at the Davos forum for decades. Last Friday, a Wall Street Journal front-page headline said: “European capitalism gets a halo.”

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And it has devastated something even more important: the American reputation for competence, along with the justification for the nation’s six-decade role as world leader.

The meeting has been one of the main channels by which a Europe long identified with interventionist and regulated Social- and Christian-Democratic business values was reluctantly persuaded to accept American ideas and business and financial principles and practice.

American comment on the crisis until now has certainly been self-critical (except in certain Wall Street institutions cut off from human reality), but for the most part there has been little willingness to assume responsibility. The overall position has been that “we all made mistakes” and it’s time to move on.

A few financial-community Cassandras of the recent (or not so recent) past have been recalled and congratulated (or given their jobs back); much has been said about “how could we have missed this or that signal,” but on the whole a curtain has been drawn, and most would agree with Donald Rumsfeld’s incantation that “stuff happens.”


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That alibi (or renunciation of responsibility) may work at home, but not abroad. The head of Morgan Stanley Asia told the opening Davos discussion that 2009, globally, “may be the first year since World War II when gross domestic product actually contracts.”

The International Monetary Fund has nearly doubled its estimate of bank failures this year; the International Labor Organization says as many as 40 million people could lose their jobs. Losses linked to bad U.S. loans could reach $2.2 trillion this year, according to the IMF. This is twice the estimate the IMF offered just two months ago.

There is more bad news to come, signaled at Davos. The political, national and psychological consequences have yet to be fully appreciated. This crisis implies something else important: The U.S. reputation for world leadership has crashed and burned.

At the start of the Bush administration years of vainglorious, ignorant and failing interventions in world affairs, there was great initial enthusiasm among Americans, believing the nation to be once again in the lead of a crusade to moralize the world by destroying evil and installing “freedom.”

Even as that policy was failing, critics of the administration were (and remain) mostly inclined to support the general line of fighting “terrorism.” They believed that, under more intelligent Barack Obama management in Afghanistan and Pakistan, it was a defensible policy, consistent with the country’s postwar leadership in the Korean War, the Cold War, the Indochina intervention and Vietnam War, and now the “clash of civilizations”—each gratifying an American self-conception as leader of the forces of freedom in what ex-President Bush, in his farewell speech, described as the great struggle between global good and global evil.

Distraction was provided for much of the world by the economic boom Alan Greenspan proudly presented as “beyond history.” A new economic order had been created by Americans that already had made the industrial world rich, and was confidently predicted to bestow the same blessing on everyone else. Francis Fukuyama’s assessment that history was coming to a happy ending was thought only a little off in its timing.

But not only the economy has crashed. It is now necessary to come to terms with the fact that the Cold War was not won by America, but lost by communism’s internal corruption. That America’s Asian conflicts were actually all defeats: Communist China, Korea, Laos, Cambodia, Vietnam, Somalia, Lebanon, Iran, Iraq (an estimated 95,000 civilians killed in Iraq, 15,000 coalition soldiers and police, including 4,229 Americans; and the outcome still in doubt). The war against terror has been a bloodbath with mainly civilian victims, two free-standing Asian states wrecked, and probably more to come.

The immediate disaster, evident at Davos, is that the American economic model of deregulated market capitalism, dominant today in the U.S. and the rest of the industrial world, cited as a vehicle of human progress, proves under examination to have been in significant part an affair of swindle, personal enrichment, looted Third World nations, international and national crime conspiracies, bank robbery and Ponzi schemes, criminal real estate practices, environmental and institutional rip-offs, and official corruption.

Stuff does indeed happen, when greed is good and power better.

Visit William Pfaff’s Web site at

© 2009 Tribune Media Services Inc.

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By Kathy, February 4, 2009 at 10:56 am Link to this comment
(Unregistered commenter)

Thanks for this well writen op ed. I like the way it links our obsession with profits with our obsession with gun boat democracy. I think the world is tired of all the collateral damage, be it singed babies in the Gaza Ghetto, millions of refugees from Iraq, or out of work citizens who now can’t pay their mortgages.

