Volcker Says U.S. Economic and Political Influence Globally Is Waning

There were disturbingly blunt and devastatingly negative thoughts about the current economic and political condition of the U.S. spoken by Paul Volcker, chairman of President Obama's Economic Recovery Advisory Board, last night at a Common Cause dinner in New York.

He singled out the danger facing the U.S. if the dollar no longer retains its role as a global benchmark. "The growing question is whether the exceptional role of the dollar can be maintained," he said to civic leaders gathered to honor Volcker's friend and office-mate, Lt. Governor Richard Ravitch.

"It's hard to call what's going on a financial system," the former Fed chairman charged in his keynote address. "Where can the leadership of the global financial system come from?" Volcker asked in a pointed way.

Not from Europe, which is trying hard to save its currency, he added. Nor from Japan, "which is caught in two decades of economic stagnation and political uncertainty."

As for the U.S., Volcker chose to emphasize a recent poll that showed only 20 percent of Americans believe the government will do the right thing to turn around the nation. The U.S., emphasized Volcker, has "lost its relative economic strengths and the coherence of its governing model" which has been emulated for so long. The U.S., Volcker said, is "underperforming as an economy and suffering from a divisive political climate."

Yet, China and India, Volcker seemed to suggest, these new economic powers, are not ready yet to assume the mantle of leadership in the global economy. "If ever there were a need for clear-headed, confident leadership, nationally and internationally, that time is now," Volcker said in a pointed way.