Barack Obama made history by becoming the first African American president of the USA. In doing so, he inherited perhaps history’s most appalling presidential legacy. But before Obama can even get his teeth into righting the wrongs of the Bush administration, he has a recession to stave off.
On the day of Obama’s victory, the US S&P 500 rose by 4.1%, the biggest in Election Day history. But amid the euphoria in the two days that followed, that same index fell 10%, marking its sharpest decline since 1987.
Obama was voted in as a pseudo-revolutionary character. He sailed into the White House on the wind of change. But he will be painfully aware that he is bereft of the luxury of a honeymoon period; the crucial 100 days between election and taking office are a vast minefield.
The S&P 500 has fallen approximately 40% in 2008, and with the US consumer base contributing 21% of the world’s consumption, a recession there would be catastrophic to the rest of the world. Never has it been more poignant to point out that when America sneezes, the whole world catches a cold.
Obama differentiated himself in the election campaign John McCain on taxes, spending and trade. On Obama’s official website, the following three issues are thrust forth as his key economic policy initiatives.
Barack Obama will provide a tax cut for working families, provide tax relief for small businesses and startups, and fight for fair trade.
Such promises, made in the heat of battle, will be hard to keep, not least his proposition to cut taxes. In the days that have followed his election we have learnt that the giddy sentiment around Obama has little or no effect on the US economy.
Before he was elected, Obama appealed to America: “I ask for your support for this economic agenda. I will not pretend it will come without cost, but I do believe we can achieve this in a fiscally responsible way - certainly more so than the current Administration that's given us deficits as far as the eye can see.”
He has promised change, rejuvenation; he has promised to do better. He can’t do worse, or can he?