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American Love
To solve the USA’s internal problems Barack Obama has to settle for a compromise even in the external policy. Given trillion debts of the Americans and a record drop in GDP the President will have to prove to the world that the whole game in a kind of default situation is worth the candle.
The new US president Barack Obama has received all the key roles in the world arena. Barack Obama is the first president of black origin in history, and the first who is ahead in the polls compared to Jesus Christ and Mother Teresa, and who must help the country out of its deep crisis. Most Americans pray that Barack Obama’s presidency will not become fatal as his game might cost a lot not only to the US citizens but to the world as well.
The fourth quarter of last year showed a large-scale slowdown in the US economy over the last 30 years and the third biggest drop in GDP in the post-war history. To avoid new “negative” records Barack Obama is ready to spend trillions of dollars and thus to lumber future generations of Americans with a big burden of the country’s debt. As of today the debt burden of each US citizen is about $35 thousand and it’s just the beginning.
Liquid production
For many people wishing to listen to Obama’s first speech to Congress it was hard to find a place in a Washington hotel at the end of February. Among the attendees were representatives of both houses of Congress, the Cabinet of Ministers, the Head of Supreme Court and ambassadors of foreign states. On February 24th Washington was full of blaring sirens, rushing officials and cameras, which scanned the White House and the Capitol. The Americans believe this is an unprecedented case. US leaders usually announce such speeches after they have been in the office for a year; but this time it was an exception. Because of the world economic downturn the US President has to report about his activity upon completion of the first month of his presidency.
A Hollywood smile and the storm of applause more reminded the best film Oscar ceremony. We could draw this parallel as Obama is to become a script producer for the rescue to save the world economy. The only difference is that the happy ending is still to come and long applause was rather a sign of creditworthiness that is a hope for positive outcomes of Obama’s policy. The keynote of Obama’s speech is that the United States of America will rebuild and recover and emerge stronger than before. To achieve this it is worth spending trillions of dollars of tax-payers now.
Hereditary diseases
If we agree with the statement that “USA sneezes, the world catches cold” then the Americans are suffering from acute bronchitis and the rest of the world has been given at least a diagnosis of bronchial asthma. Problems with the world economy breathing are connected with lack of liquidity; and draft American budget is another proof of this problem. The final option of the budget is to be unveiled in April. However, now the market participants are complaining about some of the key indicators. For the first time from the World War II the US President has allowed a budget gap in the key financial plan of the country in the amount $1.75tn. This is a lot even from the point of view of the American citizens let alone Ukrainian ones as this budget deficit makes about twenty GDPs of Ukraine.
Barack Obama admits that his budget does not attempt to solve every problem. Still, it reflects the stark reality they have inherited from the former US President – a deficit, a financial crisis and a costly recession. “So often, we have come to view these documents as simply numbers on a page or laundry lists of programs. I see this document differently. I see it as a vision for America – as a blueprint for our future”, said Barack Obama about the budget. He plans to reduce the budget deficit to $1.17tn by 2010 and to $533bn in four years, by 2013. The President believes that it is necessary to increase the debt in the short-term perspective to help the economy out of the crisis. Experts believe that the American debts will exceed $20tn in the next ten years as the result.
Given the launched anti-crisis programs the debt of the Americans in absolute terms might become equal to the country’s GDP. This is because the first two bail-out plans did not work. $700bn was spent to support the financial sector within the framework of first world-saving Paulson Plan. The second Obama’s plan suggests financial assistance to the American industry in the amount $787bn. After inefficient use of the funds allocated to help American banks the White House decided to establish supervisors over the right use of funds. Thus, vice president, Joe Biden, is in charge of overseeing the implementation of the economic stimulus funds and former Interior’s inspector general, Earl Devaney, will have to ensure transparency and that the funds are not wasted. In addition the new budget provides $250bn to support financial institutions.
The plan to provide about $2tn of non-repayable support to American corporations has faced a lot of criticism from the key opponents of Obama. The Republicans believe that given the planned spending one shall admit that the country is about to get bankrupt. Alan Case, a republican candidate for president, has announced that if Obama is not stopped USA will cease to exist. The rhetoric about the issue is getting sharper as former Minister of Finances Timothy Geithner is considered to be a Wall Street supporter. He was Assistant of the Minister of Finances in the Clinton’s administration and later Assistance of one of senior managers of Citigroup, Robert Rubin. Geithner is believed to keep supporting financing of the banks till their nationalization. Thus, last week American group AIG announced losses in the amount $61.7bn in the last quarter. This means that the insurance company was losing about $460 thousand per minute every day during the October-to-December period and the billions of dollars allocated to help the group turned out to be inefficient.
