Obama is ready to be tough
With the Fed’s coffer shrinking faster than ever, President Barack Obama has now made it clear that the cash advance in Louisianas that he is offering to corporate America will not be for free. In his recent speech at the Georgetown University, while he defended his economic policies on one hand, on the other hand, he warned people of tough choices ahead. Providing a justification for his moves, he said that each policy “is driven by a larger vision of America’s future, a future where sustained economic growth creates good jobs and rising incomes; a future where prosperity is fueled not by excessive debt, reckless speculation, and fleeing profit, but is instead built by skilled, productive workers.”
Job losses and foreclosures ahead
President Obama’s clear message for corporate America was that the careless usage of the bailout money will not be tolerated any more. Pointing at more job losses and foreclosures in the wake of a major restructuring in the U.S. auto industry and troubled insurance giant, American International Group, Obama talked about implementation of “difficult and unpopular choices.” He also said that hard times are not over yet. As per him, “2009 will continue to be a difficult year for America’s economy. The severity of this recession will cause more job losses, more foreclosures, and more pain before it ends.”
Banks are to be saved
Though a lot of discussion is going on at present about the results of the official ‘stress test’ that was carried on 19 giant banks of the U.S., Obama seems to have a soft corner for the banks. But then, that’s not without any reason. As per his Georgetown University speech, “Of course, there are some who argue that the government should stand back and simply let these banks fail – especially since in many cases it was their bad decisions that helped create the crisis in the first place. (But) The truth is that a dollar of capital in a bank can actually result in eight or ten dollars of loans to families and businesses, a multiplier effect that can ultimately lead to a faster pace of economic growth.”
Is it for banks?
Definitely, Mr. President understands the value of a sound banking system, but the question in everyone’s mind at the moment is whether he will commit further cash advance in Louisianas to those banks that will fail the stress test? Well, the answer may be ‘No’, but if he does, then soon we will get to see lot more restructuring and job cuts.
Time for America to come forward
Many will agree that extra-ordinary time requires extra-ordinary governance. Similarly, President Obama’s tough stand can actually be the bitter pill that can cure the economy. But then, he alone cannot do it, the whole of America has to come forward for the cause. And it is more applicable for corporate America, which is getting the bailouts. Companies like AIG should have understood by this time that the billions of dollars that they have got is taxpayers’ money and they have no right to waste it. That’s why President Obama is now all set to make them understand the facts by his tough stand. But even then he needs corporate America and for that matter the whole of America to come forward to make his cash advance in Louisianas work.
