U.S. Failing as economic world power

The World Economic Forum has proved to be an uncanny barometer of global trends. Over the past decade, the United States has been lionized as world leader, economic giant and home of high-tech wizards such as Bill Gates. When the high-tech bubble burst, when deficits rose, when the Iraq war went sour, the shine on the American model dimmed. But, despite widespread dismay over U.S. foreign policy, few here used to question America's role as the world's unipolar power. What a difference a year makes. Davos 2008 has laid bare a world in which no superpower seems to be in charge. The unipolar American moment is deemed over, in part a casualty of the Bush administration's political and economic policies, in larger part the result of global economic changes that are shifting wealth elsewhere. The U.S. financial crisis grew out of years of massive lending for subprime mortgages during a housing bubble. The collapse of the bubble has undercut banks and revealed serious flaws in the entire U.S. financial system. Added to American foreign policy failures like Iraq and debacles like the response to Hurricane Katrina, this creates an image of American incompetence. What makes the American case so acute, in foreign eyes, is that it comes at a time when the United States is massively in debt to China and oil-rich countries like Russia and the nations of the Arab gulf. As America cuts interest rates to keep banks solvent, the dollar becomes less attractive to those countries who are keeping America afloat. "It's remarkable how few have noticed we are entering an entirely new era of history - the rise of Asia," says Kishore Mahbubani, dean of Singapore's Lee Kuan Yew School of Public Policy. "In a few years," he adds, "the world's four largest economies will be China, the United States, India and Japan" - in that order.