The day after...

"The only thing to fear is fear itself."

---Franklin D. Roosevelt

For the record, let me spare us all the argument and say what I believe would be Mr. Obama's final legacy. His final legacy would be 20 January 2009. That he was the first non-Caucasian to sworn in as President of the United States. If he does anything else special that would redefine his legacy after eight years, I will humbly eat my words.

This new government in the United States has come into office on the back of exceedingly high expectations, and they can either succeed glowingly, or fail woefully. There is no middle ground for them. From my own point of view there are three key areas that the Obama government has to work on, and as was so well depicted in the cartoon I linked to yesterday, each one is a major headache demanding all of Mr. Obama's attention: America's internal problems, its relationship with the rest of the world, and the global economic crisis. As a non-American, I am concerned with the latter two.

The true test of Mr. Obama's foreign policy success would like it has been for so many US presidents, be how well he handles the Middle Eastern question. This is the test on which every American administration has failed since 1948, and unfortunately, I can say with all confidence that this administration would fail on that too. I simply do not see Mr. Obama calling the Israelis to heel, and that (America's unflinching support for Israel) is one of the root causes of the problem.

Please, before we run off the rails here, hear me out. This article isn't about apportioning blame for who is right or wrong in the Middle East, I have come to the conclusion that trying to tell people about the historical injustices in the Mid East is a waste of everyone's time as all the parties in this conflict are pretty much entrenched in their positions for the worst of reasons - religious. Just a few days ago, someone whom I know is a lot more intelligent than what escaped from her mouth said that Israel will always win because God gave them the land when he promised Abraham that this land will belong to his descendants. I could only shake my head in wonder at this incomplete interpretation of Genesis 15. In my opinion, anyone who reads the Bible a little further would realise that shortly after (as a matter of fact in the very next chapter), Abraham climbed Hagar, his wife's maidservant, and she bore him a son. According to scholars, the descendants of that son are today's Arabs. Who are also as a result, descendants of Abraham, and thus fall under the mandate of God's promise for that land...

But let us get off the religious schematics here. Common sense simply dictates that in settling the Jews (who had been given a rough deal by a certain Adolf) in that land and forcibly evicting the Palestinians who had been tenants there for almost two millennia, the Americans created a problem that we can't just wish away. A problem which has been ignored by the force of arms. For how long is that option sustainable, and would the Obama government have the political will to do what is required to solve the problem?

There are some (including me once in a while) who feel that the solution to the crisis out there is to leave the belligerents alone and let the peace of the graveyard ultimately break out there. But how practical is that? And to the fanatically pro-Israeli crowd, how achievable is that? You see, whether we like it or not the Israeli economy can't sustain itself and fighting the Palestinians ad-infinitum. What has sustained Israel all this while is that it is the largest recipient of American aid, both economic and military. For how long this will continue in the current economic climate is anyone's guess. At the same time, American military aid to some of the Arab nations surrounding Israel has gone up in the last two decades. Saudi Arabia, Jordan and Egypt are countries that have benefited from the American 'largesse' since the end of the cold war. The Saudis especially have also used their humongous oil wealth to beef up their military. Ditto the UAE, Qatar and Bahrain. So we have all these well armed countries surrounding Israel. At the moment, they aren't going to attack Israel because they are all friendly with the United States. But, in the largest of these countries (Saudi Arabia and Egypt) the governments there are hardly democratic, and are deeply unpopular. How soon do we have to wait before a popular revolt sweeps these despots from power and replaces them with well armed governments who may just be hostile to Israel? Another issue that remains to be resolved is the fact that HAMAS like it or not is still the democratically elected representative of the Palestinian people. They can't be ignored, and wishing the problem away will not work. For the sake of a lasting peace in the region, HAMAS has to be engaged with and not shunned. Whether Mr. Obama would have the balls to do that can only be known in future.

On the economy...

This issue is actually the one that concerns most Americans, and indeed most people around the world. How would Mr. Obama and his team attempt to stem the tide of the downturn we are facing?

