Englishman Amir Khan will never fail to look unbeatable against an opponent who considers contact optional. If you are a prizefighter who relies on once-youthful reflexes to get the better of every exchange, there’s a good chance you have no chance against Khan. He is too fast and confident. He is going to hit you, and if being hit ruins your prefight strategy, ruined you will be.
Brooklyn’s Zab Judah, older and slower and newly devoted to the Prince of Peace, was just such a man – one who wanted no part of being hit.
And so, Saturday at Mandalay Bay, Amir Khan stopped Judah at 2:47 of round 5 with a punch that hit Judah on the belly button, making Khan a unified titlist at 140 pounds. And Judah – who try, try, tried again to get the fight stopped – was left with little more than another professional paragraph that ends “, if only.”
After the fight, Khan said he believed Judah a better boxer than Timothy Bradley, the recognized champion at 140 pounds. Khan is right. If you understand the word “boxer” in the headgear-and-big-gloves, hit-and-don’t-get-hit, make’em-say-“ooh! ahh!” sense of the term, Judah is a better boxer than Bradley. But Bradley is twice the fighter Judah is.
Don’t for a second think Khan’s ability to dominate a formerly flashy prizefighter with diminished reflexes is indicative of how Khan would fare against a prime volume puncher. Khan looked unstoppable against Paulie Malignaggi. And it told you nothing about how he’d look when Marcos Maidana laid hands on him. Maybe Malignaggi was no Zab Judah, but neither was Maidana any sort of Timothy Bradley.
Frankly, it’s hard to concentrate on another disappointing match in a papered (but still sparsely occupied) arena in a depressed American city when there is a looming debt crisis.
Let’s spend some time thinking about this looming crisis, then. No, not the politics of it. That part is beneath us. Rather, let’s look at the consequences of our Treasury bonds losing their AAA rating.
Since July of 1944, America has effectively owned the world’s printing press. When the Allies met in Bretton Woods, N.H., and agreed to make the dollar the world’s reserve currency, our country was given an extraordinary economic advantage. We have not used this advantage predatorily as European history tells us we could have, no, but we’ve still taken some liberties with it. In 1971, President Nixon “temporarily” suspended the redemptions we’d promised the Allies – dollars to gold – and floated the world’s reserve currency, and every other currency along with it. In the 1980s, President Reagan used the printing press to lose a race to bankruptcy with the Soviet Union.
Today we are told to fear a takeover of the world’s economy by China – as if the yuan were poised to replace the dollar. That is unlikely. After all, it took 65 million deaths in World War II for the world to agree on a common currency.
But what if our Treasury bonds were to lose their AAA rating?
It is instructive to look at the case of American International Group (AIG) in 2008 to start answering that question. AIG, believe it or not, never exactly defaulted on its debt. Instead, it issued an incredible number of bonds to borrow money to leverage its positions. And AIG’s bondholders bought those bonds based on their AAA rating – with an agreement that if AIG were to lose its high rating, it would provide additional collateral.
When AIG’s debt was downgraded by rating agencies, it suddenly had to produce tens of billions of dollars in additional collateral to meet its obligations. Its ability to raise additional capital reflexively cancelled, AIG faced default, and our federal government – owner of the world’s printing press – intervened, covered AIG’s debt, and prevented default.
Now, imagine AIG were a country whose debt the entire world owned and who suddenly lost its AAA rating. Then imagine there was no federal government to step in and prevent default.
Welcome to the United States of America in 2011.
What happens if U.S. Treasury bonds lose their AAA rating? Nobody knows. The quality of American debt is the one constant in every economic model designed and used for the last 67 years. America is uniquely empowered by the rest of the world to print money in a crisis. It has never struck anyone that a country with this advantage would consider not using it.
Every fixed-income model used by every country relies on the U.S. Treasury bond to be a standard. If this were to change, one assumes, the algorithms on which the world’s financial models are built would trigger immediate downgrades of every entity that owns U.S. Treasury bonds.
And you thought AIG was interconnected?
If American debt loses its AAA rating, it will be ruinous to our way of life, and more ruinous to everyone else’s. Quickly enough – deprived of its standard – the credit-rating system, itself, will disappear. And without a way to know who will pay and who will default, the entirety of the global economy will congeal.
Take solace in this, though: Unlike the case of 2008, when a tiny and private band of men conspired to end the world’s economy, this time it will be elected officials of the United States that publicly raze it. A democratic solution for ending the world as we know it – which does seem fairer.
Oh, about Amir Khan? It’s hard to say. He seems to be positioning himself for a run at the winner of Mayweather-Ortiz (Mayweather) at welterweight. Timothy Bradley seems to be positioning himself for a run at Manny Pacquiao. That is, both Khan and Bradley are mapping their careers on the assumption that Pacquiao-Mayweather never happens. Hard to argue with them.
Chances are, we’ll be deprived of both Bradley-Khan and Pacquiao-Mayweather, then. Let’s hope that’s the extent of our deprivations.
Bart Barry can be reached via Twitter @bartbarry
