A Portrait of the World in 2018

America's Great Retreat

Will there be war? There is much disagreement on the prospect. What everyone does agree on is that, if war comes, America will not participate. A destabilizing conflict between China and Japan can only heap more misfortune on the US economy, having already shriveled to sixty percent of its previous size.

The great Panic of 2008-2009 spared few countries. Among the hardest hit was the United States. The near-absolute drying up of bank lending unleashed a wave of insolvencies that penetrated every sector of the economy. America experienced the worst economic slump in its history, exceeding even that of the Great Depression.

The US financial system now exists entirely under the ownership of the Treasury and Federal Reserve. This places finance in the same league as national security as a government-provided public good. The third and final bank bailout, this time to the tune of $1.2 trillion, left the federal government stuck with loads of assets that nobody else had the stomach to buy.

It was at this point that President Obama proposed a comprehensive solution. Inspired by Roosevelt's New Deal, it was to involve massive, government-sponsored public works projects to stimulate investment and growth. The program would be called "The Audacity of Hope," after the title of Obama's autobiography. It soon emerged that the government was to pay him royalties for the rights to the phrase.

Before Congress even had a chance to consider it, however, the capital markets staged a revolt. The mere announcement of the gargantuan initiative sent yields on US Treasuries into the stratosphere. Overnight, the government's cost of borrowing skyrocketed from 14 to 35 percent, forcing the program's complete abandonment. It turned out that all the money the Treasury had spent bailing out the financial institutions had left it unable to finance a viable recovery plan for the broader economy.

Obama was duly ousted in 2012. His replacement was Cleetus Jenks, a plain-talking country singer and town mayor from Tennessee. His first move in office was to extend the ban on short-selling and long-buying to cover "sideways glancin'." This brought trading on the New York Stock Exchange to a complete halt, as nobody could figure out what the new policy actually entailed. He went on to abolish the Fed, loot the Treasury, and fire up the printing presses to finance his bizarre initiatives. Most of these involved NASCAR in some form or another. With inflation at 40 percent and gold pushing $22,000 an ounce, voters returned Obama to power in 2016 under the slogan of "boundaries." Jenks now sits in a federal prison.

Obama's second presidency was to bring more misery upon Americans. Fiscal necessity, heightened severely by the economic crisis, dictated a drastic reduction in Social Security and Medicare provisions. For many seniors, the added financial burden proved too difficult to bear, pushing masses of retirees to move in with their children.

One unanticipated consequence was the return of the credit-default swap (CDS), an esoteric financial derivative whose blowup in 2009 cemented America's final descent into the economic abyss. As more and more seniors shacked up with their kids, financial entrepreneurs began selling CDS to help people offload this risk onto those more willing to shoulder it. In return for a premium, the CDS seller would offer to take the buyer's parents into his or her own home in the case of a "move-in event."

Former Fed Chairman Alan Greenspan praised the new derivatives for "effectively spreading risk from those with large short-term obligations to those with diffuse long-term liabilities, or no liabilities at all."

The drastic curtailment of entitlements followed a long series of similarly momentous spending cuts initiated under the first Obama administration. Of these measures, the most far-reaching was the withdrawal of US troops from all military outposts around the globe. The consequences were disastrous, not least in Asia, where Japan was now left on its own to fend off a rapidly rising China.

Few in America expected the resulting wave of paranoia that was to spread across Japan. The Liberal Democratic Party, having governed the country for the previous seven decades, was unable to present a viable solution. Swept away on the back of mass anti-government protests, the Liberal Democratic era gave way to that of the fascist Forward Japan Party. The FJP summarily dispensed with the constitution and jailed the political establishment. It then deployed the country's immense foreign currency reserves toward a massive military build-up, propelling Japan out of its 23-year economic slumber and forever shaking the world's geopolitical map.

It was not long before Forward Japan abandoned the pacifist foreign policy of the preceding decades. Its first act was to create and finance a rebel group that ousted the rapidly decaying North Korean regime following the third and final death of Kim Jong-il. This prompted China to step in and back remnants of the Korean People's Army in an attempt to undermine the new government, spiraling the country into a calamitous civil war.

North Korea's collapse has prompted many to ponder the whereabouts of its nuclear, chemical and biological weapons arsenal.

The Korean civil conflict was only the first in a series of proxy wars between Japan and China. Their rapid economic growth has placed renewed pressure on the world's natural resources, leading the two Asian powers to finance rival warlord factions in several oil-producing states. The "energy wars" have brought devastation to Venezuela, Angola, and Saudi Arabia, where intense fighting over oil wells has created frightening refugee flows into neighboring countries.