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By KDelphi, February 4, 2009 at 1:30 am Link to this comment

Folk—jesus! lol!

Yes, lets hear it for the “we cant afford to pay you not to shoot at us anymore” Kyrgkystanians telling the uS to f*ck off. They are probably one of the first just waiting in line. (I’m certain I spelled that right.)

One airbase down—does anyone know how many yet to go?

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By Folktruther, February 3, 2009 at 4:22 pm Link to this comment

Let’s hear it for the Kyrgyzs, truthdiggers.  Known chiefly to the world for their tragic shortage of vowels, they have decided to kick the US airbase out of Kyrgkyzstan.  Mainly because they are getting more money from the Russians to get rid of it than the US to keep it.

this is what the US power system gets for pissing off the Russians.  Now Nato cannot supply that horrible war in Afghanistan through Russia, and as soon as the Pakistans assert themselves for the US bloiwing up their homes, they won’t be able to go through the only other route to the land locked country.  The valiant Kyrgyzs therefore are playing their part in stopping the Afghan war.

The money is not incidental.  The chief industry is bride snatching and if it is anything like my home town mining patch, the chief recreation is going to the city dump on saturday night to shoot rats.  apparantly they do it on horseback there.

Known as the “Switzerland of Central Asia” (to whom I wonder?) this action forms an excellant bookend to Davos to shutting down American imperialism.  Also I have a special fondness for the Kyrgygs because if I mistyped their name, no one would ever know.

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By KDelphi, February 3, 2009 at 11:57 am Link to this comment

Still LIfe LIving—thanks for link!

Here is the Venezuela Analysis link:

Not sure how its different than the other one just wouldnt open…thanks!

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By KDelphi, February 3, 2009 at 11:54 am Link to this comment

Xntrk—I saw that—(I get the “hands off Venezuela newsletter and the one from the govt office) Have you seen the videos of the police killings at the Mitsubishi strike? They are at In Defense of—I’m sure that you have (I will give you a better link, if not)

Here it is:

There is also an analysis of US media reporting on Colombia vs. Venezuela..

“..has been little willingness to assume responsibility. The overall position has been that “we all made mistakes” and it’s time to move on…”. Yes…and its bulshit!

Actually we didnt really have a financial adviser in Davos. President Obama claimed to be too busy here (understandable), but, he sent Valerie Jarrett   instead of an economic adviser.

Summers, Geithner, and, even Bair, all pulled out plant so atttend and speak. John Thein was slated to speak at various panels—he was not heard from.

Xntrk-”-Makes a big difference in the cost of things when the middle-man is tossed out and the dividends aren’t siphoned off the top. Sure, there are some things that may be better run by private companies, but certainly nothing we depend on for living. You know, stuff like medical care, food, housing, energy and transportation. Let the corporations fight over the bling that we cannot afford anyway.”

Amen!! Could not agree more…wish I was in Hawaii…

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By Xntrk, February 2, 2009 at 9:52 pm Link to this comment
(Unregistered commenter)

Still Life Living mentioned the world Socialism Forum in Brazil. I was reading about it last night on [may have one ‘a’ too many]. Over 100,000 people attended from around the world - exciting times in Latin America, if we can keep our hands off it, and quit demonizing the left-wing democracies that are reshaping their world.

Which is much more then we can say about the Left-Wing here. Is anyone else tired of hearing about Kucinich who would have been our savior if we’d just voted correctly? Please, the man is a Democrat, a good one, but still part of the current power structure. We need to think outside the box, and start changing things in a big way, not one little Lego at a time.

Here in Hawaii, the biggest polluters are the power companies which are private corporations on the various islands. Yes, there is a Commission that ‘regulates’ them, but the companies get extra for any increase in energy or shipping [diesel] prices [so do the shipping companies. One hand massages the other]. They also add on the investments they make. This year they want 17% more, not counting the energy sur-charge.

No one is talking making them publicly owned. Nor is there a discussion of forcing them to renovate their out of date technology with cleaner burning generators. Cuba did that last year, and cut the energy [diesel] use by 25%, and is converting to solar and wind as fast as they can.

