The End of Unilateralism

For now, the Chinese Investment Corporation (CIC) does not appear to be ready to increase its stake in Morgan Stanley and the evidence would appear to suggest that the new rising powers or, more specifically the BRIC (Brazil, Russia, India and China) states, and the GCC (Saudi, Bahrain, Qatar, Kuwait, Oman and the UAE) states are not quite prepared to buy up what is left in the wreckage of American's financial system. As in the political sphere the Chinese in particular are demonstrating a wait and see attitude clearly aware of the fact that their day will come and, in the meantime, it is Japan's largest bank, Bank Mitsubishi UFJ (MUFG) that has increased its stake in Morgan Stanley to 21%. What Japan's future role will be in the world economy remains to be seen, however, while America will continue to be the world's largest economy for a few more years, the evidence would appear to suggest that the credit bubble and military adventurism have ushered in the end of American hegemony. Nothing unusual there and the "American Empire" is following the path of its predecessors.
For many at Morgan Stanley the Mitsibushi option will be preferable to the CIC increasing its stake in the bank to 49.9%. However, we shouldn't forget that it was the Chinese who decided not to take what is, in fact, a gamble. Moreover, one can almost taste the stealth in how China procedes. Therefore, the bigger and more important question is, will the BRIC and GCC states use the present crisis to facilitate a new world financial order or will they, for the time being, continue to buy American bonds and support the dollar's role as the world's reserve currency? Of course, even that question loses some of its significance because whatever happens, the control of events is no longer in American hands. In 1924 the French had their final hurra when their dependence on Anglo-American capital forced them to withdraw from the Ruhr and in 1956 Britain's dependence on American capital led to a humiliating back-down on the Suez. An administration under Barrack Obama might just mean that there will be no similar humiliation for the United States and it can also facilitate America playing an important role for some time to come, and, while no longer able to act unilaterally, it might be able to ensure that it is in no other power's interests to do so either. A McCain and Palin government on the other hand might lead not only to inevitable humiliation for the United States itself, but to and a situation where chaos reigns and anything is possible.