A poisoned chalice for Mr Obama

BY Staff
Published: September 4, 2008 in Editorial

In his recently published book The new paradigm for financial markets – the credit crisis of 2008 and what it means the billionaire speculator, former hedge-fund manager and philanthropist George Soros paints an exceedingly grim picture of the state of the financial system today, primarily in America but also in other parts of the developed world. Based on the ideology of market fundamentalism initiated by Ronald Reagan but taken to new heights by the Bush administration, the virtually complete deregulation of the financial industry has led to a credit crisis or crunch of enormous dimensions. The US housing bubble has already burst (usually referred to as the subprime mortgage crisis), imperilling the ownership of a few million homes, often in lower income communities which were attracted by the often unrealistic credit terms on offer. But, as Soros puts it: “Superimposed on the US housing bubble there is a much larger boom-bust sequence which has finally reached its inflection, or crossover point. The super-bubble is more complex than the housing bubble and requires a more complicated explanation.” He refers to the massive expansion of credit by banks and other financial institutions, the huge development of credit cards, and a whole lot of new-fangled financial instruments which few, even in the industry understand. Due to the reckless tax and other policies of the Bush administration, America has been living beyond its means for many years, relying on the savings of other countries like China and Japan to sustain them by buying US government bonds.
The credit crisis has already led to the need to bail out a couple of large financial institutions. Others have sought refuge by selling billion dollar chunks of their equity capital to foreign ‘sovereign wealth funds’ created and owned by Arab countries, China and other countries which have accumulated huge surpluses (savings) and are in effect emerging as lenders and investors of last resort. Soros goes on to speculate, interestingly, on how all this will turn out in terms of the financial system itself, the use of the dollar as a virtual reserve currency, the valuation of the Chinese currency, the threat of protectionism and so on.

It is clear that there are serious problems ahead, the result of years of dogmatic and erroneous government policies. Correcting them will be painful and difficult. The signs are clear that the current American administration will not take steps to confront these problems. Accordingly, if Democratic Senator Barack Obama wins the November presidential election, as the vast majority of Caribbean people hope, he will inherit a poisoned chalice, namely a shattered financial system and two difficult wars which are also very costly and a drain on the budget. Tackling these problems will require measures (such as the withdrawal of the tax cuts for the super rich, some new regulation of the financial system) that can easily be exploited by his Republican opponents to make him extremely unpopular in the short term. In short, he will be forced to pay the price for the years of maladministration of the current government. Indeed there are some analysts who argue that a new Democratic administration will face such daunting problems that it cannot hope to last more than one term, setting the stage for the return of a Republican president in four years time. The lightweight nature of the Republican choices for the presidency and vice-presidency might even suggest that some Republican strategists accept this view – après George W, le déluge.

Change is essential, America has lost respect globally and betrayed its best heritage on issues ranging from respect for the rule of law to saving the environment. As Senator Obama puts it, eight years of George Bush’s policies are enough; what he perhaps has not yet fully come to terms with is the massive problems he will face. They will require every ounce of the statesmanship and stamina he may possess, and the trust of the American people in the reforms he will be bound to undertake.

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7 Comments

Joe Coxall says:

September 4, 2008 at 3:44 pm

Both candidates are spilling out the same old rethoric, none of them has, or will ever tackle the real problem, only Dr. Ron Paul since president Kennedy has so far been brave or reckless enough to identify the real problem with America and is campaighing to abolish it.

That problem is the Federal Reserve and if he ever has a change to make good on his word, his very life would be in danger and that is a sacrifice that no other president since JFK is willing to make. So I say hooray to the clowns.

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justice4all says:

September 5, 2008 at 5:45 am

It is not simply the Federal Reserve. It is a system that allows corporate greed to squeeze profits without regard to regeneration, renewal or development of customer base. US international trade agreements are designed with a short term vision to extract and exploit, rather than with long term visions to sow and develop. The latter format would raise the workers of trade pardners to the level of the US, rather than bringing the US worker down to the level of the workers of its trade pardners.

