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In his 1849 novel, Les Guepes, Alphonse Karr penned the classic line: "The more things change, the more they stay the same." In the case of the United States in 2005, however, the opposite might be true: The more things stay the same, the more they are likely to change…for the worse. In that regard, compiling a list of potential threats to the U.S. this year has a strangely déjà-vu-all-over-again feeling. After all, such a list would represent nothing more than a longstanding catalogue of economic policy-making run amok. Virtually the same list could have been drawn up in 2004, or 2003, or previous years.
Such threats would include: a persistent and increasing resort to debt-financed growth and a concomitant, growing imbalance in the trade deficit, leading the U.S. ever further into financial dependency and so leaving it dangerously indebted to rival nations, which could (at least theoretically) pull the plug at any time. This, in turn, is occurring against the backdrop of an increasingly problematic, Vietnam-style quagmire in Iraq, against imperial overstretch, and against a related ongoing crisis in energy prices, itself spurring an ever more frantic competition for energy security, which will surely intensify existing global and regional rivalries.
Just as a haystack soaked in kerosene will appear relatively benign until somebody strikes a match; so too, although America's longstanding economic problems have not yet led to financial Armageddon, this in no way invalidates the threat ultimately posed. For economy watchers in 2005, the key, of course, is to imagine which event (or combination of them) might represent the match that could set this "haystack" alight -- if there is indeed one "event" which has the capability of precipitating the bursting of a historically unprecedented credit bubble.
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