I was with you right till the end. The thing about property is that it doesn't go anywhere. It is all still here. While credit will be hard to get, it was similiarly hard to get in the past. Other countries are not in a perfect position to take the "superpower" status away from the United States. China is too closed (currency, politics, etc), Russia is turning back to communism, France can't keep there own people happy, Iran might start an arms race, the EuroZone has there own problems, etc. Considering everyone else, the US for the most part is pretty stable.
Also the chinese and other large sovereign banks don't need to necessarily dump their dollars. That would be shooting themselves in the foot. Kind of like Gates selling all his MS stock. All they need do is change the mix and slow down their purchases of dollars, replacing those with euros.
That's also happening, started several months ago now.
I'm not sure credit will be so hard to get. There's plenty of money around, just a lot less stupid money. For folks who are credit worthy there will be credit. This will be a new concept to many people.
Here's a little anecdote about your point as it is unbelievably true.
I have a cousin, she's not too bright. Her first credit card was maxed out at about $10,000 so she applied for a second credit card to help pay off the first. It didn't quite dawn on her that she might have to stop the luxury spending.
You kinda forgot about Japan & Australia, if all those things happen I would bet that either of the two would become a standard.
Being an Australian I would like to say us, but it would no doubt be the Yen.
Japan has less than half of the US (or Euroland) population and insignificant natural resources. Its GDP is way behind that of the US, China, and Euroland. (However, it does beat California, not to mention Texas.)
An economic union of the reasonable Asian countries could be big enough but what would China do?
So what does population have to do with it? I thought we're talking about economic strength.
Also way to compare apples to oranges eg the whole of a country to the 2nd highest producing state of the United states.
If we were to make this assumption true, then we would have to compare apples to apples, 2nd highest producing state to 2nd highest producing state (based on a per capita basis)... in which case Western Australia would beat Texas hands down. (nearly $61k USD per person compared to about $41k USD per person)
So while the biggest topic of discussion with the American's seems to be just the financial crisis, Australia is experiencing a weird dichotomy, financial crisis and resource-driven economic boom at the same time.
Anyway, it's not a race nor a zero-sum game (there's no real point in being the "first" country); every country can be a winner in the global economy (or could be, if the bureaucrats running them understood this concept).
we were told that reflating the dot-com bubble on the back of real estate as opposed to letting a recession clean out malinvestments would be bad. we didn't listen
we were told that low interest rates at the fed wouldn't help, just make commodities more expensive. we didn't listen
we were told that $100 billion in stimulus checks would not have a measurable impact on the economy. we didn't listen
now the kicker is that the $700 billion dollar near-nationalization of mortgage lending won't help either. in six months people will wonder how $700 billion could seemingly vanish with no positive results
people are really bent on this idea that things will be fine by mid 09
next to go is whatever is left of the dollar. at some point people will realize the dollar has become a black hole and they will evacuate it. i would suggest that the dollar is already dead, no fiscal restraint can save it now
US dollar gone by 2025 -> USA gone by 2025