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Welcome to Walter Moore Canada's Blog. These comments are strictly opinion. You can disagree!

Thursday, January 21, 2010

Obama - 1st Year From a Canadian's Perspective

Originally published on 2009-12-07
I am amazed at how quickly Americans have forgotten where they were when Obama took office just 11 months ago. The republicans had put the country to the brink of collapse( I blame them most because they are the ones put in place to ensure everyone else doesn’t do what they did). The USA was crashing taking the rest of the developed world with it. The potential for all banks crashing if something wasn’t done was almost 100%. If the banks crashed everything else would go with it. USA money would be worthless and unemployment could easily hit 75%++. Some countries had already taken over their banks due to the spin-off of the USA crash. To top it off the weak car companies were finally forced to bankruptcy looking like that sector was going to be destroyed which would take the USA in to a depression situation for sure. Of course there are the miscellaneous things like Iraq, Iran, Afghanistan, Health Care, Unemployment.. the list goes on.
The final piece that I wish wasn’t there but do have to recognize is he is black. This undoubtedly has and will create difficulties within his own country. On the other hand I think it helps him in International issues.
This is the toughest position a US president has ever walked into by far in my opinion. As “a world leader” this US president has a responsiblity to think of more than his own country(although USA is his priority). Especially with whole countries like Iceland going bankrupt due to investments in USA. Previous presidents could say screw everyone else, he can’t.
So now you can remember SOME of the mess let’s look at where USA is 11 months later… The banks are making money and paying back their loans(made money on that one), the car companies went through orderly bankruptcies and came out leaner and meaner(might get money back), the unemployment appears to be peaking at 10.2%(no where near 75), AIG’s possible impact has been dramatically reduced(they alone were going to make everything collapse), housing market is stabilizing in some markets(at least not free-falling), the dollar has depreciated enough to start making USA exports competitive(was way over valued to make US products competitive) and possibly reduce cost of payment of debt. unfortunately (or fortunately – sell more USA products), imported products cost more.
That alone would be enough for most countries to praise the president. But Obama has done this while dealing with Health Care, Iraq and all the other issues noted above. The guy has been in power for 11 months and accomplished more than virtually any other president in their entire tenure. Cut the guy some slack. USA is lucky it is not in a depression and to avert a depression and start coming out of the crash within 11 months is awesome.
Are things perfect? Absolutely not. USA has just averted probably it’s worst crisis to date and all some are saying is “ARE WE THERE YET?”.  USA is not going to fully recover for years(if ever) but maybe you should be thankful that you are not where you were going to be if republicans were still in power.
Why not try asking some of the republicans why they didn’t do anything before? It was obvious to all of us, why didn’t they see and address the problem? They took the easy way out because they wanted votes, that’s why. Anyone with any legal/accounting background could see big problems coming. I am quite sure there were some staff in the offices telling them what they were putting in place was crazy. However, they got a lot of votes by implementing ways for people to buy houses they could not afford. There are a lot of people who were fine in their old house but were told they could sell their house and get bigger/better so they did, only to find they lost the house because they could not afford the upkeep of the new house.
I hope Obama moves to Canada after serving the USA and runs for Prime Minister. Many Canadians I know(including me) would vote for him.
My personal opinion on the reasons for the crash are multi-folded.
  • I think the car companies were a problem that was going to happen anyway…Just happened sooner with the crash. 
  • The US government created ways for people that could NOT AFFORD a home to get one, then instead of realizing the problems actually added more ways people could get homes they couldn’t afford.
  • The real estate system for figuring out ways that people who could not possibly afford the house could buy it(knowing full well people would be kicked out of their house later). 
  • The stock market packaged up these obvious bad debts and promoted them as safe and backed by the government(sort of) so they could sell them.
  • The ratings agencies rated these junk assets way above their true value.  
  • Everyone for assuming the price of real estate would never go down.
  • People bought homes they knew they could not afford. Real Estate system played their dreams perfectly.
  • Everyone else(like me) sat around and let them do it!!!!! WE KNEW BETTER!!!
There are a lot of pieces to this problem that didn’t occur in other countries, but they still crashed.  Mostly because of investments directly or indirectly in USA and USA’s sudden drop in purchasing their goods… countries like Iceland,China, Europe, Australia and especially Canada(85% exports go to USA). Countries that emulated some or all of the US model for real estate really got hit and they can’t afford or get a trillion dollar loan.
How many of you knew that something had to give when they came out with sub-prime and other loan options. Sure prices of houses were going up but that was an unrealistic supply/demand issue driven by the ability of those that could not afford houses to buy a house. The whole market was a farce. Without the artificial housing there is no need to build/sell all the products related to housing(a lot).  However, how many thought it would get as bad as it did? I didn’t… I thought it would be more localized to the USA and not as bad as things were at the worst times.

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