America: Still in the driver’s seat

The United States is suffering the worst financial crisis since the Great Depression. The nation's reliance on the rest of the world to support its rampant spending is increasing and across the nation Americans are losing their jobs.

All this has led many to ask the once-unthinkable question: Is the United States at risk of losing its status as the world's top financial superpower? To be sure, things seem grim. …

…This crisis will certainly leave its mark on America.

"Our credibility has been destroyed," said Joseph Stiglitz, a Nobel Prize-winning economist at Columbia University. "There will be a fundamental change in the role of the U.S."

For starters, it'll be a long time before a U.S. Treasury Secretary can go over to India or China and tell those countries how they should run their banking systems.

Also, more jobs will likely be shed in the U.S., economic growth will slow for several more years, and the amount it costs to borrow money will increase.

But economists including Stiglitz are nearly unanimous: The United States won't lose its position as the world's financial superpower because foreign economies are slowing just as fast as America's, their debt levels are just as high, and the developing world is too reliant on the U.S. market to achieve significant growth on its own.

"The U.S. will still be the world's largest economy," said Stiglitz.

Irene Finel-Honigman, a colleague of Stiglitz's at Columbia, put it more bluntly.

"The U.S. remains and will remain the standard bearer in financial markets," said Honigman, an expert in international finance. "Even in a recession, the U.S. will lead the way out."

It's not just American economists who think the United States will remain the world's financial center for the foreseeable future.

"It's overdone to think the credit crunch itself will mark the end for the U.S. as the world's most powerful capital market," said Lex Hoogduin, chief economist with Dutch investment firm Robeco. "It's popular in political or left-leaning circles, but I don't think they will be proven right." …