Thursday, January 15, 2009

Obama's Sorry State of the State

Now that the new president is almost the president we should take a look at the state of the state he will be inheriting before we get too caught up in the euphoria of the historic moment. Make no mistake, the challenges facing Obama are among the most difficult ever faced by an incoming president. If he succeeds he will have earned his place among the greatest presidents in our history.

While Obama gets a lot of mileage out of his humble beginnings and life, the fact he went to Columbia and Harvard and his wife went to Princeton belies some of the impact. These Ivy League schools are among the best and most expensive schools in the USA and world. Let us hope he didn't lose his ability to stay humble while rubbing shoulders with the aristocrats. He certainly did acquire the ivy league taste for the good life starting with his home of well over a million dollars.

As a candidate for president Obama spent three times more than any previous candidate in history, about three quarters of a billion dollars to win 53.5% of the vote. His speech the night of the Democratic convention cost $8 million, just one speech mind you. This inauguration will cost more than $150 million, three times more expensive than any in history. Add to that the economic bailouts he already has supported to the tune of over a trillion dollars, and he isn't even president yet, and we have ourselves one very high maintenance newcomer on the political scene.

Then we get to the problems he faces. There is the economy. Big money, big banks and big fat investors are lined up waiting for the new president to bail them out of the trillions and trillions of our dollars they lost, squandered or stole the past couple of years. Seems funny that if you rob a bank you go to jail but if you steal all the money from inside the bank the government bails you out.

Why is it the financial experts guiding us out of this mess are the same financial experts who got us into the mess in the first place? If we put into jail all the people who masterminded the bankruptcy of America and the takeover of the US Treasury New York City and Washington, DC would be ghost towns, Wall Street and Capitol Hill would be surplus property, the Money God would not have a blank check on our tax dollars and unemployment would be greatly reduced because the bad guys would be locked up.

Today 1 out of every 54 mortgages in America is facing imminent foreclosure and everyone in Congress is scrambling to find ways to save the poor citizens. Now if you listen to the politicians, media and Wall Street you would think that means every other house in America is in foreclosure. The truth is less than 2% of the homes with mortgages are in foreclosure, about 2 million out of over 100 million mortgages.

If you look a little deeper at the sub-prime mortgage mess that brought down our economy, a program of waiving the normal mortgage requirements so anyone could buy a home in the mid-2000s that was the brainchild of Barney Franks and other Democratic leaders, things get more interesting. There are over 7.5 million sub-prime mortgages, mortgages in which minimum down payments were accepted, excessive fees were paid, credit fraud was tolerated, balloon interest payments were built in and inflated home values were inherent.

About 25% of the sub-prime loans are in foreclosure meaning nearly 100% of the foreclosures were not the typical citizen buying a home but the people taking advantage of the sub-prime scam and now that they are defaulting on the loans the government is now trying to figure out how to use taxpayers dollars to save them. In short, we are all going to pay for the fraud. It was these loans that were packaged by Wall Street greed mongers and sold through stock offerings that brought the banks, mortgage and financial institutions down and triggered our current recession. Trillions of dollars have been lost by investors to the very institutions claiming responsibly for managing our wealth, pensions funds, savings and so on.

Many other aspects of the economy from AIG and bank bailouts to oil price increases, the futures markets, swaps, derivatives and others were created for the purpose of getting away with what should have been illegal. Is it so important we spend trillions of government dollars to save the very people who created the scams in the first place?

In other areas there is the latest threat from Osama Bin Laden to continue his terrorist actions against the USA while wars continue in Afghanistan and Iraq. Pakistan is ready to fall to insurgents waiting to deliver it to the Taliban. India is being attacked by Pakistan. Did I mention that Pakistan, home to Bin Laden and headquarters for many terrorist groups, really has nuclear weapons unlike Iraq. Russia is testing it's strength against the Ukraine and Europe. Israel is battling the Palestinians, killing them at a rate of 71 dead for every Israeli killed. You get the international picture, just add to the violence the reality of worldwide recession and many more nations could get desperate.

Now beyond the economy, wars and international affairs there remains a health care system that is the most expensive in the world and 56 million people with no health coverage. Schools that don't teach. States that are going broke. Auto and other industries that can't efficiently produce or sell. Energy policy that leaves us subject to the pricing and manipulation of others. Immigration issues with Mexico and the threat of drug cartel warfare in Mexico crossing the border into the USA not to mention the corruption of our southern neighbor.

Wow, come to think of it do you think Obama would have become the greatest spender in campaign politics history if he knew what he was getting into once he won the election? At least we will find out real soon if that Harvard education was all it is supposed to be. If he can solve the mountain of problems and issues he inherits he should be entitled to every award like the Nobel Prize offered.

Lastly, let us not forget the other thorny issue Barack has already raised that may prove more difficult than many I listed. Our new president has already signaled the NCAA that he wants to push for a National College Football playoff and championship, something long overdue. Good luck Mr. President.

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