How Obama will fix the economy in four years

President Obama on Credit Cards

President Obama knows and understands the cause of this crisis: Lack of oversight, too much money in too few hands and no accountability for decisions of enormous impact on an entire nation. In his speech (see video) President Obama's intentions to implement more vigorous oversight of banking, credit and financial institutions is clear. The inability of the average American to pay down debt has more to do with the original sleight of hand from these financial entities. Example: Owing a mere $1000 to any credit card company with astronomical interest rates can take more than a decade to pay off at minimum monthly payments. This is neither a financially stable method of financial restitution nor is it a viable means of allowing the borrower the option of reducing debt. Are those 21% interest rates on credit cards necessary? Or, is it merely more of the same kind of financial schlock by lenders? While the prime rates have become virtually skeletal, bank fees, surcharges and other taxes have risen astronomically, adding to the financial burdens of consumers.

How Did It All Go So Wrong?

To look for the most obvious culprit of how and why the financial situation became so devastatingly volatile, it's necessary to look back at least two decades to the time when health care costs to employers drove them to cut staffing and send business offshore, where no responsibility for health care was necessary. Not having the expense of health care for employees put more profit back into businesses. But, the loss of American jobs grew proportionally devastating to most households. The second part of the financial disaster equation occurred when employers realized employee-paid pensions such as 401K, 403B and other stock-based plans had a two-pronged benefit to business: Business costs to provide pension benefits were reduced and the inclusion of company stock as part of these plans pumped up company stock prices on the open market. Employers are chiefly responsible for choosing these plans. Employees had little choice in the kinds of portfolio contents they contributed to regularly. Such plans benefited stockholders and the Stock Market in general. Enron was the first company to experience a total collapse of their 401K stock-based plan in which employees lost their entire retirement savings. The ripple effect began in earnest in early 2001, when one by one, more and more CEOs were found guilty of fraud, Ebbers, Kozlowski, Lay, and others were indicted for fraud. Under intense public scrutiny it became clear that their chief decision making benefited them obscenely, while leaving employees with huge retirement losses and/or loss of jobs. When the government knows the cause of a situation of this magnitude, the cure is not far off. History may one day refer to the era of the gluttonous greed of CEOs as "The Era of the Executive Privileged".

President Obama and Oversight

The Obama Administration has already begun to rein in the obscenity of throwing more money at billionaires, banks and big business without oversight. His stimulus package is focused mainly on stabilizing small businesses and rejuvenating the job sector. In 2001, former President George W. Bush allotted millions of dollars to businesses for the sole purpose of energizing hiring and job stimulus. According to the US General Accounting Office (GAO) Report in 2006, less than 1% of the businesses who received this money used it to increase hiring or add jobs. Instead, this money was used to pay off business debt and make additional financial investments to increase profits. American taxpayers have become the main source of financial rescue to businesses with the worst return on investment: the highest record of unemployment in 17 years according to the US Labor Dept. and health care no longer affordable, that has rung up higher and higher credit card debt that pays for catastrophic and chronic illness. With such a financial disaster looming, those most responsible for decision making just crossed their fingers and toes, made sure their salary increases and bonuses were secure and held their breath, hoping the working class wouldn't notice the financial avalanche about to fall on them.

The Big Shock?

Was it a big shock to millions of Americans who lost jobs or suffered stagnating salaries that regressed back to that of 1971, according to Dept. of Labor data? No. Was it a shock to those with the most to lose when their actions caused America's Main Street to cut back severely on consumable goods? Yes. The downside for middle class Americans was the decimation of the housing market. Greedy land and housing developers played fast and loose alongside the banking and credit industry to capture huge profits. Overpricing housing from the former and reaping huge commissions from the latter. Like that avalanche, the biggest investment brokerages began to own up to deceptive business practices that provided glowing business reports of healthy profits when the reality was quite the opposite. With one presidential administration almost totally focused on military maneuvers in 2 wars, the likelihood of focusing on the oncoming domestic turmoil was zero. The military budget exceeded that of any prior US military operations as a result of a virtually privatized military and outsourcing military suppliers like Blackwater, KBR and Halliburton. More than $200 billion dollars in military spending remains unaccounted for according to news reports in 2006 and 2007. With the knowledge of all of these factors, the focus narrows to a total lack of government oversight and accountability. This is the first item President Obma will address as part of his total package of restoration of US financial security.

