Ubermensch, as a non-American, I must say that I agree with some of what you say, but not all. The US is moving backwards in terms of social and political policy. But the US is not losing its power. It remains the largest economy and military in the World. But other parts of the world are gaining power. The EU and China are on the rise and will provide balance to World power. A balance that has been vacated by the Soviet Union when it collapsed in the mid to late 80s.
However, for Europe to grow into a viable force, a few things must happen. Most important of all, England must join France and Germany. Without England, Europe will never have the cohesion necessary to make it a meaningful block. Italy and Spain will fall into place if England decides to take its place along with France and Germany. Secondly, Europe needs to build the infrastructure to attract the best and the brightest. They have the resources, but they lack the proper system. They need to fund better universities and alter their labor laws. Of course, the alterations need not be drastic, but they need to be effective. I would hate it if Europe lost its joie de vivre. Europe's social consciousness is what makes it so unique. Finally, Europe needs to build its own joint strike force and leave the UN. The UN is a joke. It has been since the 1940s.