One of the financial issues close to ordinary Americans, which are to be settled by the Obama’s administration, is creation of a new lending fund, which is to temporarily replace banks in the issues of financing. In addition, the Americans are promised to be able to refinance their mortgages and to take advantage of the lower interest rate as the result. The priority areas of the next several years include healthcare, energy and education. Picture of smiling Obama appear on tickets and subways and the fashion industry uses the US President’s face in their new collections. “It is early to judge Obama’s actions; too little time has passed. We will see the first results of his presidency in three months”, thinks an ordinary American taxi-drive Jack Pieters.
External policy
Experts do not have a unanimous opinion about Obama’s external policy. Most speakers keep to the opinion that the US policy will be more focused on settlement of internal economic problems as they are the source of the global crisis. So, the Unites States of America shall settle them first. At the same time settlement of internal problems is closely connected with external economic issues. It will be hard for the Americans to get out of the crisis without external financial aid. To the words of Barack Obama with a new administration in Washington “a new era of engagement has begun” between the USA and the world community. “For we know that America cannot meet the threats of this century alone, but the world cannot meet them without America”, believes the US President. Following that statement USA might become less persistent and less active from the point of view of supporting other countries including CIS countries. In addition, new administration gives signals to Russia aimed at patching up relations, which have deteriorated as the result of the events in Georgia.
What other explanation but for external economic concessions can be given regarding active discussion of Barack Obama’s letter to the Russian President Dmitriy Medvedyev in which he offers reasonable exchange of geopolitical decisions. One of the explanations is readiness of Washington to stop the plans on deployment of a missile defense system in Europe if Russia terminates cooperation with Iran on nuclear program and military developments. The wish of Washington to cooperate with investment resources of China is also obvious. February tour of Hillary Clinton, a secretary of state, to Asian countries with the appeal to buy American bonds proves one more time that US external policy in the given circumstances will be favorable and full of compromises. Despite financial difficulties experiencing by the USA Hillary Clinton was trying to convince Chinese leaders that US debt load would benefit China. “We are truly going to rise and fall together. We are in the same boat. Thankfully, we are rowing in the same direction”, she said in Beijing.
If US-China relations are more or less clear relations of Washington with Kyiv might be subject to some changes. Today Ukraine does not present any strategic interest to the USA on geopolitical world map. This does not mean that Washington might refuse Kyiv’s support completely but one could expect some chilling of relations. Even Ukraine realizes that now it is required to look for some reasonable balance of relations with all economic partners including USA, EU, Russia and the Middle East.
Americans also started saying that Ukraine needs to use the methods of people’s democracy. The meeting organized in Washington by the Foundation for Effective Governance of Rinat Akhmetov and American Newspaper the Hill can serve as an example. Among the key problems of Ukraine mentioned by the representatives of the American Senate were political instability, weak currency and high inflation. However, US cannot provide financial support to Ukraine that is why they have made a hint on looking for a compromise with their neighbor Russia.
“Perhaps, Ukraine needs the expertise of other countries and in this context the meeting in Washington was very important for us. We would like the American establishment to be able to know about a real economic situation in Ukraine as well as about all other challenges and objectives our country has faced”, noted the Director of the Foundation for Effective Governance Natalia Izosimova. To her words, it is important to outline the priorities and problems, which require outside help and those which can be solved inside. “People have come to discuss the situation and to hear how Ukrainians might solve the problems themselves. When we were listening to the reports I saw sincere interest and we had feedback from people. There were a few people from Ukraine and a few people from the USA and they were keen to understand what shall be done for Ukraine using mutual efforts. Possibility of a dialogue at this level is a very big thing and I was very much impressed”, shared his impressions Anatoliy Bliznyuk, the Head of Donetsk Regional Council. To the words of Senator Jack Reed Ukraine and USA share common problems one of which is the global crisis. Ukraine’s Ambassador to the USA Oleg Shamshur expressed hopes for close cooperation with strategic partners of Ukraine USA and EU in looking for efficient ways of overcoming modern economic challenges. Along with understanding of all the challenges experts got focused on new possibilities of the country. However, there were no specific decisions in favor of the Ukrainian party.
Elena Moshenets
Investgazeta Newspaper
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