The worst financial crisis since the Depression has taken toll of some of the icons of American capitalism like Lehman Brothers, Merrill Lynch and Washington Mutual and has compromised US position as the financial superpower. The social costs of the ensuing economic downturn are formidable: 400,000 unemployed have been added to the list of the jobless, 40,000 families face foreclosures, thousands of businesses have been destroyed, wages have fallen while inflation is on the rise. With weak consumer spending, manufacturing industry has declined. The cause behind the downturn is sheer greed which is ingrained in the capitalist system as a driving force. It becomes particularly lethal in its unfettered and deregulated Anglo-Saxon version, which Pakistan has been forced to adopt. This encouraged financial institutions in the US to create lucrative but hazardous products and indulge in speculation. The crisis comes amidst perennial budgetary deficits caused in a big way by skyrocketing defence spending in pursuit of Washington's imperialist goals. Since the end of WWII the US has undertaken over fifty military interventions in a number of countries in East and South Asia, Latin America and Middle East. Over 700 US bases have been set-up in 130 countries across the globe. This has led to a whooping defence budget of $515.4 which in fact would cross $1 trillion if indirect expenses were also included. US overall budget deficit is expected to hit $482 billion during the coming year, a figure that does not include billions of dollars in additional Iraq war and the total could be higher yet if the economy fails to recover. The national debt this year exceeded $10 trillion, a figure that could not be displayed correctly on Times Square's National Debt Clock as it didn't have room for that many digits. The economic downturn is by no means irreversible. Things would however go bad before they start improving. A deep recession is not ruled out. Even after financial markets level off, broader economic recovery would be slow and the economic conditions would be less favourable than they were before the crisis. Given the burden of debt that has accumulated, it's hard to see the US economy growing as fast as it did over the past few decades. And in the coming years debt will constrain the United States government as it copes with the combined deficits created by the Bush administration's policies, the ever-more expensive financial rescue and the biggest item of all, Medicare for the baby boomers. Infrastructure, medical system and the country's energy policy are in need of improvement. There would however be less money for them than there was 5 or 10 years ago. With the coming skyrocketing of Medicare costs, the federal budget deficit could balloon wit the result that leading foreign investors might decide to shift their lending to safer economies. Were that to happen the country would face a whole new crisis. Will the Empire fall? Of course not. But the financial crisis would have repercussions for the US influence abroad. It has revealed that the American colossus has feet made of clay. This is likely to hasten the decline in US power and influence abroad. Combined with the worries created by the Iraq and Afghan wars, the crisis would take a toll on the respect and deference for the US soft and hard power. The US will of course continue to be the top dog for a number of years for the simple reason that there is no other country to replace it. What the financial crisis has however done is to make the task of the potential challengers easier. As it is, the Chinese economy has grown so quickly in recent years that according to Goldman Sachs it could overtake the American economy as the world's largest by 2027. Just three years ago, Goldman Sachs said it would reach the level until at least 2040. With rising US defence spending currently at about one trillion dollars (if spending on CIA and indirect defence expenses are included) leading to he budgetary deficits, and sever economic jolts of the type that characterise neo-liberal economies, China may take a shorter period to achieve the status. Similarly Russia with an extra large scientific and technical manpower, sufficient natural resources and a big pile of petro-dollars at its disposal is likely to pose challenge to the US in years to come. A number of Asian and Latin American countries too are developing fast. During the next decade there is a likelihood of multiple centres of power coming into existence to challenge the US hegemony. E-mail: azizuddin@nation.com.pk