The global financial crisis continues to chip away at America’s global power and influence. This weekend, U.S. President George Bush bowed to European demands for a global economic summit soon after the U.S. elections in November. The president’s announcement, reported in the Wall Street Journal, “represents another concession to European leaders, who’ve already forced the U.S. hand on key design elements of the financial rescue effort that’s currently underway around the world” (emphasis mine throughout). Having watched their economies tank, countries worldwide, particularly in Europe, are demanding more from the one nation they believe to be responsible for the mess.

According to today’sTelegraph, “The emboldened Europeans signaled that the bloc was ready to ambush Mr. Bush and his successor, who is expected to attend the meeting, to impose a European vision for new financial market regulation.” The article continues,

European diplomats are hoping that a new U.S. president-elect might be more receptive to European style “social market” reforms, especially if the elections sweep Democrat candidate Barack Obama into power.

“We need a new global financial order,” European Union Commission President José Manuel Barroso said yesterday. “Those words,” the Christian Science Monitor says,

could send shivers through a White House that is suspicious of the current chorus of world leaders—European, Russian, and others less friendly to the U.S.—who are hailing the current economic crisis as a moment to usher in a multi-polar world.

America and its European “allies,” as we have written before, have drastically divergent strategies for solving the banking crisis. These differences will only sharpen in the months ahead. Ultimately, just one economic superpower will emerge from these bilateral attempts to solve the crisis—and it won’t be the United States.

Another article appearing in the Wall Street Journal on Friday takes a broader look at America’s diminished stature as the world’s lone superpower:

America’s historic economic shock in the past month came as its ability to project influence globally was already being challenged by emerging powers such as China and India, as well as oil-producing Russia and Iran.The limits to U.S. power have become apparent in the Bush administration’s final year, as it has struggled to end Tehran’s nuclear program and failed to safeguard Georgian sovereignty during the Russian incursion in August.

According to the Journal, an intelligence assessment is being prepared for the next president that will outline America’s long-range position in the world and how its “dominance will be much diminished” between now and 2025.

In fact, America’s inglorious fall from power will happen much faster than that. But at least many commentators are now aware of America’s dramatic decline. So much, in fact, has been written along these lines in recent months that one might forget that theTrumpet.com, and the Plain Truth before us, has been predicting America’s downfall for decades. As our regular readers know, we have based our accurate projection on the sure word of Bible prophecy.

Benedict Snubs Israel

Israel’s envoy to the Vatican has renewed Jerusalem’s open invitation for Pope Benedict xvi to visit the Holy Land. That may not happen anytime soon, however, judging by remarks made yesterday by Peter Gumpel, a Vatican cardinal. According to Italian news reports, Gumpel said Benedict would not visit Israel until an inscription below a portrait of Pope Pius xii is removed from Jerusalem’s Yad Vashem Holocaust museum. The caption accuses Pius, who became pope in the lead-up to World War ii, of ignoring the Holocaust.

Today, in a statement released by the museum, Yad Vashem acknowledged that historians have long debated Pius xii’s pontificate—particularly as it related to Nazism’s massacre of the Jews. The museum display, though, is “based on the best research regarding the topic,” the statement read. It continued,

Yad Vashem is certain that the opening of the Vatican archives on the relevant period would help further research on the subject.

A spokesman for Israel’s Foreign Affairs Ministry was less subtle in his criticism of the veil of secrecy surrounding the Vatican archives: “So long as the Vatican refuses to allow historians into its archives, that painful question will remain unanswered.”

The Vatican has since distanced itself from Gumpel’s remarks, saying the museum caption would not be the “determining factor” in a possible papal tour through Israel. But with many Vatican insiders pushing for Pius xii’s beatification, Catholics and Jews are miles apart in their reading of the Vatican’s stance, then and now, on the extermination of millions of Jews.

The World’s Riskiest Investment Bank

Of America’s big five investment banks—Bear Stearns, Lehman Brothers, Merrill Lynch, Morgan Stanley and Goldman Sachs—only Stanley and Goldman survive, and only as “different types” of banks, writes the International Herald Tribune.

With those risky investment banks now gone, we can all breathe a sigh of relief, right? Wrong. The biggest, riskiest lender of all is still around: the U.S. federal government.

The federal government’s decision in the past week to purchase $250 billion worth of bank stock now makes the government a major investor and owner in the banking industry. According to the Tribune, this move is one of many that is “redefining and enlarging Washington’s role in the banking system.”

And if conditions worsen, or the bank industry’s derivative positions are much more toxic than realized, then taxpayers once again could be left shouldering the massive debt.

Just what is the role of government in finance, the Tribune asks? “History shows that government intervention in banking systems can carry its own dangers, with money funneled to political favorites and away from innovators.” The article points to Fannie and Freddie, the two mortgage political-economic behemoths, as our most recent history lesson:

Fannie was created during the depths of the Great Depression, and Freddie in 1970, to help make mortgages more affordable for homeowners.But as the housing bubble grew, the companies came under political pressure to buy riskier loans and loosen their standards, according to former executives and analysts. Last month, the federal government was forced to bail out Fannie and Freddie, and pledge perhaps $200 billion or more for the rescue.

For our take, read “The Politically Correct Housing Bubble.”

All totaled, the Tribune says the federal government has committed $5.1 trillion in bailout money to cover everything from Bear Stearns to aig, as well as the financial rescue package approved by Congress earlier this month.

Housing Value Hits Rock Bottom in Britain

According to ratings agency Standard & Poor’s, 335,000 homes in Britain will be worth less than their mortgages by the end of the month. This figure could increase by 60,000 a month, possibly peaking at 2 million, if current trends continue.

Britain’s Conservative Party blamed the Labor government for creating a “culture of indebtedness.” Philip Hammond, the shadow Treasury chief secretary, said, “We are now paying the price for a decade of debt-fueled boom, with hundreds of thousands of people unable to sell their property, after being encouraged by the government to overstretch themselves to get on the property ladder.”

Too many homeowners believed the continued increase in property values would give them an endless fountain of wealth. Television ads told viewers to “unlock the value” in their homes by re-mortgaging once their house increased in value. Banks granted 100 percent or even 110 percent mortgages. Now that the housing bubble has popped, many Brits are waking to the fact that they live in a home they cannot afford and will never pay off.

Repossessions rose over 40 percent in the United Kingdom during the first half of this year—the highest level in over a decade. Lenders repossessed 19,000 homes during the first six months and are expected to take over 26,000 more in the next six months.

For more on the cause of the credit crisis, read “The Cause of the Crisis People Won’t Face.”

Elsewhere on the Web

Spiegelnoted last week that a cloud of pessimism is looming over the nato mission in Afghanistan. “Nothing is moving forward anymore,” one ambassador said, “and yet we are no longer able to extricate ourselves. … We are trapped.” nato is trapped in more ways than one. The ailing organization is not only bogged down in Afghanistan, it is, as we wrote recently, being systematically undermined and dismantled by Germany—one of its largest members—and a newly resurgent Russia.