The United States has been at the center of the international financial system ever since the Second World War. The dollar has served as the main international currency and the United States has derived immense benefits from that position but lately it has abused its privilege. Starting in the 1980s it has built up an ever increasing current account deficit. This could have continued indefinitely because the Asian tigers, first under the leadership of Japan and now of China, were willing to finance that deficit by building up theirr dollar holdings, but the excessive indebtedness of United States households brought the process to an end. When the housing bubble burst, households found themselves overextended. The banking system has suffered tremendous losses and has to earn its way out of a hole. In commercial real estate and leveraged buyouts, the bloodletting is yet to come. These factors will continue to weigh on the American economy and the American consumer will no longer be able to serve as the motor for the world economy.