Wednesday, November 05, 2008
You have to wonder what the outcome of yesterday's election might have been if, instead of the financial crisis taking a dramatic turn for the worse back in September, a geopolitical crisis had taken center stage instead. If nothing else, it would have been much closer.
This morning's newspapers are full of stories about the historic vote and the celebration that followed, Barack Hussein Obama's victory speech being yet one more in a long line of rousing oratories that have inspired millions.
In the New York Times, the results of the vote were characterized as "a national catharsis — a repudiation of a historically unpopular Republican president and his economic and foreign policies, and an embrace of Mr. Obama’s call for a change in the direction and the tone of the country".
It's hard to argue with that view.
As the confetti is swept up and the party hats are put away, the grim reality of governing will begin to set in.
The first term senator from Illinois will have a daunting task.
In a best case scenario, there will be few foreign policy flare-ups to deal with (despite running-mate Joe Biden's predictions of a week ago) to enable the domestic economy to receive the new president's undivided attention.
In two days, President-elect Obama will get his first big economic news in the form of the monthly labor report. From the looks of this morning's ADP employment report, where 157,000 private sector jobs were lost, the Labor Department's take on the job market is likely to be the worst of the year.
With job losses already totaling 760,000 so far in 2008, factors may have aligned to push this over the one million mark - that would be an appropriate welcome message from an economy that is experiencing its worst decline in decades.
As for stocks, after a tumultuous two months and a recent rebound, today's early-morning decline is a clear message that there is still much more work to do in order to restore confidence. That will be no easy task as an increasing number of 401k investors have lost faith in the whole notion of "stocks for the long run".
First housing wealth evaporates, now equity gains over the last few years are gone - that's a tough combination from which to recover.
It looks like there will be another stimulus bill of some sort, probably before the end of the year, and there are many appointments to be made, the position atop the Treasury Department surely taking the highest priority. The leading candidates are said to be former Treasury Secretary Lawrence Summers, New York Federal Reserve President Timothy Geithner, and former Federal Reserve Chairman Paul Volcker.
The name of the most recent former Fed chief has apparently not come up.
With almost $2 trillion of new borrowing already committed and more likely to be needed, the task of managing the nation's fiscal house will immediately follow a successful rescuing of the economy, if one materializes.
The former may ultimately prove to be a much more difficult task than the latter.
Good luck Mr. President (elect) - you're going to need it.