Can Barack Obama really steer the US off the rocks?

As the country goes into meltdown and California prints IOUs, Americans are already questioning if the president can save them

FIRST POSTED FEBRUARY 13, 2009

It's economic devastation, near and far. Here in far northern California I walk into a local plumbing store, a large place used by building contractors. There's one other man in the store buying a $5 plastic fitting. One of the owners say there's zero new construction in the area. "We fix a few toilets. The only people actually building are the marijuana growers down in southern Humboldt."

Take out Humboldt's good fortune in being in the Emerald Triangle and multiply by every plumbing store in America. Throw in the idled lumber yards, construction stores, paint suppliers, and building crews. Count in the car lots that are going out of business because the banks won't finance car loans. Go to the lost auto assembly jobs. It tots up to a job loss across America just in December and January of 1,175,000. And that's an underestimate.

Every president since Reagan, particularly Bill Clinton, has jimmied the unemployment criteria to produce an undercount. The actual number for the two months is nearer 1.75 million. The actual total unemployment rate, according to statistician John Williams, using pre-Reagan criteria, was 17.5 per cent in December and 18 per cent in January.

California can’t pay its bills - it’s going to start printing its own money
These are numbers out of the great Depression of the 1930s and it's going to get worse in the next few months as businesses put up their shutters. The air is whistling out of the American economy. We're now heading into the February-May trough dreaded by every retail store on every Main Street in America. Consumer spending is dropping longer and faster than at any time since they began keeping records in 1947. A quarter of all home-buyers are late on mortgage payments or in foreclosure. People inch through monthly payments on maxed-out credit cards.

My own state of California - often touted as the eighth largest economy in the world - can't pay its bills. There's a shortfall in revenues and it can't sell enough bonds. On January 26 the California State Controller John Chiang announced that the state is going to print its own money. If the state owes us money we'll get this scrip as IOUs. Who knows, in happier times maybe we can hawk them on eBay. Student aid and payments to the disabled and needy will also come in the form of IOUs. Governor Schwarzenegger and his aides are negotiating with the banks to get them to accept the IOUs

President Obama has been battling to force through the largest stimulus plan in American history

as deposits.

America is in meltdown. In Washington President Obama has been battling for his stimulus plan, with Congress now apparently settled on a package costing just under $800bn. Although it's the largest such plan in US history, the New York Times's Paul Krugman, resplendent with his Nobel prize for economics, has torn into it for being way too skimpy and conservative, far too respectful of Republican prejudices against hand-outs to anyone without a 10021 zip code, a Wall St business address and a mansion in Connecticut or Long Island.

The Republicans have elected to array themselves in implacable opposition to the package – surely the stupidest political strategy since Walter Mondale tried to beat Reagan in 1984 by promising to raise taxes. When Obama went last week to Elkhart, Indiana, where official unemployment is running at over 15 per cent because no one wants to buy recreational vehicles, he invited Republican Senator Dick Lugar to come along. Lugar declined – a petty sectarian display of a sort which could cost Republicans badly in the 2010 mid-term elections.

Obama's package is meant to generate three to four million new jobs which will cope with job

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Our leaders are well and truly lost. They have no idea how to restore America's once sound economic, industrial, and agricultural base. Obama's inerest in and vocal emphasis on new "green" technologies is an indication that he has a clue. But what is required is a great deal more than anything that has been suggested thus far. The biggest obstacle is a banking and commercial sector leadership/power bloc so far removed from any useful experience, understanding, and working knowledge of the elements of sound agricultural, industrial, and economic policy as to be oblivious of the essential nature of the crisis. "And now is industry supplementing agriculture, with consequently increased urbanization and multiplication of nonagricultural groups of citizenship classes. But an industrial era cannot hope to survive if its leaders fail to recognize that even the highest social developments must ever rest upon a sound agricultural basis. ... the fine arts and true scientific progress, together with spiritual culture, have all thrived best in the larger centers of life when supported by an agricultural and industrial population slightly under the land-man ratio. Cities always multiply the power of their inhabitants for either good or evil. ... When standards of living become too complicated or too highly luxurious, they speedily become suicidal."

Posted by MichaelG49 at 3:34pm on February 14, 2009

Well well, poor President Obama has been in the saddle for barely three weeks and already conclusions are being drawn as to his competence to lead the country out of its mess! Yet the architect of this horrendous scenario was given EIGHT years, with serious criticism only surfacing within the last two. Perhaps those Americans and their kin harbouring doubts about the new president had better turn to the Almighty. HE might well be the only one able to help them!

Posted by Yolande Agble at 4:12am on February 15, 2009

No, President Obama cannot turn America around. Americans have no sense left of personal responsibility. Let me give you an analogy: There are people who live in mobile homes in "tornado alley." When a tornago goes through, you'll hear people say "We ddn't even hear a warning siren!" This is the mindset of people who buy houses made of fake stucco, chicken wire and particle board and pay $300,000 for thinking they have made a "good investment" (and have "bragging rights at their dingy office), but don't realize that wages are not going up and no one can pay for that $300k ugly monstrodity, and no one who makes a good wage will want to buy that ugly monstrosity. I could make millions selling these people t-shirts in a bucket scented with beer and farts at their sporting events.

Posted by Carrie Boyer at 4:27pm on February 19, 2009