Axis of Upheaval

The Dow Jones average today is flirting with 7,500, meaning that all the gains of the past decade have been lost over the past few months.

Meanwhile, Niall Ferguson writes that the globe could be on the brink of massive political upheaval. Excerpt:

The problem is that, as in the 1930s, most countries are looking inward, grappling with the domestic consequences of the economic crisis and paying little attention to the wider world crisis. This is true even of the United States, which is now so preoccupied with its own economic problems that countering global upheaval looks like an expensive luxury. With the U.S. rate of GDP growth set to contract between 2 and 3 percentage points this year, and with the official unemployment rate likely to approach 10 percent, all attention in Washington will remain focused on a nearly $1 trillion stimulus package. Caution has been thrown to the wind by both the Federal Reserve and the Treasury. The projected deficit for 2009 is already soaring above the trillion-dollar mark, more than 8 percent of GDP. Few commentators are asking what all this means for U.S. foreign policy.

The answer is obvious: The resources available for policing the world are certain to be reduced for the foreseeable future. That will be especially true if foreign investors start demanding higher yields on the bonds they buy from the United States or simply begin dumping dollars in exchange for other currencies.

Economic volatility, plus ethnic disintegration, plus an empire in decline: That combination is about the most lethal in geopolitics. We now have all three. The age of upheaval starts now.

Meanwhile, the Taliban now rule an area of Pakistan that is as far away from the Pakistani capital of Islamabad as Richmond, Va., is from Washington DC. Pakistan is an economic basket case. With nuclear arms, the control of which sits 100 miles from where the Taliban have just effectively taken over from a weak Pakistani army.