The Financial Crisis & Geopolitics

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The Financial Crisis & Geopolitics

Postby sanha926 » Fri Dec 19, 2008 1:06 pm

There's an interesting piece by Ricardo Hausmann in the 16th of December Financial Times (p. 11):

http://www.ft.com/cms/s/0/a6de7bdc-caaa ... 07658.html

Hausmann's argument, in a nutshell, is that the current crisis doesn't necessarily compromise American hegemony (assuming, that the US is still hegemonic), but may in fact bolster its power. Arguing that power is a relative rather than absolute concept, Hausmann makes the following points:

-the Dow Jones is down about 40%, yet it is still the 'best performing stock market in the world';

-rival states like Russia, Iran and Venezuela are in severe trouble because of collapsing oil prices and decling bond values;

-capital flows to 'emerging markets' are in decline;

-the US is now the world's lone 'super-borrower' - the US Treasury remains as one of the few borrowers people are willing to lend to;

Hausmann goes on to argue that the US should use its financial power to stimulate their domestic and the global economy or risk the spectre of other nations turning towards isolationism/protectionism.

Has anyone here done any empirical work, or know of other empirical work, on the geopolitical consequences of the current crisis? Does it confirm or contradict the arguments made by Hausmann?
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