November 5th, 2008
05:20 AM GMT
LONDON, England - When Barack Obama is sworn in as U.S. president on January 20, 2009 he will be taking office on the usual wave of enthusiasm for a new political beginning, but against a grim economic background.
Barack Obama must act quickly to turn around the U.S. economy.
There's a much-told story about a couple becoming utterly lost in the back lanes of some rural area and chancing upon an ancient local inhabitant.
Asked for the directions to their destination, the old man leans on his stick, furrows a wrinkled brow and remarks sorrowfully: "If I wanted to get there, I wouldn't start from here."
Obama won't have any choice, any more than the couple in the story did.
Shortly after the crowds attending the inaugural parade have gone to their homes (assuming they haven't lost them to foreclosure by hard-hit mortgage lenders), ill tidings will reach the Oval Office: the national income numbers for the fourth quarter of 2008.
They will confirm to everyone but a few academic pedants and hair-splitters that the United States will be well into recession by then.
By then, too, the usual remarkable capacity of the U.S. economy to create jobs will be fully exhausted. The unemployment rate will be rising inexorably.
Add all that to a housing market still on life-support, and the feel-bad factor will be overwhelming.
The U.S. consumer will be in parlous state, and retailers will be licking their wounds after a disastrous 2008 holiday season.
So what will the new president need to do to dig his nation out this sticky economic mess?
In fairness, a start has been made by President George W. Bush's administration after a hesitant start.
Fingers crossed, the worst of the financial turmoil is already behind us: the banks have been underpinned by hundreds of billions of dollars of government money and U.S. stocks appear to be escaping out of the cycle of volatility that has marked the past few weeks.
Economic forecasters believe the back end of 2009 will see global recovery - without adding any riders stipulating that what the new U.S. president does will alter the outlook.
But it plainly will.
The holder of the most powerful office on the planet can do more than anyone to influence global economic fortunes, especially if he has the support of the U.S. Congress, which holds the key to the awesome power of the U.S. federal budget (albeit painfully overstretched by the bank bailout plan).
So what should Obama be doing? What will be his most powerful tools? How will he stimulate the economy? How will he best use the "presidential bully-pulpit" to instil confidence into a stricken nation?
Should he adjust the duties of the U.S. Federal Reserve to include an obligation to prevent the formation of financial bubbles? Or would he be well advised to avoid extending the boundaries of economic regulation, while perhaps making sure that the existing framework is used more effectively?
How will he lift the housing market off the floor? And should he reach out to those many Americans suffering the distress and humiliation of being turfed out of their own homes because they can't make the mortgage payments?
Please give us your answers and ideas.
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