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Wednesday, May 21, 2014

Did our Creditors Stay Our Hand on Syria?

Our external debt prevents us from going to war in the Middle East.   Journalist Eamonn Fingleton argues that our ability to power project is directly tied to our external debt obligations:
On the U.S. Treasury’s figures, America’s net foreign liabilities at last count totaled a stunning $3,863 billion. This is up nearly 16 times on a figure of $246 billion in 1989, the year the Berlin Wall fell. (You can see the full story by clicking here and then checking out the Excel table headed “International Investment Position, 1976-2013″.)
It seems hard to believe now but the United States was once the world’s largest creditor nation. Actually its net foreign assets peaked as recently as 1980 (at $360 billion). With mounting trade deficits under Ronald Reagan, however, the net figure rapidly dwindled and by 1986 America recorded its first net foreign liability figure of modern times.
Fingleton says US creditors--namely China and Europe--didn't want us to intervene in Syria ,so it didn't happen.  If our creditors don't back us, US interest rates will soar.  So, if Obama seems like a wimp, it's because financial realities makes him so.

Worth reading his whole post.  No argument from me that we must reduce our debt and restore our trade balance.  If not, American power and prosperity will be permanently undermined.

Now, as for the intervention in Syria.  We didn't respond to Assad's use of chemical weapons because Obama didn't have the domestic political backing to act.  The specter of Al Qaeda in the Syrian rebellion, and the possibility that our intervention might help AQ,  outweighed the nastiness of the Assad regime.  The administration probably believed Assad used chemical weapons.  Obama himself spiritually comes from the Henry Wallace-George McGovern wing of the Democratic Party, which distrusts the use of American power abroad.  His fail safe position is NOT to intervene militarily.

Still, worth keeping in mind Fingleton's thesis down the road.  After all, his good book "Unsustainable" helped inspire this blog!
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