BARACK OBAMA - THE LAST NAIL IN THE COFFIN

A time comes, but comes seldom in history, when someone from a race of people, trampled upon and abused, stigmatized and suppressed rises to the pinnacle of the epitome of universal dominance. Perhaps, the USP of the epic saga is the irony and paradox this victory of democracy, in the purest connotation of the term, has created - a BLACK in the WHITE HOUSE.

If the usage of the term USP has caught your attention, it was intended. Its hilarious to observe around you that people who have not even an iota of knowledge about American politics are hobnobbing ‘Barack Obama’ as if it were divine words of a litany. In fact, such has been the brilliance of his team that Obama has been projected as the Messiah who will bail this world out with his bailouts. Nonetheless, what is even more perplexing is the fact that a person whose economic ideals are almost socialist is hailed as a saviour, when the socialist economy was the biggest failure ever.

There is no contention to the fact that Barack Obama has talked himself into the White House. Just in case, anyone of us is bowled over by his oratory prowess, we shouldn’t forget the fact that Adolf Hitler, the name the world dreads, was a great speaker too. If it is an effort involving great intellect to draw an inference from this simile, then maybe this analogy would simplify it – ‘there’s always more than what meets the eye!’

All through his campaign, Mr. Obama has stressed on the concept of stimulus packages, tax reliefs and bailouts and thereby creating millions of jobs and affordable housing. With due regard to his unwavering beliefs, I fear he has it got it all backwards. Mr. Obama is attempting to defy the fundamental premise of this universe – ‘Only the fit survive.’

All the measures Mr. Obama suggests are devoid of rationale. What logic underlies the act of taking ahead something that is the inherent cause of the present economic pandemonium? The very act of trying to artificially stimulate the economy has today spread like venom in the economy, that has poisoned the very lifeblood of the economy – CASH. The turmoil we are facing is the magnified version of a fundamental problem – the paucity of cash in the system.

The question everyone is asking is - “How did this happen overnight?” With no disrespect to their ignorance, the sub-prime crisis is not an overnight volcanic eruption, but a foreseen consequence of a series of actions. And if the mess hasn’t reached its climax, we have one Barack Obama, who will take it to the peak, to the pinnacle standing atop which we would be staring in awe at the annihilation and extermination of the economy. I am aware of the fact I must have already irked the ire of the Obama disciples, but I care no less.

Before impulsively declaring me an outcast, maybe you could spare a few minutes to understand why I see Obama no different than Bush and asking you for a few of your minutes is by no means callous.

For decades (after the end of pure capitalism, i.e the Ronald Reagan era), the USA has been manipulating prices to encourage homeownership and "steer" the economy (which is the focus of Barack Obama – to create affordable houses). To "incentivize" the Americans to buy a house, it made mortgage payments tax deductible, largely exempted homes from capital gains taxes, and created institutions like Fannie Mae and Freddie Mac with government-guaranteed debt leading to artificially low mortgage rates and the illusion that the financial instruments created by bundling them are low risk; government-licensed rating agencies, which gave AAA ratings to mortgage-backed securities, creating a false sense of confidence; deposit insurance and the “too big to fail” doctrine, whose bailout promises have created huge distortions in incentives and risk-taking throughout the financial system. After the stock market tumbled in 2001 and 2002, Washington established a policy of artificially low interest rates that created the illusion of cheap credit; leery of the stock market, and looking for someplace else to put all this easy money, Americans began buying homes in droves.

But eventually the venomous high of artificial credit wore off, and the soaring housing prices plummeted, sparking the financial crisis. What was Washington's response? It ramped up its price manipulation policy, injecting a new round of "easy money" antidote. The Bush administration doled out "stimulus" cheques, the Treasury began funneling billions into banks, and the Fed started frantically slashing interest rates which left the housing market in utter pandemonium. Many homes built for the current population has sent prices spiraling downward and millions of homeowners, stuck with mortgages they can't afford and houses they can't unload, are facing foreclosure. This was followed by what we are now witnessing – “bailouts” i.e aimlessly using billions of tax-payers money to save financial institution the road to the grave.

What Mr. Obama intends to do is to take this irrationality to a new level. Merely pumping in billions of dollars is not a panacea to the cash-strapped economy. The black-hole that has been created is as many times difficult to plug as it was easy to create. The only solution to this problem is to allow the basic premise of economic reality prevail and take its own course. Let the basic elements of demand and supply of money determine the interest rates. Such market determined rates reflect reality. Let us be candid enough to accept the fact that a person who cannot afford housing ought to live on the streets. By lowering interest rates and allowing principal repayments as deductible expenses, by contravening the basic tenets of income, you are by no way elevating that person’s standard of living, but giving him an illusion of what is not true. Illusions, though far better than reality, do not last for too long, and this illusion of ‘cheap and affordable’ housing was no exception. It takes no great accounting and financial dexterity to understand the fact that, where a bank is lending money at an interest rate below inflation its basically waving a red cloth in front of an angry bull and hoping the bull will kiss it.

If today, we are likening the present scenario to the Great Depression, the causes thereof are similar. There is sufficient, conclusive and compelling evidence that it was the Fed and other government policies that were responsible for the crash and the inability of the economy to recover, the prescribed “solution” yet remains, the government to exert even more control.

The only panacea to this turmoil is the Laissez-Faire – PURE CAPITALISM. Let the fit survive and the rest die. Let’s recreate the Ronald Reagan era again and see a “new morning in America.” The ideals of capitalism are fair and square, rational and logical, justified and true, unconditional and universal – “the moment government pokes its filthy nose into business and tries to push through the most ignominious and squalid ideology of SOCIAL WELFARE, disaster ensues.” It is the prerogative of the government to take care of the people, and not business. No bank should be compelled to extend discounted credit; no builder should be coerced to allow cheap housing!

And if it didn’t end just there, Mr. Obama has set foot on the fast track to destruction by proposing a new scheme of pure stupidity – deciding a cap on the remunerations and emoluments of CEO’s! It just completely beats all principles of logic. It takes no great dexterity that the President has miserably failed to establish the relation between a successful company and its CEO! More often than not, it’s the higher executive that draws the lines between a successful company and a failure. Someone like Steve Jobs or Arun Sarin should by no means be made to suffer at the hands of such a barbaric policy! When the CEO loses, the company loses. When the company loses, the shareholders lose. The shareholders are the people, who have already lost enough.

Stop Obama! Stop the savage before he runs riot! Explain to him that “wealth cannot be multiplied by dividing it.”