The Nuts and Bolts of Obama's How To

What We Will See Is Key With the astute common sense this president possesses, there is no doubt he understands that corruption, pay-to-play, lobbyists like Abramoff and his minions of K-Street and lack of oversight cost the American taxpayers more than is necessary or could ever be imagined. Such economic trends make wasteful spending endemic and continual. Each of the major social programs, i.e., Medicare, Social Security and Unemployment Insurance, will benefit from major overhauls by President Obama that will rein in deceptive payouts to HMOs, Big Pharma and the insurance industries. This is where the largest percentage of wasteful spending occurs. This is also where the highest CEO salaries are paid. President Obama will not fail to insist upon "transparency" as he has stated as a means of reducing wasteful spending which leads to maximum oversight of taxpayer funded programs. As he stated, "What is past is prologue.", an indication of his intentions to correct the mistakes of the past.

How Obama Will Fix Banks

The banking system as it exists at present is broken. The major reason is poor judgment in investing. Obama will follow a pattern of sound financial steps that will protect banking from reverting to unsound investment practices through legislation that places tighter reins on how much a bank may spend on annual investments until financial stability is restored.
The US Financial Crisis evolved over a period of decades. Repairing the damage in four years is a daunting, if not impossible task. President Obama will begin repair of this financial crisis in the only pragmatic way available: Stop the hemorrhaging of American jobs. This is the only common sense first step that can alleviate the financial bleeding. Money in the hands of consumers moves an economy out of a deep recession faster than handing money to financial institutions who then make decisions on how "they", not the government will spend it.

How Obama Will Fix the Lending Markets

President Obama will push for legislation that reforms loopholes in the Predatory Lending Act. This will insure that lenders must file documentation for all loans that could have serious implications for both the financial stability of the country and those seeking loans.

How Obama Will Create Credit for Small Businesses

President Obama's stimulus package will create credit for businesses by providing them with an initial financial boost sorely needed to restore shaky credit ratings. The Small Business Administration will responsible for reform of its policies for small business credit and oversight. Small businesses that restore their financial stability thus are able to acquire better credit ratings and with more credit available to them. However, the cost of health care will continue to have a devastating impact on small businesses as will the high cost of energy. Until both of these issues are resolved, small businesses will inevitably show lackluster progress.

How Obama Will Fix Credit Rates

In order for President Obama to fix credit rates, there must first be accountability by credit card companies. This may be as simple as reducing their ability to increase credit interest rates or as complex as pushing for legislation that investigates credit practices to weed out corruption that has a significant effect on the most vulnerable. Tightening credit card companies ability to continue a runaway path of higher and higher credit rates will no doubt have the effect of stabilizing debt to manageable proportions. However, the general public must also take responsibility for increasing their knowledge of the credit industry to avoid scams and other deceptive business practices that often lead to identity theft, divulging personal credit information and avoiding "maxing out" credit by more prudent and self-disciplined spending. This is what President Obama alluded to in his inaugural speech. and during his election campaign.

"Yes We Can" - The Obama Message of Hope

President Obama is wisely choosing to retrofit many of the programs that FDR also chose to raise the US out of the "Great Depression" - Infrastructure, Education and Training. With the loss of so many American jobs, the dire condition of US infrastructure, and the need for education and training in hi-tech industries for the future, Obama has constructed a Reformation Program of great potential. In the first few days of his office as president, his vigilance over national security, the financial crisis and diplomatic relations provide a new stream of consciousness for all Americans from which to base their own futures. Globally, his international diplomacy policies are straight-forward and "no nonsense". With his diplomatic approach, terrorists will need to respond in kind or be seen as evil and blood thirsty slaughterers of the innocent and most vulnerable. President Obama's greatest victory will be over terrorism. His proficiency for choosing the most excellent, most capable cabinet members will endow the US with a "Newer Deal" out of the depths of the current domestic and global crisis. His strokes will be broad enough to be encompassing and flexible enough to achieve the best results.

The Financial Crisis in Conclusion

President Obama selected the most appropriate campaign slogan, "Change" because change is the only alternative to the financial devastation that can occur if swift and sure action isn't taken to reverse the trends that caused the problems in the first place. Many will be resistant to changes that are not a direct benefit to the 1% with the most financial power. That will undoubtedly become Obama's most frustrating challenge. Reversing fortunes that grew from corruption and deceit won't be easy, particularly for those nouveau riche with attitudes of entitlement to vast wealth and fortunes. The crux of the situation is how such obscene wealth was acquired. Wealth that can only accrue by increasing poverty through destructive job loss and price gouging of those who can least afford it, is wealth for the individual good, not the acts of Americans willing to work together for the common good. President Obama's plans address the American ideal of working together for the common good of all Americans. He has emphasized this in several of his recent speeches. Conclusively, by working together in mutual effort toward common goals, the job of lifting the US out of this financial crisis becomes less ominous. Those who are willing to do so will make history along side this historic president. Those who continue to cling to ideas of willful self-importance in order to retain their old values regarding money will reveal themselves as less American and more destructively narcissistic.