Today is an historic day for the United States as we inaugurate our 44th president Barack Hussein Obama.
It's is truly one of those days that everyone will remember and everyone will be proud to say they witnessed.
I'm not sure what's more ground breaking: that the nation elected a minority or that they elected a junior senator from Illinois.
As an economic and financial market adviser to the McCain campaign, I can tell you that Obama won because he was the better candidate of hope, he was the better candidate of change, and he was the best of the two Democrats running.
To say that the world holds it's collective breath today is an understatement.
Our incoming president has a 70%+ approval rating and an expectations rating that is off the charts. Solve the US economic issues.....no problem. Improve the relations with our strategic partners....piece of cake. Reduce global warming: consider it solved! I don't want to say that things are out of control, but the parade route crosses over the Potomac River without the need of a bridge.
John Kass from the Chicago Tribune tries to downplay the excitement, "And Democrats, now on their hopium with Obama of Chicago and the reforms they think will come with the Daley machine having a pipeline to the White House, expecting more federal health care, more federal schools, more federal this, more federal that. If we run out of money, don't worry, let's party and print some more." (In fairness, he deservedly rips the outgoing Republican administration as well.)
Taking this to the extreme, Nobel prize winner and leading Democratic economist Paul Krugman one-ups this concept. According to ABC News, Krugman said the government could borrow up to $5 trillion --if needed-- to speed up a recovery from the recession. "Government spending is the only surefire way to create employment." I bring this up to show the mindset of those that are providing guidance to the incoming Obama administration. Regardless that history shows the opposite, Keynes and his strategies are alive and well.
Today as if by some magical occurrence, the US bond market has awakened to the thought that the Obama administration is likely to sell record amounts of debt to pump up the economy. Actually, I think the bond market has awakened to the fact that everyone is going to attempt to go down this path. Krugman's postulation should be enough to unnerve any bond market guru.
I wonder what poker player Bill Gross would say? Fold?
Now with all the country downgrades that are occurring, the question remains: why isn't the US in the crosshairs? My guess is that the ratings agencies are keenly aware of what the US is going to do with debt issuance and what the US is likely to do with taxes.......and they are the same thing. Eventually, they are both going to go up. Way up. One to fund the economy and the other to pay for that funding.
However today, the focus will be mainly on the promise of a new leader for the world's largest economy and military. The obstacles to success are many and daunting. However, truly great leaders are defined by the challenges they face and the leadership they provide to succeed. Nothing else matters. Becoming the first minority to take the highest office in the land is a great start.
Let's hope that this is not the only achievement he accomplishes.
- Obama's Challenge: Worst Economic Crisis in 70 Years