Who can save Uncle Sam?

Och, we live in interesting statistics.

US Federal debt in the Daily Schedule for the 14th of November 2007 was sitting round about nine trillion dollars. Well, $9,096,326,000,000 or so to be more precise.

It was $8,994,638,502,013.99 in the Monthly Schedule for the end of October, so it's grown by more than $101 billion in a fortnight.

It's also been running eye-watering current account and federal deficits for the past five years or so (websites are down just now, but www.bea.gov and www.cbo.gov will give you the gen - or I'll remember to come back and post it). There's been some movement to bring these accounts back under control, but it's hardly been a stunning success. If memory serves me right October's federal deficit ran in about $92 billion (I'll need to check that when the website comes back up). There's nothing wrong with running a deficit - nearly every country in the world does - but the scale of the US deficits are truly frightening.

Add into that mix a dollar that's incredibly weak and the credit crunch caused by corporate greed and you have all the makings of a disaster.

Swinging into the picture is the Organisation of the Petroleum Exporting Countries. OPEC ignored calls from the US to increase production. The US wanted increased production to lower world prices and help soothe an irritated US domestic market, OPEC argued, probably quite rightly, that an increase in production would do sod all to lower world prices because oil is traded in dollars and the dollar is weak so commodities traders are piling their money into oil instead of dollars to wait for a dollar recovery (which is, of course, hampered by the fact that traders are stockpiling oil instead of dollars).

Venezuela and Iran were arguing at the recent summit for the very sensible solution of not trading oil in dollars any longer. Since 2003, in fact, Iran has required payment in Euro for some of its oil in defiance of OPEC rules (although prices are still expressed in dollars). This may help to explain some of the aggression the US is showing towards Iran - it's not Iran's primitive nuclear programme that worries the US, it's the threat to the US dominance of the commercial world and a subsequent inability to support those massive debts they've been racking up. The US has not had to pay for its domestic problems and economic incompetence for decades because it used the Dollar's status to print money to buy its way out of trouble.

A conspiracy theorist looking for evidence that the US is terrified of losing control would point to the decision by Iraq in 2000 to move its reserves and international transactions from the Dollar to the Euro, threatening the Dollar hegemony and the US economy - as well as US oil import prices.

If the world was to swap the petrodollar for the petroeuro there would be no need for nations to hold those dollar assets and they'd start returning them. The US has printed dollar bills like monopoly money in the past and may come to regret that. The Dollar would be hit with what could amount to terminal decline, the Euro would become the stable benchmark for world currency tradings, and the currently precarious state of the US economy would be further endangered.

Is the US frightened by the prospect? Yup. In 2002 the former US ambassador to Saudi Arabia told the US Congress;

'One of the major things the Saudis have historically done, in part out of friendship with the United States, is to insist that oil continues to be priced in dollars. Therefore, the US Treasury can print money and buy oil, which is an advantage no other country has. With the emergence of other currencies and with strains in the relationship, I wonder whether there will not again be, as there have been in the past, people in Saudi Arabia who raise the question of why they should be so kind to the United States.'

The economy of the US as a federal beast would be threatened with collapse. There's oil in Texas which might help them survive and there's a massive economy in California which might do the same for them - although there are serious infrastructure problems in California. I simply don't know enough about the US to make any predictions, and I'm not an economist, so the predictions wouldn't have all that much weight anyway.

Should we be worried? We're often told that the US economy dominates the world economy and a slow-down there gives us all problems. There are people who will tell you that a weak Dollar is our nightmare because it makes our exports harder, slows the whole world economy, will be especially damaging to the developing countries in Asia, and so on, but there are voices, not only of dissent, but of outright rebellion to this straitjacket.

Some movement away from the Dollar and towards the Euro has already started - and that trend is only likely to continue, and some moves which would have been unthinkable a few years ago are now becoming commonplace.

With reports from the US now talking about one mortgage foreclosure for every 92 American families, 10% (yes, one in every ten) houses in Cleveland now vacant, family life becoming more expensive with food prices rising , and other nations beginning to see asset-stripping opportunities in the US, it's a wounded country.

This economy will no longer dominate the world - at the very least Europe is now a contender and America sneezing will no longer give the rest of the world a cold.

The biggest cost, though, is the human cost being borne by so many American families - especially amongst the poorest ones. The inability of the US federal government to respond to crises within its own borders was more than amply demonstrated in New Orleans, perhaps the rest of the world should be preparing to lend aid to the US when it needs it.