Everyone talks about Keynesian theory as the panacea to this credit crunch which according to the media has become a recession, which according to the same media may well be on the way to becoming a depression. For those who may not know, when the Great Depression started in 1929, most economists at the time struggled to come up with an explanation for what was happening. John Keynes came up with an explanation of economic slumps that was quite simple. He said that in a normal economy, there is a high level of employment, and everyone is spending their earnings as usual. This means there is a cyclical flow of money in the economy, i.e, what I spend is what the next man earns and what he spends becomes what I earn.

If however, something happens to shake my confidence in the economy, then I will start saving for the future or more simply put, hoarding the money, which impacts on the other man's earnings. The other man, suddenly faced with a drop in his earnings would also hoard money, and thus starts a vicious cycle of hoarding. According to Keynes, the solution to this was to increase the amount of money in circulation! That was his solution for a recession.

Keynes said that a depression was a recession in which people had fallen into a 'liquidity trap', i.e a situation in which no matter how much more money was pumped into circulation, people would continue to hoard their cash. It is at this point according to Keynes that the government should begin to spend, spend, spend, in an effort to kick start the cash flow again.

Back in 1933, Keynes' theories were eventually applied to the US economy, and by the middle of the 1940s, the US was well on the way to a massive economic boom which ended with them as the world's number one industrial power. In seven short years, under massive Keynesian spending, the U.S. went from the greatest depression it has ever known to the greatest economic boom it has ever known. A lot of economists agree that World War II helped. This is a large part of the reason why "wars are good for the economy" was a mantra successfully sold by the Bush administration.

From a detached viewpoint, I think that actually we should look more closely at the war/disaster/catastrophe 'solution'. Regardless of the bollocks being churned out in the media, and at the risk of sounding like a prophet of doom, I dare-say that we are already in depression. If Keynes is to be believed, then the liquidity trap started a long time ago. And considering that it took the respective governments of Europe/Japan/America months after the fact to admit that their economies were already in recession, why should anyone believe them now that they are insisting that they are still in recession not in depression? Look at the signs: money is being thrown at the banks in a bid to get them lending again, yet bank shares are falling faster than at any point since the Great Depression itself. Companies are closing down, unemployment rates are sky-rocketing, employment schemes are being scrapped (I have three letters in which promising employment prospects with Toyota, Nissan and NATS have all been called off for the same reason - the economic downturn).

The British government has already led the way in employing Keynesian principles to shore up its flagging economy. Other governments are on the way to doing that, in many cases they already are. Even the United States government is doing that in many forms (the bank bail-outs, the auto bail-outs). Mr. Obama has proposed massive spending on infrastructure projects in order to create jobs for the mass of unemployed in the US, yet not even he with all the good intentions he may have, and all the good will he has definitely come into office with can stop what I see to be the tide of history. The rot has eaten in too deep and the whole rotten structure which was the Western economic system has to come crashing down in order to be rebuilt. Capitalism as we know it is dead. The question now has to be whether this rebuilding can be done with minimal pain, or whether there would be a lot of bloodshed in doing it.

Ultimately what is unpalatable to talk about, but what remains true is this: World War II solved the Great Depression in the simplest of manners. The war started in Europe in 1939. By the time the guns fell silent in 1945, 70 million people lay dead, much of Europe, Russia and the Far East lay in ruins. That is a great number of potentially unemployed people wiped off the books, and an even greater number of infrastructure projects to keep the remaining unemployed busy for a long time. Is that what the world needs now? Maybe, but from the bottom of my heart I hope not.

Unfortunately, money doesn't grow on trees. Continually throwing money at this problem will not solve it but will only mortgage the future of children just being born. Bank bail outs have to stop or else the greedy bankers will simply keep coming for more where there is none. There is a large pool of unemployed people, more are joining in and many of the signs of frustration are creeping in. Xenophobia is on the rise in the rich world. When xenophobia rises, people are more willing to listen to megalomaniacs like Hitler. Would that be the case? Only time will tell.

P.S: How does all this affect Naija? That is a topic for another day...