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When I say we have no moral compass, I am specifically referring to our nations priorities of "guns versus butter". The military industrial complex is choking off funding for so many other important programs, and we are viewed around the world as a violent, militaristic, arrogant, aggressive and threatening nation. Hardly a force for good, or that "beacon on the hill", as Reagan put it, anymore.
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I have two fundamental disagreements here.
1) The moral compass argument seems odd coming from a self-described liberal advocating the values of Western Europe. I'm not in the slightest speaking about the nexus of religion and morality-- I am one of many mainstream Americans who derive their morality from a general sense of right and wrong far moreso than any biblical interpretation. What I really mean is, the American left--in much the same way as Western Europe-- engages in such a high degree of moral relativism that the entire concept of a moral compass (especially on a NATIONAL level) is bankrupt... "when you stand for nothing, you'll fall for anything." I'm not saying everyone on the left is an amoral heretic or something; I just think in general they do their best to be so non-judgemental that they're not willing to call the difference between good and evil, even when clearly presented (unless, of course, they can throw it at the right wing.... Republicans are evil.... everything else, well we can't quite tell, it's all relative).
2. As far as being viewed internationally as a huge military power, or even a 'bully'... I don't necessarily disagree that this is our common perception from the outside (although I don't think it's as dramatic as some try to make it out to be). But you know what? I'm okay with it.
Here's why; although you can certainly cite instances of it's misuse, that power and its perception give us tremendous capital to do good in the world. Case in point, current Chinese attempts to reunify Taiwan. Now, we didn't explicity threaten China with military force. We did announce our solidarity with Taiwan, because we think the values of freedom that they embrace--free elections, a liberal society, etc etc-- are a good thing. Not only is that evidence of a national moral compass, its a direct product of our military might. If we had Canada's military, our announced solidarity with Taiwan would be scoffed at and the Chinese would have their will.
This power is a blessing and a burden. It means we do have the ability to be a force for good. Unfortunately, it also means we often HAVE TO entagle ourselves into often unsavory conflicts, because with the power comes the responsiblity to do so, and the world can't rely on anyone else. I know that last sentance makes most liberals vomit, but look at those liberal non-judgemental PC non-threating UN efforts, and what they've done to prevent atrocities and threats to humanity... Rwanda, Somalia, the Balkans, Haiti, Darfur, the current UNIFIL force in Lebanon, Liberia, the failure to keep North Korea from going nuclear, the same as current with Iran, the Iraqi oil-for-food scam... it's a horrible, horrible record of failure.
For a modern parallel.... no matter what you think about the war in Iraq, the power of our military won several major victories in other nations without making a move in their direction. Gaddafi, the thug dictator of Libya, disarmed and allowed regular inspectors. Although he was re-elected, Hosni Mubarak allowed free elections and the people of Egypt for once chose their own government. The AQ Khan nuclear network in Pakistan was stopped before it could do more damage. Syria withdrew from Lebanon (even if they're still trying to meddle via proxy).
Again, with Canada's military, none of this happens.
Depending upon what you feel about what has actually gone on in Iraq (and there's no shortage of debate to be found there), you can characterize this a positive or a negative employment of our power.
But don't scoff at our military in general; it's strength and power gives us the capital and the ability to do tremendous things for the world, many of which don't even involve firing a shot.