Could Obama be a one term president?

It is premature to make any such predictions at this stage of political season. Having said that, the signs are not good for this administration. In case the much touted health care overhaul goes down the drain, Barack Obama might be in a serious trouble for the mid-term congressional elections next year. This presidency is going to be judged on the basis of the economy at the time of the reckoning! Yesterday on Fareed Zakaria GPS, Nouriel Roubini, Mort Zuckerman and Niall Ferguson were all very pessimistic about the short-term future of the US economy. Barack Obama has failed to show any understanding of the complex situation of not only the American economy but also the world at large. The United States needed economically a very savvy president at this stage of the game. The social agenda of a classical liberal like Barack Obama is not what the country is looking for.

Internationally, the Obama administration is promoting disarmament, nuclear non-proliferation and global warming. These are important issues but not at this time. Barack Obama should be talking about economy, economy and economy. Translation, fast-tract the Doha Round of trade negotiations, some kind of global agreement in G-20 summit and an agreement on energy demand and supply. A stable energy supply and price could quickly translate into a stable financial environment. These are important global issues and would impact the US economy in a short, medium and long term. Seeking friendship with the Muslim world, finding a solution to the Afghanistan War and other non-economic issues can move along at a much easier speed. What could destroy this presidency is an absolute ignorance of the world situation by this very talented team. This is a very different and complex world. Nobody should wish this young president to fail!

Eightieth anniversary of the Great Depression…

Next year, on October 29, 2009, it would be the eightieth anniversary of the Great Depression. Mine is the post depression generation. I do not know how it felt then, but it sure feels scary now! Are we heading for another depression after 80 long years? Probably! But you can bet on one thing for sure, it is not going to be simply another recession. This is big and profound. Once it is over, whenever that might be, the world would have lost anywhere from $40 trillion to as much as $90 trillion in assets. The collateral damage would be incalculable.

It is Tuesday September 16, 2008. That was also a Tuesday, October 29, 1929; the US Stock Market crashed that led to a worldwide economic contraction called The Great Depression. Although the causes of the Great Depression are still uncertain, the basic fact was a sudden loss of consumer confidence in the economic future of the country and therefore a run on the markets. This destroyed the Presidency of Herbert Hoover, and his Republican solutions further compounded the problems. President Herbert Hoover was defeated in 1932 general elections and Franklin Delano Roosevelt took office on March 4, 1933. Roosevelt introduced the ‘New Deal’ to mitigate the effects of The Great Depression.

The economic slump in North America, Europe and other parts of the industrialized world that began in 1929, lasted until about 1939. It was the longest and most severe depression ever experienced by the industrialized Western World. We all thought that we have learnt our lessons of our lifetime! President Ronald Reagan brought back the orthodox supply-side ideology with him in 1981 and once again we began the policies of President Calvin Coolidge that caused the depression in the first place. Any economic ideology is fraught with dangers that few can logically sustain. The so called progressive ideologies have done similar harm to the economies of Europe and Japan. When will we learn to moderate our economic ideologies?

Once again we are at the cross roads. Senator John McCain proposes a moderate supply-side economic policy. Senator Barack Obama counters that with moderate, progressive, economic solutions. Both proposals make me nervous. I want the next President to drive our economy at 65 miles per hour, neither at 60 miles, nor at 70 miles per hour. What I mean by that is that some regulatory oversight is imperative but over-reaction could plunge us into a certain depression. Neither candidate has assured me of the fiscal maturity that we all need so badly. I heard Bob Rubin and Lawrence Summers on Charlie Rose recently; I was frightened by their current views. Then I heard Nouriel Roubini and I went into a depression. You hear Roubini for yourself and makeup your mind. I, for one, would keep my options open at this point!

Nouriel Roubini – “a 12 to 18 month recession” (1 of 3)

Nouriel Roubini – “a 12 to 18 month recession” (2 of 3)

Nouriel Roubini – “a 12 to 18 month recession” (3 of 3)