Andrew Busch
Global Finance Strategist
BMO Financial Group

Welcome to a new world and a new world leader. The expectations are high and the challenges are great. Let's start with some of those expectations. From his editorial in USA Today yesterday, here are the new President-Elect's promises:

1. I'll give a tax break to 95% of workers and their families, and eliminate income taxes for seniors making under $50,000 a year. If you work, pay taxes and make less than $250,000, you won't see your taxes increase by a single dime.

2. I'll end tax breaks for corporations that ship our jobs overseas, and give them to companies that create jobs in America.

3. I'll eliminate capital gains taxes for start-ups and small businesses, the engines of our job creation.

4. We'll create 2 million jobs by rebuilding our crumbling infrastructure and laying broadband lines that reach every corner of the country.

5. I'll invest $15 billion a year over the next decade in renewable energy, creating 5 million new green jobs that pay well, can't be outsourced, and can help end our dependence on Middle East oil.

6. My plan will make health care affordable and accessible for every American. If you already have health insurance, the only change you'll see under my plan is lower premiums. If you don't, you'll be able to get the same kind of plan that members of Congress get for themselves.

7. To guarantee every child a world-class education, I'll invest in early childhood education and recruit an army of new teachers. But I'll also demand higher standards and more accountability. And we'll make a deal with every young American: If you commit to serving your community or your country, we will make sure you can afford your tuition.

8. When it comes to keeping this country safe, I'll end the Iraq war responsibly so we stop spending $10 billion a month in Iraq while it sits on a huge surplus.

9. I'll finally finish the fight against Osama bin Laden and the al-Qaeda terrorists who attacked us on 9/11, build new partnerships to defeat the threats of the 21st century, and restore our moral standing so that America remains the last, best hope on earth.

Keep this in mind: the US is predicted to issue up to $2 trillion in new debt just to cover the existing promises that have been made by Congress and President Bush. This will be double 2008 and that was a record. Mr. Obama faces daunting challenges on stabilizing the US economy, restructuring the financial architecture, and trying to raise a massive amount of capital to pay for all his programs. Remember, US Senator Chuck Schumer (D, NY) wants to have two stimulus packages as well to add to this pile of debt.

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Interest rates play a critical role in the outlook for our economy. The US yield curve has steepened with short term rates sinking and long term rates going up slightly. As the WSJ points out, this normally is a very good thing as it incents banks to lend and make money. However, this isn't necessarily happening as the actual cost of capital for banks in the short term is higher than the rate that the US Treasury can borrow. Also on interest rates, you've noticed that mortgage rates in the United States have not fallen with the cuts by the Federal Reserve. Last point on rates is that should long term rates back up a percent or two, it would wipe out the stimulus packages that will likely be considered.

It's complicated, it's a mess, it's the United States. Congratulations on the new job, Mr. President-Elect.

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Andrew B. Busch is Global FX Strategist at BMO Capital Markets, a recognized expert on the world financial markets and how these markets are impacted by political events, and a frequent CNBC contributor. He can be reached here.

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