Although we are all currently focused on the short-term upheavals associated with the European debt crisis, there is a more interesting long-run issue which we would do well to understand. This issue is the decline of American hegemony. Over the past 20 years, China has emerged as an economic superpower. In 1991, its share of world GDP was under 5%, whilst the US share was circa 25%. By 2013 China's share will be 15% and the US share will be 19%! It is reckoned that China's share of world GDP will equal that of the US by the end of this decade!
Globalisation has been cheered on by successive US administrations, and the costs to date have mainly been for US workers, whose jobs have been off-shored or who face downward pressures on their wages due to competition from overseas. But maybe the largest cost to the US, however, will be the decline of its hegemony and the concurrent rise of China.