The 20th anniversary of the Berlin Wall’s fall reminded Americans of just how heady it felt when a triumphant America stood astride a collapsing Soviet empire. Two decades later, Americans find themselves bewildered and resentful. Many are now asking, Where did it all go?

In truth the decline of American supremacy was a long time coming. Even at the height of US power, crucial trends were undermining the long-term health of American society. A humiliating defeat in Vietnam, an exhausting war of choice in Iraq, a political class ever more beholden to corporate coffers, crumbling educational, medical and public infrastructures, an debt-driven economy dominated by risky financial speculation at the expense of productive activity: All these and more sapped the essential sources of national strength.

Now, as Americans survey the wreckage of their dreams, their responses to this diminished destiny are sharply divided. The financial collapse of 2008 left most Americans breathless and bereft.

Legacy

The financial collapse occurred just in time to hand Barack Obama a ticking time bomb. Recently released documents reveal that the fix was already in during the last days of the Bush administration to hand US banks and investment firms a free pass to cover their misdeeds and emerge not just unscathed but with a still more dominant role in the American economy. The Obama administration was handed a poisoned chalice and forced to drink it.

But Obama then compounded the crime with egregious errors of his own that have left his supporters deeply dispirited. Instead of defending ordinary Americans from the depredations of an unconscionable financial sector, he handed the tiller to the bankers.

The result is that 10 months after a tidal wave of progressive populist hope, the ‘liberal moment’ is already waning. In its place, a much more menacing populism is emerging. It deftly exploits the fears of those left behind by the new economy and stokes fear and loathing in venom spewed by incendiary talk show hosts, Rupert Murdoch’s fact-free Fox News, a virulent blogosphere, orchestrated ‘tea parties’ and bizarre ‘birther’ movements.

This retro populism glories in its own ignorance. For the past few decades Republicans have found a winning formula in putting forth presidential candidates manifestly unqualified for the job yet hugely appealing to a significant segment of the population that isn’t comfortable with anyone leading them who knows more than they do.

Far right populism is fuelled by conspiratorial fantasies and a surly contempt for facts and reasoned debate. Historian Richard Hofstadter once called this “the paranoid style in American politics”. Like a lethal political virus, it routinely erupts during periods of economic distress and social dislocation.

It all sounds eerily familiar, with haunting echoes of the rise of fascism in Europe two generations ago. The accelerating decline of US power and influence after decades of malfeasance and mis-governance raises the question of how Americans will take no longer being Number One. The contrasting populisms of right and left reflect radically different responses. On the left a new localism is emerging in post-political movements for self-reliance, simplicity, and a renewed spirit of interdependent community. Many long for their country to be liberated from the burdens of empire so as to focus on rebuilding a more equitable and sustainable American dream.

Confronting the same disturbing trends, retro populism shares the impulse to return to family, friends and community. But it expresses itself in anger at the immigrants, minorities, and cultural elites its adherents see as undermining traditional American values. And it forcefully rejects any future where the United States is perceived as anything less than “the greatest nation on earth”.

Progressives have long warned of a homegrown American fascism. Yet the self-balancing nature of its government and the ballast of its middle-class society have always prevented the country from succumbing to its worst excesses. But now, the decline of its superpower status, massive economic insecurity, orchestrated rage, and a poorly informed and educated public could combine with the amplifying effects of partisan media to unhinge American history.