Effects of the Current Crisis
The current financial crisis will affect many aspects of the life of the average person in the foreseeable future. Investors will see shrinking portfolios, job prospects will dim, and retirement funds will dwindle. Credit markets will freeze; small businesses will feel the pinch and many will see their net worth diminish.
The Financial Crisis and US Leadership
The financial crisis may also have an unforeseen effect-the limitation of the US to exert a leadership role in world affairs. Since World War Two the US has been the most powerful nation militarily but just as important is the reputation of the US as a financial powerhouse. New York has long been considered the world’s financial center. The status of the US dollar as the world’s dominant currency gave it special powers and privileges. “The dollar’s status as a reserve currency … has given the U.S. a privileged measure of economic stability relative to its rivals,” said journalist Sebastian Mallaby, of the Council on Foreign Relations. “It has allowed the U.S. to project power abroad, too.”
