The world is holding its breath, still trying to grasp the potential enormity of what is unfolding. Economic downturns and stock market crashes are hardly unfamiliar, of course, even if a decade or so seems a long time ago for western consumers habituated to rising house prices and non-stop shopping.

But this crisis threatens to be rather different, a Big One. Already it has forced the government to engage in what has been a heresy for almost three decades: nationalisation. Major crises such as the Northern Rock debacle in the UK are not matters of punctuation or pauses for reflection, but defining historical moments, marking the end of one era and the beginning of another.

There are two conclusions that we can draw from the economic crisis that began last August and might, in some form or another, last for a prolonged period. First, it heralds a major reduction in the global economic and political influence of the United States, rather in the manner that the 1931crisis announced the final and belated end of Britain’s global economic supremacy. Fundamental systemic crises are often associated with the decline of the dominant imperial power and its increasing inability to sustain the system over which it had previously presided.

The present crisis, at root, is a consequence of the economic decline of the US and its increasing weakness at the apex of an international financial system of which it was the architect and chief beneficiary. This is most clearly expressed in the US’s chronic balance of payments deficit and its long-term dependence on East Asian inward capital flows to shore up the value of the dollar. Perhaps the present turmoil will ease, but in truth the old arrangements are now coming apart and, in anything other than the short term, seem patently unsustainable.

The second conclusion is that the political consequences of this shift will be enormous. The interwar crisis led to the Second World War and the birth of Keynesianism. The less significant Opec crisis of the 1970s destroyed the social-democratic consensus and led to the triumph of neoliberalism. And this time? One thing seems certain: the neoliberal orthodoxy will be undermined. It could lead to a rise of protectionism in the US and Europe against developing countries such as China, or new regulations designed to prevent sovereign wealth funds from taking over what are deemed key strategic assets.

The political terrain is shifting. Attitudes towards the US are a case in point. The move towards neoliberalism in Britain was intimately bound up with the embrace of the US as the country to be aped and copied. The American model was celebrated by Thatcherites and New Labour alike, California worshipped as the model of the future, “Anglo-Saxon” embalmed as the fitting metaphor for the shared Anglo-American legacy, Europe denigrated and the rest of the world ignored.

How perceptions of the US have changed: a country living beyond its means, dependent on large helpings of Asian credit, characterised by huge inequalities, its great financial institutions guilty of huge folly, forced to rely for their salvation on the sovereign wealth funds of China and elsewhere. And, remember, we are only at the very beginning of the biggest geopolitical shift since the dawn of the industrial era. — The Guardian