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Politics and the Economy
Well it is six days until George W. Bush ends his 8 years as President and Barack Obama begins his first term. Is it my imagination or is the youthful Barak beginning to age already.
Full of hope and wanting to change everything he seems to be quickly learning that Congress hasn’t changed one bit. Oh, the partisan shift has come to pass but the ways and practices of the body politic hasn’t changed one bit. Each member is struggling for his/her “rightful” place and share of the power.
The economy is still on an accelerating decline, 401(k)’s are going to be further crushed as the markets continue to fall. There is a school of thought that says as goes January goes the year in the stock market. Fourteen days into January and things aren’t looking so hot. The Dow Jones Industrial Index closed 2008 at 8801.64 and is trading this morning (1/14/2009 @ 10:48AM) at 8160.00 or off 7.29% already this year. The Volatility Index which is derived from the options market tells us when the traders are running scared. The index hit the 80’s in the latter part of 2008 then was quieted to the high 30’s in early January. Today the index is crowding 50, indicating further nervousness and uncertainty amongst the traders on what is left of Wall St.
Obama will take the reins of a country with an imploding economy, an aging workforce whose retirement funds will be a small percentage of what they had just a year ago, and an expanding life expectancy with increasing health care needs. On top of that the national debt has soared and the recent bail outs approved by the Democratically controlled congress (can’t blame Bush for that one, although he agreed) has added more than a Trillion dollars to the debt in last few months. Yes, winding down the War in Iraq will save a lot of money but cranking up the war in Afghanistan will suck most of that up.
Mr. Obama may be one very smart fellow and he may have the very best of intentions but he is like a wounded salmon trying to swim upstream. Many strong and healthy salmon begin the swim but many of them drown from exhaustion before they arrive at the mating grounds. The odds of his achieving many if any of his goals are stacked against him. Not as a result of a Right Wing conspiracy but just real world conditions as they are.
For all our sakes I hope that four years from now we can talk about Mr. Obama using the Rocky metaphor. I hope he has over come the challenges and really made progress. Right now, however, I’m not inclined to bet the farm. Mr. Obama is too inexperienced to not be extremely vulnerable to making mistakes that could jeopardize his ability to achieve his goals. Congress , which is already showing that they won’t rollover just because he asks, will become more aggressively stubborn on issues that affect them in the midterm elections in two years. Remember, some of them (Republican & Democrat) may need to start campaigning within the year and they will be positioning themselves accordingly from the start.
The rest of the world is in trouble as well. We have been the economic engine for a very long time and what happens to the USA impacts on everyone around the world. So they should jump up to help us right? Right maybe but they have depended on Uncle Sugar for so long that they really can’t do much to help us, they are busy trying to contain the damage caused by the fallout from our troubles. Developing countries have come along way in the last 20 years or so, but those gains are fragile and they could collapse easily, giving rise to political unrest in places like India, China, Thailand, and most of South America. The great emerging economies (BRIC countries – Brazil, Russia, India, China) will see growth slow dramatically. China has a $600 Billion stimulus package of its own. Russia has been funding much of its reforms with money from their export of oil and gas. As demand and prices for those things decline what will happen as the money dries up? Who will be the next great consumer of the worlds products? Will it be China with its cash reserves from all its exporting? Will it be Russia, controlling natural gas across Europe? Will the USA learn a very important lesson and recover to once again provide economic leadership to the world? Some of the future rests with Mr. Obama and his team. Maybe that realization is beginning to weigh on him already.
I’ll bet the first couple of nights after the election he was privately giddy. I won! I’m making history as the first mixed race President of the United States! We are going to work at the White House as the Boss, not the hired help. I don’t know if he felt that way but it sure isn’t hard to imagine that he would and deservedly so. Now as he is briefed on more and more issues, I just wonder if privately in the darkness of the night he wonders just what the Hell have I gotten myself into and why did I want to put my family through it. We were living well, we had the American dream. Now even picking out a puppy for the girls is state event. I do hope somebody appreciates this. I can’t say that I would blame him if he had thoughts like that. I’m not sure why any sane person would want that job. Big corporations pay better.
