With the economic crisis/collapse and the incapacity of leaders to effectively resolve it, there is a profound and existential fear gripping the modern world. According to columnist Jean-marc Vittori of France’s Les Echos, Western-style democracy, which has long been considered the most advanced system of governance, may be irretrievably unraveling.
Global finance is built on a simple idea: the debt of the United States is 100 percent secure. All financial products are defined by differences in interest rates – and therefore risk – in relation to U.S. federal debt obligations. Of course, the rating isn’t gospel. It’s just one piece of advice among others. But it proclaims one truth: America cannot continue to forge ahead with a gargantuan public deficit (more than 10 percent of U.S. GDP) and minimal growth (less than 1 percent in the first half of 2011). For the first time in over two centuries, it may not be able to repay its debt. With S&P’s announcement, bankers, insurers and investors the world over can no longer close their eyes to this disturbing reality.
But finance is not the only entity that was shaken. Since public debt is the cause, so are the politics behind it. The representative democracy under which we live was born three centuries ago around a simple idea: to avoid a debt spiral and bankruptcy, public finances must be controlled by representatives of the people and not left to the discretion of the king. Today this founding mission is no longer being successfully carried out in the United States – long considered the model representative democracy. And, in our Old Europe, doubt is growing about the capacity of States to bear their financial commitments, as we saw on the markets last week.
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