Makes a big difference in the cost of things when the middle-man is tossed out and the dividends aren’t siphoned off the top. Sure, there are some things that may be better run by private companies, but certainly nothing we depend on for living. You know, stuff like medical care, food, housing, energy and transportation. Let the corporations fight over the bling that we cannot afford anyway.

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By Ed Harges, February 2, 2009 at 3:18 pm Link to this comment

re:  By Mike3, February 2 at 8:46 am:

Yeah, that was astounding: “Gee, it might be nice to hear a reply to Shimon Peres’s defense of Israel’s vicious mass slaughter in Gaza - but we really must get everyone to dinner…”

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By Bubba, February 2, 2009 at 2:50 pm Link to this comment

How much longer is it going to take for this reality to trickle around to a significant number of Americans?

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By Spiritgirl, February 2, 2009 at 2:49 pm Link to this comment

Only in America, would a dumbed-down, demoralized, gullible populace fall soooooo hard for the okee-doke!  Americans have made fun of Europeans with their old world behavior, and following the “Monarchy”, and their “conservative” attitudes for years!  Now after 8 years of GWB (anti-intellectual), 12 years of miss-rule by a Republican lead Congress that has a firm commitment to deregulated markets, and an American populace that has finally grown weary of “government off of our backs” - even the American people are crying for a return of government intervention for the everyman vs the corporation!

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By Ed Harges, February 2, 2009 at 1:26 pm Link to this comment

Well, gee! You mean it turns out that allowing a bunch of greedy rich people to pursue financial gain by any means they can dream up doesn’t result in the greatest good for society at large, as an accidental by-product of these purely selfish activities? Who could have suspected that this theory was faulty?

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By Still Life Living, February 2, 2009 at 12:40 pm Link to this comment
(Unregistered commenter)

There is another global conference going on right now.  It is called The World Social Forum. ( )
But no one is following it.  I learned about it from the Lewiston Morning Tribune, a small regional paper in northern Idaho.  Surely people building the economy from the bottom up is as important as those trying to dismantle it from the top down.

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By Mike3, February 2, 2009 at 9:46 am Link to this comment
(Unregistered commenter)

But Mr. Pfaff, you missed the best part, when the Turkish Prime Minister Mr. Erdogan stormed out when he was cut off trying to respond to what the Israeli President had said regarding Gaza. The American David Ignatius sounded really pathetic when he said something like: “we must get everyone to dinner”. Jesus! America doesn’t just look stupid anymore, it sounds stupid. And it’s still bias in favor of Israel. So no change there.

But yes, the article was good. So are Americans beginning to realize that the Europeans are not so bad after all? We’ll leave the surrender monkey bit out, and keep hoping for new changes.

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By felicity, February 2, 2009 at 8:52 am Link to this comment

That’s one good article, Mr. Pfaff.  Let’s hope that the government/private sector power structures can adapt to and adjust to and go forward with America’s new status rather than continuing to live in and by way of its delusions. 

If the world blames America for the alarming fact that 40 percent of the world’s wealth has been destroyed during this economic crisis, it’s a wonder we’ve even been given a seat at Davos.

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By hippy pam, February 2, 2009 at 6:06 am Link to this comment

and CHINA is pissed at us cuz we aren’t buying their cheaply made plastic,lead painted garbage…..We need companies here-to make consumer goods-so people can earn wages-and buy homes-pay bills…...
Let’s DO IT HERE…..and let the rest of the world worry about their own problems….

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By rosross, February 2, 2009 at 1:23 am Link to this comment
(Unregistered commenter)

Try a million dead in Iraq. Only Americans have seen themselves as the ‘leader’ of the world for 60 years.

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By M.B.S.S., February 2, 2009 at 1:09 am Link to this comment

davos man is half the man he used to be.  if you gauge men by their bank accounts.

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By P. T., February 1, 2009 at 10:18 pm Link to this comment

The Wall St. wrecking crew needs to be fired, not get bonuses from taxpayers.

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