NF: No, he's clearly not that figure. Those of us who supported John McCain said Obama was more like Jimmy Carter and indeed, this is a Jimmy Carter presidency with much better presentational skills. It has the combination of economic malaise and foreign policy trouble, and I think further foreign policy trouble is going to come thick and fast. It's clear that the United States, because of its financial crisis, is going to have to cut back, and cut back seriously, on its overseas military expenditure. So we have two bumpy years ahead in Afghanistan and Iraq and the rest of the world will see these as symptoms of American decline, and they will be; but the key thing to remember, going right back to the beginning of our conversation, is that history is not cyclical. Repeat after me: history is not cyclical. Empires can have bad decades and can come roaring back just as the British Empire did after the 1770s. The other point I would make by way of historical analogy is a different one. 

In many ways, this situation reminds me of a hundred years ago. A hundred years ago, there's a complacent, English-speaking empire that seems to be the hyperpower. The general view is that the sun will never set on that particular empire, not only literally but also metaphorically. There is a rapidly industrialising rival, gaining fast — indeed overtaking — in terms of output, and this rival has a distinctly different set of political values. I'm talking about Britain and Germany, of course. There are some very interesting parallels to be drawn there. There's an economic symbiosis in both cases. The relations between Britain and Germany were deeply, deeply intertwined and yet they came to strategic conflict. My slight anxiety about what I've called "Chimerica", that fusion of the two economies, is that it too could blow up quite quickly into a strategic conflict. While they are intertwined economically, they are not intertwined strategically. There are indeed points of conflict which are quite easy to think of right now, of which North Korea is the most worrying. So that's the historical analogy I find most helpful and in that analogy, it is much less certain that the US bounces back, because if it comes to a protracted conflict — not a cold war or hot war, but some kind of strategic rivalry — then it is very hard for the United States to come out as the winner. 

DM: And they've lost a lot of friends internationally. The Chinese now, very cleverly, have got many other countries around the world, from Australia — which is, by the way, the largest recipient of direct foreign investment from China — all the way through to Africa and South America to be onside with China. But the other thing that makes this time slightly different is that you really have a credible competitor, a credible alternative model. The greatest concern the Chinese have is the race against revolution, but that's a domestic revolution that is, to me, economically led. Of course, there are issues of culture and religion that Niall talked about which are interesting, but my sense, from being in Beijing and Shanghai recently, is that people have put aside their concerns about democracy in the interest of Maslow's hierarchy of needs: food first, we can talk about everything else later. It may seem rather simplistic but there are a number of Chinese journalists — diehard supporters of a democratic regime — who will say they absolutely despise the communist system. Yet there are just not enough people who prioritise political change. What they care about most is getting on the economic ladder and that is the big challenge for the Chinese government. The new game involves a real, credible competitor to the US, which the US, like many other countries around the world, is in hock to through the massive amount of debt that it owes. It will have to cut its nose off to spite its face to get out of that trade relationship and I think they're too far gone.

DJ:  Niall was referring to America's military strength. You mention in your book that the United States basically has paid for the rest of the world to have peace since 1945. It initiated the dismantling of the communist bloc in eastern Europe, it paid for Western Europe's defence, kept the sea lanes open, provided all the research and development. It's been subsidising everybody else. You argue that that's got to stop, that they can't do everything. In that case, it's a scenario of the US drawing in its horns, not quite being isolationist, but at least refusing any longer to promote its ideology of democracy and freedom. Where does that leave the rest of world? We haven't talked about India, which is a huge subject. The Indians think they are going to overtake the Chinese.

DM: Well, they have got demographics on their side.