A New Era in Black and White

Obama is the next US President, now what?

For most of the world – as we saw on the Economist electoral vote – Obama was the right choice to be America's President. Many see an amiable America after his is sworn to the office next year. But things are tough, and so will be his presidency.

The myriad problems that the world faces are only beginning to unfold, the current crisis is reaching to untold levels of complex derivatives that government officials are trying so hard to hide. We are at a benighted stage, the future looks dim and with the price of oil going down there are two new foreign policy aspect to take into account.

First of all Obama must deal with global warming. We saw some light when oil prices were trading above $150 per barrel, now they price is below $70 meaning that people could afford to drive big guzzling cars.

Second the financial crisis is creating a plethora of opportunities for a few really wealthy people to increase even more their income, leaving the vast majority with less money to cover their basic needs.

The world seems to have acknowledged that change is needed, even with nuance upon basic proposals the broad picture is objective to the blindest. But as we all know, whatever is cheap and brings more money, is what we will buy in the end. So with prices falling down and with no signs of recovering in the near future, oil is the king again.

Although this is good for consumers, for oil exporting countries it could prove to be devastating. If low prices are the trend then Obama may have an easier time in dealing with Russia, Venezuela and Iran. Those countries facing low prices and therefore lower income will need to cut back on costly social programs.

On the first front Obama will need to push to customize subsides on alternative energy, that is until companies have enough production to cut costs and be competitive. This or taxing oil – which won't happen any time soon. The great advances on fuel efficient cars could prove inadequate under low prices at the pump. Solar panels, wind farms, research on bio fuels, all compete directly with fossil fuels, and with oil being cheaper there is no space for any other source of clean energy.

We face a world in which pundits have a hard time adjusting to a cultural reality; capitalism won't fade even when banks fall into the government's hands. An ominous challenge is to regulate without strangulating entrepreneurs, without giving too much on subsides, without risking tax payer´s money. We sure miss high oil prices for a green future, we don't when it comes to geopolitics.

This brings us to the second problem, the financial crisis and the leaders that were the apotheosis of failure are still managing the possible solutions to hinder this recession. They failed at preventing this mess, and now they think they can get the world out of it. Shame on them.

Few harbingers were accurate when smelling the whole that was being dig underneath the housing bubble that busted. Among the future tellers that weren´t is Alan Greenspan. He is still surprise that the economy did not act according to what the theory stipulates. Maybe he is mistaking macroeconomic calculus with the theory of gravity.

Obama must deal with the most severe recession since War World II mixed with rough regimes and the threat of Al Qaeda. Printing money won't get the country out of debt, it will increase its dependence on foreign “aid” just when there is no foreign money. China holds over a trillion dollars on US debt, it cannot allow the dollar to fall so it needs to keep on buying government papers. China suffers when the Fed lowers interest rates, at present time it is 1% – lower than inflation. China loses money each time that this happens.

Those tawdry international investors who win when they speculate with the ups and downs of the market, are the ones that hurt poor countries around the world. They bet against the dollar, then against the euro, then against the peso, all of this in micro deals that create a sweeping vacuum machine that suck money out of every continent.The next US President must deal with these voracious investors as he tries to calm the market and the common people that are raving against the Wall Street´s greedy. Saving Wall Street means that Main Street will suffer, but the pain won't be as bad if the government chooses to let Wall Street fall. Punishing speculators will be impossible; the first step will be to push for more regulation and more power to international entities, something that Bush and his doctrine of isolation don't want.

More regulation will only minimize the problems, we will see if the dynamic of the US economy is enough to take it out of this crisis, and later if faith on the market could make honchos invest again.

The market teeters with no clear direction or signs of prompt recovery. The dollar strengths no because its economy is getting stronger, but because the others are doing much worse. Obama must prioritize the resurge of the US with unshakable leadership. Like Sarkosy in Europe the US must lead our continent to a sole and unify policy toward this global mess. Most of our governments will take scathing measures if they react as late as usual, this will only dampen the steady growth that Latin America has enjoyed in the last years.

Obama could not allow the lacunae in our financial world to become a plight chaos of epic proportions as it swallows every dream in which we have forged our society. He must act right now by getting the best and brightest into his ranks. He must not dodge at any difficulty, if he is to become a legend, he must put the country first, even before his party´s principles.