The world economy is in a downward spiral and large corporations have their economic balances on sinking sands. Free market fundamentals based on globalization have integrated our world and high risk loans to mortgage owners in the USA has turned to a debilitating virus developing into malignant form in the global economy. China and Russia with huge reserves are beginning to groan after their acclaimed immunity from crisis due to falling exports and commodity prices. The blame game continues as Vladimir Putin and Wen Jibao tell an easy story of how America excessive spending has decimated the global markets. It is obvious that despite their analysis in Davos, America still remains the World superpower with the might to fix the global economy.
After a shortage of favourable options and his sound oratory skills, Barack Obama has been offered the post of the American President. Since his last 21 days in office, he has summoned enthusiasm and courage to fix the loose nuts of the American economy with the economic stimulus bill. The economy is the biggest minefield as 598,000 jobs were lost in January and IMF forecast for global economic growth has shrank to ½ percent. It is clear that a recovering America is the solution to the global economic crisis because China with its $2 trillion reserves (eight times the IMF financial reserves) cannot boldly in concrete terms fully improve the global illiquidity problems except borrowing to America through treasury bills. America also needs to shed some might and allow effective participation of emerging markets especially through strengthening of G20 summit and reforms of the global reserve agency like IMF.
The solution to the global economic crisis is shrouded on uncertainties and even the professor of economics and business leaders cannot tinker a masterstroke to calm this economic panic. Various models based on fiscal, credit, monetary and tax cuts are being propounded but all seems to revel in illusion. The economic recession has humbled the economic surgeons desecrating their diagnostic ability to mere interns. State influence through bailout mechanism is crumbling globalization as emphasis are now on border controls, nationalist priorities, consumer protectionist measures and intra capital flight. Unregulated capitalism that has adored crooks like Madoff, preached in global temples is gradually turning to a prophecy of doom and entombing the success and milestones of the past.
Barack Obama $835bn stimulus bill now passed by the US Senate has been touted by his advisers as the current solution to America woes in the stronger tone the fix for the global economy. The energy and consuming confidence that emanates from the US president give a hopeful verdict that the global solution has arrived. Bush rock has refused to produce water and Obama has decided to sink boreholes. Republicans are labelling it a spending bill with no effect in American prospects in the short and long run. The zealousness of Obama came to fore when he labeled the inaction of republican based on political lines or non-conviction as an inexcusable or irresponsible act.
The fact is that Obama is living on the cusp of history and he must get it right in the market trading on uncertainty or he virtually becomes a laughing stock of the local and world ‘opposition’ leaders. He needs to be doubly sure that his economic stimulus package will improve consumer spending, create jobs, improve ethical lending and global liquidity not just a local American stimulus package. It almost a do or die affair for Obama to match his words with explicit results because the pendulum swings of his stimulus package might be his political cum historical verdict. September 11 and George Bush aftermath decision created night mares and credibility crisis for him. Obama faces another uphill task to dine among the great or grope in the abyss of the mediocre. It is pure suicide mission if this plan fails as taxpayers money at stake, treasury bills in Asia, national debt increase, jobs on line………….his cusp of history.