The new geopolitical environment has thrust Russia, with its vast oil and gas reserves, into the role of kingmaker. To the surprise of many, the Putin-Medvedev partnership has endured. Putin, known derisively to the public by his new nickname, "Sani Abacha," spreads the Kremlin's plentiful oil revenues around the country's corrupt and venal elite. He has secured his alliance with president Medvedev by engineering the government takeover of Lukoil, Russia's last privately-owned energy conglomerate, and selling it to the president's brother-in-law in exchange for a half-eaten Chicken McNugget.

If the shocking effects of America's Great Retreat in Asia came as a surprise to many, no less dramatic were its consequences for the Middle East. The Obama administration's first foreign policy move, of course, was to hastily withdraw all US forces from the region. To be sure, the intensifying economic crisis left Obama with few other options. The aftermath in Iraq, however, was horrifying. The halting progress it had made since the "surge" now disintegrated into a vicious three-way civil war. Opposing factions backed by Syria, Iran, and Turkey clashed violently, plundering, raping, maiming, and killing in their pursuit of Iraq's oil wealth.

The unspeakable atrocities committed by all sides eventually triggered a popular backlash against the three foreign powers and their domestic clients. Having transparently cloaked their naked quest for riches in extreme religious ideologies, the warlords unwittingly laid the foundation for a new movement espousing a secular, pan-Iraqi nationalism. Formed mostly by Shias, it brought under its universal umbrella many Sunnis and Kurds as well. Its ability to inspire mass support and recruit committed volunteers enabled it to gradually expel the warlords and their foreign backers. As it did so, the new ruling party consolidated its authority across ever-larger swathes of the country, bringing with it stability and economic modernization. Iraq had finally gotten its Ataturk.

Inspired by the Iraqi example, a similar movement sprung up in neighboring Iran. The pampered and privileged Islamist elite under the Ayatollah Brezhnev soon found itself under siege, its authority limited to a rapidly diminishing island around Tehran. Accelerating its demise was a series of newspaper exposés detailing the full extent of top officials' involvement in the trafficking of Afghan opium.

Afghanistan, for its part, witnessed the rapid advance on Kabul of the Taliban following America's withdrawal. From Kabul the Islamists descended on Pakistan, where years of economic collapse had left its previously imposing army decimated by mutinies. The Afghan Taliban was able to rely on the help of its Pakistani counterpart to briefly take control of the capital, Islamabad, before being ousted by a China-backed coalition of army officers. The country's substantial nuclear arsenal is assumed to have disappeared onto the international black market.

Halfway across the world in Europe, things are looking better, but gloomy still. Europeans' widespread gloating at America's misfortunes ended with a severe depression of their own, prompting a backlash against dark-skinned immigrants from North Africa and Turkey. Frightening pogrom-style attacks ensued in Austria and Denmark. Across the continent, radical nationalist parties were swept to power. One by one, they pulled their countries out of the Euro mechanism and re-adopted their own national currencies. This prompted a wave of competitive currency devaluations from country to country, bringing Europe back to the brink of 1920s-style hyperinflation.

On paper, the single European market still exists. In substance, it is all but dead. Governments responded to the financial crisis with massive bailouts of loss-making national "champions" and, later, of smaller firms. The European Union is now little more than a collection of protectionist fiefdoms. This time, however, there will be no Great War; Europeans, fortunately, have become too lazy to fight each other.

Like Europe, Latin America did not manage to avoid the financial contagion. New debt and currency crises befell Argentina, Mexico, and Brazil, wiping out the middle classes that had emerged there over the preceding two decades. With them went the democratic regimes that depended on these middle classes for support.

In Zimbabwe, the good news is that Mugabe is finally dead. The bad news is that his defiant corpse has vigorously rebuffed all attempts to remove him from his chair in the National Security Council meeting room.

Israel has extended to its logical conclusion its policy of walling itself in from the Palestinian territories by erecting a roof over top of itself connecting the walls. It has been nicknamed "the Jafrodome."

Al-Qaeda broke up following bin-Laden's insistence that the group change its name to "Osama and the al-Qaedans." He went on to launch a solo career releasing more threatening videos.

But something, alas, is stirring in America. A group of PhD dropouts from Berkeley trying to engineer an ever-more potent strain of marijuana stumbled upon a cheap source of renewable energy. They have already secured a patent along with backing from venture capitalists, and the project is set to go into mass production. If the new technology succeeds, it will require scores of industrial-made products to be redesigned and manufactured anew to utilize the new energy source. Demand from Asia is set to explode. America may be back yet.