I had a thought about the current situation over lunch today. Is it possible that several at the top in the US (Paulson, Bernanke, Bush et al) realized that the house of cards were going to collapse, and are now acting to end up with the US in the best place possible considering the circumstances?
If you look at what truly is a worldwide crisis, you see that other countries, basically everyone else, is being hurt even more than the US. Despite a large portion of the responsibility for the mess being layed at the feet of the US, most of the world is still buying treasuries because we are still the safest place for foreign currency. Would China Inc choose someday to dump US bonds and move to say, Japanese securities? Probably not. Would they stick their money in Arab dictatorships? Nope. Socialized Europe who seems to be imploding as we watch the nightly news? No again. They don't have many desirable alternatives.
The price of oil also had me thinking of this thread topic of manipulation. A barrel of oil was bid up dramatically this year, and fell even more quickly to 2004 levels. Oil producing countires (OPEC nations plus Russia) have based their budgets on the price being much higher than $40. Their leaders' power base is contingent on them being able to provide a basic standard of living to their citizens, or at least having enough muscle to keep the masses in line. Having your government's budget cut in half because you planned on $80 oil makes that a challenge either way.
I am not a conspiracy enthusiast but will play one for another paragraph or two. So imagine for a minute that Paulson/Bernanke etc realize it is all going to come crashing down. Our US lifestyle is going to take a hit regardless of what is done, but perhaps depending on what steps the government takes we could come out of it somewhere between impoverished to just knocked down a few notches. We go from a Lexus to a Chevy, instead of a Lexus to a bicycle. I think you get my meaning.
So what if as the crash happens, they play up the crisis to once-in-a-century proportions. Get a huge $700B chunk of newly printed cash to do with as they please. This means they can control the market to the downside. None have explicitly done it, but with one public sentence either Bernanke or Paulson (or Bush) could send the stock market into another 3000 point dive. They also get to choose which marginally viable companies get to live and who are allowed to die.
Rather than fighting amongst ourselves, people in the US realize their position and how dependent they are on imported goods and more importantly, imported energy. A movement to restore the US manufacturing base and have clean energy independence by 2020 takes hold. This would be Obama's job, and I hope he pushes it. He has the opportunity to be one of our best Presidents if he can communicate this to the people.
The rest of the world goes in the tank, governments which have propped up their industries for decades (Airbus?) suddenly are cash-strapped. Oil-rich countries become oil-broke as they run huge deficits to keep power. The EU effectively disbands as each country goes back to its own currency, in hindsight the nationalism of each was discounted. In good times they can hold their noses and put up with each other, but now in bad times they protect their own kind.
Russia and China are weakened, and more importantly their real areas of weakness are exposed throughout this trying time. That leaves the US, bloodied and battered, poorer but not bankrupt, as the overwhelming lone superpower in the world. Energy independent, with strong manufacturing and financial services. But most importantly, the attitude of the citizens of the US has changed to not expect something for nothing. Ironically, the US as a whole adopts an attitude more like the Asian immigrants I have encountered: busting your ass and frugality are the best way to financial security.
IMO it would be exactly the same for every argument you just made... but that's just my opinoin. I think the US is worse off in every way, and that the EU is more stable.... There in general is tighter fiscal frugality and prudence in Europe especially Germany then the US, jsut look at consumer savings, and govt spending over time... which would be more confidence inspiring to have a EU denominated global currency