Obama has the capital, now he must spend it wisely

February 25, 2009

(Copyright 2009)

The drought in leadership at the helm of the United States government has been broken, judging by the speech I just watched President Barack Obama deliver to a joint session of Congress.

It’s up the Republican obstructionists to either help or get out the way.

He was not long on detail, but you really can’t do that effectively in such a speech. You have to give an outline. You have to project an attitude. He did. And it seems to be a no non-nonsense move forward for and with the American people approach.

I think one of the things that is giving the Republicans fits is that they are so party and ideologically bound, while the new president, although liberal, is really projecting something beyond pure politics. As much as the Republicans want to wage that straight political battle, he won’t play by their rules.

I liked what he said about finally doing something on health care. He proved that he understands the problem and that he is ready to move beyond and around that tired old fight between the haves and have nots. I got mine, you get yours. So many people no longer have theirs, so many businesses finally realize that simply using health care benefits as an employee attractor is no longer fiscally feasible and yet they know they need to have their investment in their workforce protected. I think (I’m not sure on this one) that even Walmart discovered that just giving your employees a handout on how to get on government health care for the poor is not a substitute for a comprehensive health care plan.

Also Obama said that he has revised the budget process so the costs of the wars will be laid out for the current year with projections for years to come. We have ignored and/or fooled ourselves too long on the monetary costs of wars. Only recently have I heard experts actually saying that the cost of the wars is part of what has led us to our current economic crisis.

He warned that more money will be pumped into the banks but promised bankers will be held accountable and will not be able to use government money for their personal pleasures. We’ve heard that one before. Maybe some perp walks with bankers in chains is what we need to see.

I don’t know what the Wall Street reaction will be in the morning (I’m writing this right after the speech Tuesday evening). But I think at least the markets now have a clear message as to the direction we are going and more importantly the attitude of the new president. It would seem that stocks in innovative companies with an eye to the future (not the next quick dollar) should rise – renewable energy, for example.

Add 1:  And this morning I get the answer. Stocks are down amid concerns over the continual decline in home resales and falling home prices, as well as over concern that the credit crisis is worsening. It is troubling to know that our whole economy over these past many decades has been based on inflated home values. Seems to me we need something more like industrial and agricultural output with a dose of renewable energy to support our economy. And somewhere in there there has to be a whole lot of good paying jobs. Inflated home values did produce a lot of jobs — good paying jobs, not so much.

Getting the banking situation resolved seems to me the thing that needs to get the top priority. Housing is an offshoot of that, but I fear the president has just previously put forward a somewhat complicated sounding and maybe overreaching program in that regard.

I don’t think we want the government setting prices by forcing lenders to pull down the principle on houses, although lenders on their own might choose to do that. Unfortunately in probably the majority of cases, as tragic as it is, foreclosures need to take place, losses (to both the occupants and the lenders) to be suffered, the end result being bankruptcies for both individuals and lenders.

But only in that way can the market be determined. If in the end there is an oversupply of houses, the prices will at least settle in a more affordable category.

(Interest is a confusing thing to me. It would seem it needs to be set primarily by availability and risk, not by artificial government actions, part of what has caused the present crisis. From this time forward the price of risk will likely be higher on home mortgages.)

Only once the bad debt is finally settled (much of it by bankruptcy) can a new and improved banking sector rise up from the ashes.

While I am not sure President Obama’s approaches to each problem are the best, he has proved that he is indeed a forward thinker.

I think the wars will plague the Obama administration efforts, but he has not given any indication that he would back down from the challenges he faces in that regard. And although he has made some strong statements about fighting global terrorism, akin to those made by George W. Bush, he has not yet painted himself into a corner.

Although I appreciate and admire President Obama’s willingness to work with the Republicans, I almost wished I could hear him just tell them: “Oh, just shut up – I have work to do”! But he is much too wise a politician and too diplomatic for that.

One more thing. While his predecessor claimed to have “political capital” after his second election victory, he found it to be ephemeral, primarily due to his ineptness and pig headedness.

President Obama has as much political capital as any president I have seen in my 59 years. I hope he spends it wisely. from what I just saw, I have reason to believe he will.

P.s.

Right now the Republicans seem to be in the lonely position of the loyal opposition with no plan, only reaction, thus making them seem “reactionary”. A new leader will emerge if they are lucky.

Add 2:  And after initial reviews  I have concluded is won’t likely be the young and somewhat emaciated looking Bobby Jindal, Gov. of Louisiana, who gave the official Republican response to the Obama speech (I didn’t bother to thake that in — yadda yadda yadda).