The most memorable sentence in Barack Obama’s speech on election night in Chicago is the following: “Our climb will be steep.” Then, it appeared that in deference to the Reverend Martin Luther King and all the civil rights leaders who preceded him and made possible his victory at the polls, Obama meant to say that though he’s reached the mountaintop there were still miles to go before we all rose to the top.
Since then, the US economy has virtually collapsed. Wall Street has imploded, taking with it hundreds of thousands of jobs, and the life savings and pension funds of millions of people who were looking forward to a comfortable retirement. Throughout 2008, economists and pundits wondered aloud whether recession had hit the US. Last December the cat was let out of the bag: the US had been in a recession since December 2007. From the looks of it today, the US is in a depression. One does not need to be a Nobel prize winner, nor an average bookkeeper to settle for the evidence. It is all around us. There are today so many people filing unemployment claims that in several states, including New York, the computers processing these claims crashed. Still few wish to characterize it that way for fear of setting panic and fear through the global economy.
I believe that it’s too late for that. Wall street appears to be one huge Ponzi scheme that swallowed up the savings and investments of commoners, shifted wealth to the rich at an unprecedented pace, leaving the average commoner, laborer and middle class member up to their necks in debt and looking at an uncertain future. Since Bernard Madoff’s Ponzi scheme came to light, with an eye popping $50 billion tag – the combined Gross Domestic Product of about 50 fragile states, or 25 times Zimbabwe’s GDP – others have come to light in the US, and India.
The biggest Ponzi scheme of all has been however completely legal, one that both the Bush Administration and Congress signed off on: it’s called the Troubled Assets Relief Program (TARP) which has already cost US taxpayers more than $1 trillion. Through TARP, the government has handed over billions of dollars to mostly financial institutions in order for them to invest in the economy. So far, there’s been little investment. The Banks have essentially been hoarding the money, and writing down their assets, i.e. writing off monies that they no longer expect to collect from clients and consumers who are walking away from debts and high mortgages on homes with little or no equity. Meanwhile, these same banks have yet to reduce rates on credit cards. Instead slight delays in payments trigger increases in interest rates that the loan sharks of yore could only envy. And it’s all legal.
“We have nothing to fear but fear itself”
Taking the bull by the horn, President-elect Barack Obama has moved quickly to get a handle on a legacy that he neither wished for nor expected when he began his bid for the presidency of the United States. In a speech today January 8, 2009, Obama recognized that:
This crisis did not happen solely by some accident of history or normal turn of the business cycle, and we won’t get out of it by simply waiting for a better day to come, or relying on the worn-out dogmas of the past. We arrived at this point due to an era of profound irresponsibility that stretched from corporate boardrooms to the halls of power in Washington, DC.
Que faire? “It’s time to trade old habits for a new spirit of responsibility,” says Obama who set the following priorities for the American Recovery and Investment Plan:
- Double the production of alternative energy in the next 3 years
- Modernize more than 75% of federal buildings
- Improve the energy efficiency of 2 million American homes
- Equip tens of thousands of schools, community colleges and public universities with 21st century classrooms, labs and libraries
- Provide new computer, technology and new training for teachers so that students can compete in the global market for jobs of the future
- Save lives and cut costs through computerization of all American medical records within 5 years
- New infrastructure:
- Repair crumbling roads, bridges and schools, eliminate backlog of needed infrastructure repairs
- build a smart electrical grid
- Expand broadband lines throughout the USA
- Invest in science, research and technology that will lead to breakthroughs and new discoveries
- Tax cuts: 95% of working families will receive a $1,000 tax cut which they will be encouraged to spend to get the economy going again
- Extend unemployment benefits and healthcare coverage to the unemployed
- Assistance to States that are struggling to meet the needs of their residents
Finally, Obama promises to reign in the financial sector while preventing its complete collapse. The cost of this plan has been estimated at about $1 trillion. You can access the entire speech at change.gov, the official transition web site.
We’ll dissect the speech and what it means for our communities in a later post. Meanwhile we welcome your comments and feedback.