Undoubtedly, the military remains the United States’ strongest card; in fact, it is the only card. Today, the United States wields the most formidable military apparatus in the world. And if claims of new, unmatched military technologies are to be believed, the U.S. military edge over the rest of the world is considerably greater today than it was just a decade ago. But does that mean, then, that the United States can invade Iraq, conquer it rapidly, and install a friendly and stable regime? Unlikely. Bear in mind that of the three serious wars the U.S. military has fought since 1945 (Korea, Vietnam, and the Gulf War), one ended in defeat and two in draws—not exactly a glorious record.
Wallerstein's analysis of US foreign policy and fading US hegemony is mostly cogent (although I don't agree with his assertion that World War I+II should be seen merely as a US-German conflict). As the US wanes in power, I hope that we can do so more gracefully than Mother England. I also hope that our ideological child Japan does a better job at running the world than we did.
On the bright side, this may all be so much liberal pablum and everything is just fine.