Wednesday, January 21, 2009

Barack Obama's presidential acceptance speech


Gracious and serious this is a speech worth listening to. There is much sense amid the rhetoric and Obama is - as everyone now knows - a talented man of enormous charisma. But as I stressed a few days ago the difficulties facing the US and hence Obama are immense*. The positive changes will only take effect gradually - a couple of terms in office at least.

He seemed so relaxed and yet determined. As I have said before I think Obama has the makings of being a great US president. He has buried the race issue because there is no issue of a Obama being an 'accepted' black man - he is an outstanding person, period.

I assume the interest group pressures on him will be as great as for other presidents but there is a backbone there that augers well. I am optimistic.

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* As many have pointed out this was the worst inauguration day in US history for stock market prices. The US banks plummeted (shares of Bank of America, under pressure over its Merrill Lynch takeover shares dived 29%. JP Morgan dropped 21%, Citigroup 20%, Wells Fargo 24% and Goldman Sachs 19%) and as a group seem destined to fail. Nouriel Roubini, is quoted saying 'losses in the US financial system could hit $3.6tn before the credit crunch ends – which, he said, means the entire US banking system is effectively bankrupt".

This is a stunning statement backed up in markets. The Dow dropped 4% mainly because of the banks while, in Australia, the ASX dropped 3.1% with banks again pounded but resource stocks being even more heavily dealt with - BHP-Billiton announced 3400 workers in Australia will be sacked.

What a mess. The US banks may need to be nationalised or put into receivership.

9 comments:

jc said...

Harry

The US banks- the two that needed assistance are fine as far as it goes. The Feds have ring fenced 306 billion of risky assets for Citigoup and around 100 billion for BAC.

I really don't know understand the panic about the US banking system at the present time. It all started because the UK bank RBS which bought Amro for 70 billion suffered a huge loss and their basically done for having to be nationalized. In other words they completely wiped out their balance sheet equity.


The UK under the Labor clowns is now basically broke.

Bek said...

Harry

Obama's speech and talent is just facinating. What a great time to be a graduate student in economics witnessing financial crisis as well as witnessing change of leadership in America.

civitas said...

Obama's speech was fine. I don't expect all that much from any inauguration speech and he surely was exhausted.

As for his talent, other than for giving a speech, no one really knows anything much about it. I'll wait until he actually does something before deciding about his talent.

But I do have hope! I hope he can help in turning the economy around. I hope he (and Congress)stops the lending to people who cannot pay the loans back. I hope he keeps his promises about tax cuts. And most of all I hope that he can keep the country safe from attack. That is perhaps his most difficult, yet most important, assignment. It's also a task that he personally will have much more effect on than the economy where there are so many variables out of the president's control. I wish him well on both the economy and the security.

charp said...

"The UK under the Labor clowns is now basically broke"
.
and the US under the Republican war-mongers isn't?
.
Personally if you are going to spend 300 billion, why not just set up a new banking system, and let the old one die.

jc said...

and the US under the Republican war-mongers isn't?

nope, the US finances even now aren't as bad as the UK's. Sorry.

Spiros said...

"the US finances even now aren't as bad as the UK's."

There's nothing left to lose in the UK, apart from HSBC, and time will tell with them. Whereas there's still plenty of downside left in US.

We'll see how the scoreboard looks when all is finally revealed.

Anonymous said...

could be the best orator since Martin Luther King Jnr

conrad said...

Sorry JC,

that was me -- not sure why I came out as charp! I agree about the UK finances, but I think, like Spiros, they're closer to the bottom than a country which is evidently going to bail out companies which are just going to cost more and more in the long term, like Ford et al.

jc said...

That's fine, Conrad.

look who knows. Who knows where this stuff ends up.

It's like the cockroach theory. There's always more than one and this time it's an entire nest.