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- GREG says:
  
  September 6, 2008 at 4:14 am
  
  The latter will not be allowed to happen for the same reason that there is an embargo on Cuba. The status quo must remain - the vast difference between the super rich and the poor. Let’s see what Obama can do. Good editorial.
michael tannassee says:

September 6, 2008 at 10:24 am

” apres george w,, le deluge “,,, well indeed ,, after george (l’il bush),, there is every reason for there to be a deluge,, and in the broadest sense of the word ,, no less !
it was for this very reason why ,, Hillary shoud have been the Presidential nominee ,, and after she won the “chair” in the oval office ,, combined with the experience of the “greatest ” president of the last century ,, the global chaos ,, that we now have on our hands ,, would be turned around to look much like when Bill was in Office,, if not better in 8 to 10 years,, it is no conjecture about Bill’s ability,, nor do i need to elaborate and,, expound here,, for the world,, indeed anyone over 20 knows all about him ,, if not for his vast experience in mangement of globaly affairs ,, then certainly for his human frailty,, which is inherent in all of us and ,, indicative of our imperfection,,,,,, but forgive my philosophising and back to the real issues ,,

was it not possible to see what we are heading into come november ? it is so simple to see ,, that Obama’s inexperience in anything about “global affairs” will be his need to be surrounded by advisors with robust expertise ,, here’s the kicker ,, they each have their own agenda,, and so far i have not seen 1 (one )
black ceo from any school( Cornell West from harvard and de opra woman ! ) ,, or corporation who may be part of his cabinet or any other agency of the govt ,, if by divine intervention he wins the “chair “,, as is the projection of most whites who are sucking up ,, for their chance to advance their agenda ,, aided by the corporate world ,, of speculators ,, who now have us where we are,, with a steady slide to decadence ,,

the Israeli and Palestinian conflict is the core of global conflict ,,– the embryo of religion — and those who can remember,, it was Bill who created history ,, when he made two fierce adversaries — Rabin from Israel and Arafat from the Plo –shake hands with each other,, Bill’s vision then was to avoid what we now have as a result of this lame duck president we now wish to be gone ! as a result of his lack of experience at anything which is why Enron and HalliBurton unfolded during his 2 terms ,, Hillary would have had experience to close to home to advise her ,, and no advosor would have been able to get anything past,, Bill who would have been the chief negotiator ,, for the peace — that has been so close ,, yet seems so far away now — would have been her emissary to the globe for peace and prosperity !

this is being truncated ,, since now it seems futile ,, that Barack is the nominee who “does not”,, even with providence on his side ,,, which i fear since for 20 ears he sat in a chruch religiously listening to the pulpit preaching priest spewing race hate………

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- GREG says:
  
  September 6, 2008 at 3:05 pm
  
  Got it totally wrong. I have followed Hillary all my life and now that I am in the US, where there are so many documentaries on her I was impressed until Obama entered. I understand republican values, (which you expose and support) and delve deeply into that of the democrats. I am an ardent listener of Rush Limbaugh. I have listened carefully to Obama, followed every single debate and speeches, analysed every single nuance and I am of the firm conviction that as an intellect Hillary is running a way off second.
  
  On a deep understanding of world views Barack is way ahead of the average American. On the question of experience some explained that it is a culmination of knowledged gained during time lived and it is realitve to a person’s intellect and ability. You can have a hunderd years of experience in a field while another person can come along and in one year surpass all your attained experience. Barack is that kind of person.
  
  My rebuttal to experience is that vision beats experience any day. A 12 year old with a vision can set up a company to rival microsoft. Don’t forget Bill Gates’ age when he got started.
Charriot says:

September 9, 2008 at 11:00 pm

Remember this is the Capitalist Capitol. It means DOG eat DOG by anymeans necessary!!!

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bgsbny says:

September 6, 2008 at 8:43 pm

….. ur total misconstruction of my post is not by any stretch of imagination surprising ,,,,, how come ? well for starters ure ranting,,, but oh,, so very subtle ,, so as not to allow ur wolverine fangs to show while u express ur sheepish notions of chalk,, thinking that u just possibly could make us believe it’s cheese !…….

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