The sudden fall of communist Russia left the world with a solitary super power, with the world as its playground. Democracy and Capitalism had been vindicated, it seemed. As with the historical pattern, the verdict would not be without a few surprises.
With its nemesis vanquished, the USA now had free reign to recreate the world according to its own image. The first opportunity to flex its geopolitical muscle arrived soon, in the form of the Gulf War that it dispatched with devastating efficiency. This period coincided with the dawn of the “Information Age”, which precipitated a sustained economic boom in the US. US President Clinton, who had the fortune of presiding during this period, simply could not put a foot wrong in the eyes of many Americans. Indeed, deservedly or not, his name is destined to go down into the annals of US folklore.
Like all fairytales this one too had to come to an end. This end was brutal if not surreal. It came in the form of a surprise attack on the symbols of American economic and military power, the Twin Towers and the Pentagon respectively. The world, it seemed, was not as safe as had been imagined. This time the instigator was a “faceless enemy” from hardened Islamist militants, whose hatred for Israel was matched only by that of its key ally America. An exceedingly costly war on terror that included simultaneous wars with Iraq and Afghanistan ensued, with untold fiscal consequences, which may yet define its future hegemony.
The event precipitated a chain of events of far reaching implications. The shock to the markets was tangible, with the New York Stock Exchange closing for a few days. Consumer confidence and trade plummeted. Exacerbated by the recent bursting of Internet bubble, the US economy plunged into deep and unfamiliar recessionary waters.
An attempt to ameliorate these economic travails led to a reduction of interest rates to near zero by Governor of the Federal Reserve Alan Greenspan, leading to a welcome but specious recovery. It carried hidden dangers, which would only fully manifest later, when the damage had already been done.
Meanwhile across the Atlantic, Europe was busy celebrating the fulfilment of a fifty-year-old dream. In a quest to forever banish any possibility of a European war, under the 1957 treaty of Rome, the European Economic Community and the Common Market were established, institutions which were to be consummated with the formation of the European Monetary union in 2002. And thus was the Euro birthed. The multilateral arrangement consisted of fifteen countries, with a population of almost 400million. This diverse union consisted of countries of such economic disparity as Luxembourg and Portugal with GDP per capita of $108,952 and $21,542 respectively. From the onset, it seemed an unsustainable marriage of convenience.
The silent rise of China was now beginning to be tangibly felt. By sheer force of its population size, this erstwhile global power was beginning to stir geopolitical waves, bringing to mind words attributed to Napoleon Bonaparte on China,"Let her sleep, for when she wakes, she will shake the world." An inflection point had been traversed and China began to shake the world indeed. Following the market friendly reforms of Deng Xiaoping, the Chinese Gross Domestic Product had grown by a remarkable average 10% from 1979, continuing to this day. From a mere footnote, it would later overtake Japan to become the second largest world economy, with some forecasts predicting that it will ascend to the summit by 2020.
The low interest rate years of the Greenspan years, had given rise to a property bubble, which duly burst in 2007, resulting in a collapse of a number of financial institutions. Thanks to the wonders of collateralisation, banks across the world were affected, some of which never saw the light of day again. The so-called sub-prime crisis was soon to turn into an economic crisis that plunged much of the world into the deepest crisis since the Great Depression.
As though the world had not seen enough crises, the excesses of a previous boom, financed through volumes of debt, gave rise to a Eurozone crisis the end of which is not yet fully known in 2011. Elaborate if not desperate efforts to rescue a profligate Greece are well in progress. At the root of the crisis is the misguided pursuit of a monetary union without a commensurate fiscal union. In turn, the latter would be impractical to implement without a corresponding political union. With entrenched cultural homogeneity and deep-seated historical rivalry and antipathy, the sustainability of such a political union is difficult to envisage.
At the end of 2011, the world faces deep and ominous challenges, which this platform does not allow for much scope to exhaustively explore. The image of a rudderless ship drifting aimlessly on treacherous seas, tossed this way and that way, seems an apt description of the condition of the nations of the earth. Where exactly this voyage will lead, is yet unclear. The death of idealism, the so-called “death of God” and the mortification of objective truth have robbed the world of a substantive anchor, such that the best it can hope for, in the absence of fundamental change, is an aimless drift from one crisis to the next, as it navigates its way through the unchartered waters of the third millennium AD. Indeed, if man is truly the measure of all things, the events of the previous century have taught, there is good reason for uncertainty and a sense of foreboding.
