Two American icons, General Electric and Berkshire Hathaway, lost their triple-A credit ratings. Then China, America's largest creditor, called for a new global currency to replace the dollar just weeks after it demanded Washington guarantee the safety of Beijing's nearly $1 trillion debt holdings. And that was just in March.

These events are the latest warnings that our world is changing far more rapidly and profoundly than we – or our politicians – will admit. America's own triple-A rating, its superpower status, is being downgraded as rapidly as its economy.

President Obama's recent acknowledgement that the US is not winning in Afghanistan is but the most obvious recognition of this jarring new reality. What was the president telling Americans? As Milton Bearden, a former top CIA analyst on Afghanistan, recently put it, "If you aren't winning, you're losing."

The global landscape is littered with evidence that America's superpower status is fraying.

Nuclear-armed Pakistan – arguably the world's most dangerous country – is falling apart, despite billions in US aid and support.

In Iraq, despite efforts in Washington to make "the surge" appear to be a stunning US victory, analysts most familiar with the region have already declared Iran the strategic winner of the Bush administration's war against Saddam Hussein. The Iraq war has greatly empowered Iran, nurturing a new regional superpower that now seems likely to be the major architect of the new Iraq.

Sadly, what was forgotten amid the Bush-era hubris was that America's edge always has been as much moral and economic as military. Officially sanctioned torture, the Abu Ghraib scandal, US invasion of a sovereign country without provocation, along with foolishly allowing radical Islamists to successfully portray the US as the enemy of the world's 1.5 billion Muslims, shattered whatever moral edge America enjoyed before 2003.

Washington's uncritical support of Israel at the expense of Palestinians is perceived by much of the world as egregiously hypocritical. Consequently, America's collision course with Islam may be irreversible. Muslims believe Islam never lost the moral high ground – and they won't readily relinquish it for Western secularism.

Even politically conservative journals such as The National Interest recognize something has gone wrong. In a recent issue, Robert Pape opined: "The self-inflicted wounds of the Iraq war, growing government debt, increasingly negative current-accounts balance, and other economic weaknesses have cost the United States real power in today's world.… If present trends continue, we will look back at the Bush administration's years as the death knell of American hegemony."

Now, as a massive retrenchment of the US economy is under way, it is time to shake the mental shackles of the superpower legacy and embrace a more peripheralist agenda. That need not mean isolationism or retreat. It would still require maintaining substantial armed forces with a qualitative edge, but using them only when there is an affordable and persuasive American national interest. Iraq never fitted that description.

The price tag for the wars in Iraq and Afghanistan wars is in the trillions. Sun Tzu, the ancient Chinese military commentator, prophetically observed 2,500 years ago, "[W]hen the army marches abroad, the treasury will be emptied at home."

It remains a lingering American myth that US troops and warships can go anywhere and pay any price. Not so. The modern Chinese have discovered a better way. The Washington Post reports that the Chinese went on a shopping spree recently, taking advantage of fire-sale prices to lock up global supplies of oil, minerals, and other strategic resources for their economy. That amounts to a major economic conquest – without using a single soldier. By contrast, American efforts to secure oil have looked clumsy.

Iran also is achieving serious regional hegemony, without armadas, using proxy guerrilla armies to dominate its near neighbors. Its rebuffs to President Obama's recent outreach speaks to Tehran's growing confidence in its ability to manipulate its home-field advantage – stage-managing events from Afghanistan to Lebanon, all the while thumbing its nose at both the American and Israeli "superpowers."

Last August's Russian invasion of Georgia was a painful reminder that Russia has what its leadership calls "privileged interests" on its periphery. Yesterday's superpowers have been replaced by regional hegemons, as the globe is being carved up into more-defensible spheres of interest.

Americans need to acknowledge that war, like politics, is the art of the possible, and both have their limits. The Bush administration was unable to deliver its promised democratic remake of the Muslim Middle East.

Thus, another unpleasant truth: The Western democratic model has no appeal to much of the Arab world. Nor is democracy an attractive model for huge swaths of the rest of the world, such as Russia and China.

It's time to lower our geopolitical sights and end America's unrealistic crusade. We shouldn't expect "them" to want to be like "us."

It took years for the US to recover its moral authority after Vietnam. It will be an even harder comeback this time.

Walter Rodgers is a former senior international correspondent for CNN.

[Editor's note: Due to a production error, the original version of the article omitted the first paragraph.]