To: i-node who wrote (614858 ) 6/5/2011 8:21:51 AM From: Alighieri Read Replies (1) | Respond to So we could have had another fat bloated program, as big or bigger than Medicare, for our kids to deal with 50 years hence? What Obama inherited was certainly better than what Bush inherited (a recession ACCOMPANIED BY BIN LADEN at his peak of power). Nouriel Roubini : The Economic Mess and Financial Disaster that Obama Will Inherit ....Obama will inherit an economic and financial mess worse than anything the U.S. has faced in decades: the most severe recession in 50 years; the worst financial and banking crisis since the Great Depression; a ballooning fiscal deficit that may be as high as a trillion dollar in 2009 and 2010; a huge current account deficit; a financial system that is in a severe crisis and where deleveraging is still occurring at a very rapid pace, thus causing a worsening of the credit crunch; a household sector where millions of households are insolvent, into negative equity territory and on the verge of losing their homes; a serious risk of deflation as the slack in goods, labor and commodity markets becomes deeper; the risk that we will end in a deflationary liquidity trap as the Fed is fast approaching the zero-bound constraint for the Fed Funds rate; the risk of a severe debt deflation as the real value of nominal liabilities will rise given price deflation while the value of financial assets is still plunging. The latest U.S. macro news have been worse than awful: collapsing retail sales and consumption, free fall in capex spending by the corporate sector, sharply falling industrial production, sharply falling employment, housing still in free fall and home prices bound to fall 40% from the peak, collapsing auto sales, forward looking indicators of business (ISM) and consumer confidence dropping to multi-decade lows, sharp surge in corporate defaults, a wrecked banking system and financial system that will have to be partially nationalized. This is the most daunting set of economic and financial challenges that any president has had to face since FDR during the Great Depression. And in the meanwhile in the rest of the world things are as bad: a severe recession in Europe, Japan and other advanced economies; the risk of a hard landing in many emerging markets including China; an almost certain global recession; a severe global financial crisis. So let us not delude each other: the U.S. and global recession train has left the station; the financial and banking crisis train has left the station. This will be a long and severe and protracted two year recession regardless of the best intentions and good policies of the new U.S. administration. It will take a lot of hard work and sound policies to clean up this mess and reduce the length and severity of this economic contraction. When Barack Obama raises his hand and takes the oath of office next Jan. 20, he will inherit arguably the worst international mess ever passed on to an incoming president. politico.com
