America Governs the World through Laws and Dreams

Millions? Billions? By launching its offensive on the world soccer giant, the American justice system will surely see fresh money going back into the Treasury once more – money potentially coming from said giant, FIFA, most likely from banks that laundered the money of corruption. The famous Department of Justice will again contribute to rebalancing American public finances. Over the past three years, judges from the United States have taken almost $140 billion from national and foreign banks (including $9 billion from French bank BNP Paribas). They alone seem to be able to make financiers foot the bill for their excesses, fraud and market hindrances.

The real American power is not a military one, as evidenced by events in the Middle East, where Washington makes do by intervening from 10,000 meters in the air. Its economic power does not come from shale gas or wage reductions (or at least not most of it), as a recent study by French think tank Fabrique de l’Industrie indicates. In reality, we must look elsewhere for the source of its power. The true American power is based on notions of legality and fantasy. Law and dreams.

Law first of all. Nothing surprising from a nation of legal practitioners. The country’s elite is made up of lawyers (Barack Obama is one of them) and is the source of countless jokes (“What is 10,000 lawyers chained up at the bottom of the sea?” – “A good start”). Lawsuits are omnipresent in American films, and there is even an entire TV channel devoted to the topic (truTV, picked up by 90 million households). Nothing surprising, except that the United States is now extending its laws beyond its own borders – in football and finance, but also tax law. The Foreign Account Tax Compliance Act has given the go-ahead for the automatic exchange of information between tax services from different countries in order to combat tax fraud. According to legal practitioners, the extraterritoriality of United States law is on the rise. And America is affirming its new power, which often manifests itself in the form of threats toward banks (“If you don’t cooperate, you will no longer have the right to work in the United States, or even in dollars”). However, it also uses other means, such as access to digital data granted by the Patriot Act and its younger brother, the Freedom Act, which is currently being debated in Congress. Essentially, they are pulling out all the stops.

Next, dreams. America invents the future, or a possible future, then it sells that promise to investors. At the end of the 1980s, foreigners bought into American cinema. Japan’s Sony acquired Columbia, and Italian businessman Giancarlo Parretti purchased MGM Studios (with the backing of French bank Crédit Lyonnais). Billions of dollars in losses followed in subsequent years. At the end of the 1990s, the Internet frenzy took hold at a time when a company that added “.com” to its name would take 10 percent on the stock exchange. This frenzy led to a considerable wave of mergers and acquisitions – high-tech companies at the time having unlimited money through increasing their capital or by borrowing. Late to the market, European firms bought lame ducks at a high price. The return to reality was brutal. Enormous losses were sustained. The bill was tens if not hundreds of billions of dollars. In accounting, the transactions did not yield a return. In other words, Europe gave huge sums of money to America, simply for getting a whiff of its dream.

The same story repeated itself at the end of the 2000s, but on a larger scale. After the cinema and the Internet came finance. Little Wall Street geniuses invented financial products by combining mortgages: a wonderful invention, as these “securitized” products bring in a lot of money with no associated risks – tens of thousands of them were given AAA status. Many European banks, late to the game, bought more complex products. When the American housing bubble burst, the first banks that failed from 2007 onward, after the number two of the “subprime” loans to the United States (the good called “New Century Financial”), were two German banks… surprise, surprise! Once again, the financial crisis saw net transfers of hundreds of billions of dollars from the Old Continent to the New World. The asymmetry is to be found in the frankly fraudulent products. Unlike the United States, in Europe several banks lost hundreds of millions in the Madoff scandal, even though they were warned from the outset by their New York teams.

Yet, America isn’t done with its dreams. It is again at the forefront of a new chapter, a behavioral revolution. In this terrific lifestyle transformation, where we rent cars rather than buying them, where our home becomes both an office and a hotel, where education is made to measure, where health is protected by big data, American companies are calling the shots. Their strength here does not come from technology as much as their ability to invent, their freedom to dream and then to test those dreams. “Dieu et mon droit” (God and my right) is the motto of the British monarchy. “Le rêve et mon droit” (the dream and my right) could be the motto of the United States.