For Barack Obama the most important, and disconcerting, discovery will be that this is not the America he set out to conquer. Two years ago, when he launched his campaign, Iraq was the issue with the economy a mere blur in the background. The first wave of banksÃÂ troubled assets swept Bear Stearns away, midway through the campaign, and since then gained tsunamic power to devastate economies from America to Ukraine.
Considering the leap of faith by Americans in this historic election, ObamaÃÂs first priority will be the domestic economy. Besides footing the bills for the $700-billion Troubled Asset Relief Programme and sundry other bailouts, Obama will have to quickly stimulate the economy that is contracting and could slip into recession. With the IMF putting AmericaÃÂs 2008 year-on-year growth at 0.52 per cent, the worldÃÂs No. 1 economy finds itself ranked among the bottom 10 of 181 nations.
The US Federal Reserve has acted with alacrity by cutting interest rates but needs fiscal policy back-up, both to re-capitalise lenders and to stimulate spending directly through increased public expenditure or tax cuts. Immediately, Obama will try to find the $50 billion he promised to ÃÂjumpstart the economyÃÂ.
Images: Democratic Presidential candidate Barack Obama addresses supporters during his election night victory rally at Grant Park on November 4 in Chicago, Illinois.
Text: Business Line
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