Wednesday, November 05, 2008
President Obama began this process last night, in his victory speech, when he noted that restoring the country's health might take more than a term. In the next few weeks, he should go well beyond this:
- The deficit will be more than $1 trillion a year for several years
- The country needs a massive new fiscal stimulus
- The housing market will continue to decline through at least 2010
- Interest rates and taxes will eventually have to rise (after the economy stabilizes)
- Weak corporations have to be allowed to fail
- Millions of homeowners will lose their house
- Unemployment will probably rise to 10%
- The government simply cannot "bail the country out"--not because it lacks the will, but because it lacks the power.
In short, Obama needs to acknowedge reality, erring on the side of overstating the problems and challenges, and he needs to prepare the country for several tough years. Because if he doesn't, within six months of his taking office, the country will have forgotten all about the prior administration and will instead be blaming everything on him.
henry blodget is exactly right. obama has to prepare this country mentally for the onrushing depression that is already here but which most citizens are still either ignorant or in deep denial of. his job will be more difficult than was that of this inaugural address, delivered in march 1933 -- three and a half years following the 1929 crash, two years following the breaking of the vienna creditanstalt, weeks after the purgative collapse of the banks. no american could in the spring of 1933 deny disaster and refuse to admit to themselves the reality of hardship.