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I have often discussed the American predicament. The quandary is the precipice of collapse on which the United States finds itself economically, socially, and strategically.

When I discovered that the US net-saving rate is 0.0%, I realised that the ‘tipping-point’ may well be closer than I had imagined. But the final warning may well have struck….

Hurricane Katrina

When I say ‘warning’ I am not meaning in the environmental sense, although one could argue that The White House’s ignorance of Climate Change was been punished by the ferocity of Katrina. I am referring to the huge inequalities that have been exposed in the aftermath of the flood. The plight of the poor in the wake of the disaster has been played out 24hrs a day on the rolling news channels.

What amazes me has been the reaction of the American press and public, as if the middle-classes were unaware of the huge levels of poverty in their country. You could almost hear the echoes of C19th London as they read the horrors of poverty in England’s north in Elizabeth Gaskell’s seminal novel Mary Barton (1848). It was a shock to the citizens of the world’s richest country that poverty, racism, and vast inequality still existed in their great society.

When those at the bottom of the socio-economic pile are united and mobilised they have the potential to usurp the status quo. Will the open wound of Katrina lead to the sort of suppressed anger, which the violence following beatings of Rodney King only alluded to?

The response to Katrina will be of potentially greater significance than the response to 9/11. The attack on the World Trade Centre unified socially and politically divided Americans and provided President Bush with a rallying cause to solidify his leadership. Katrina has again divided Americans, critics have openly derided the federal response and the overwhelming numbers of blacks who were unable to escape the city, point to the realities of American Society: Deep division and inequality.

Economists were already suggesting - prior to the hurricane - that America might slip into a recession in 2006. As insurers measure the impact of the catastrophe, investor confidence will suffer. Reports in the US suggest that Katrina will trim economic growth by 1% and cost 400,000 jobs. Can the resilient US economy survive Katrina? Will the horrendous financial irresponsibility of congress finally catch up them? Will the recession cost Americans their heavily mortgaged homes?

The future of American dominance is indeed precarious.