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A Fusion of Capitalism and Socialism Could Solve America's Misery
[Analysis] 663,000 jobs were lost in March, for a total of about 5.1 million since the slump began
Bhuwan Thapaliya (Bhuwan)     Print Article 
Published 2009-04-07 12:16 (KST)   
In the form of Barack Obama, America got what it deserved the most -- a new president. According to latest polls, even those white conservatives, who were dubious about Obama in the beginning, are now happy at the thought of Obama playing a pivotal role to rescue America's faltering delineation all over the world and bail out America from the worst economic slump that has been haunting the American dreams.

Most Americans are saying that under Obama - everything is wonderful and anything is possible. Obama's most obvious handicap will be the economy but he will have the opportunity to shine as well in the next four years if he rescues America from its economic malaises. But to achieve that "the most powerful man on earth" will have to do restore the morale of the American public - the most difficult task on the Earth at the moment to execute.

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Obama had the luck to proceed over a globally detested, out of favor president but this means that he will be constantly scrutinized and evaluated by unforgiving values and standards. Critics say because of Alan Greenspan's loose monetary and credit policy, initially Bush was able to give American's the chance to spend more than they earn but under Obama they will have to earn more than they spend. Considering so, there are strong possibilities that almost anything Obama does to strengthen the economy may back fire him.

Meanwhile, the man who ran one of the most thrilling and laborious election campaigns in modern times says he wants to build a prosperous, tolerant and happy America. But the economic indicators are shallow. Deteriorating American economy and the soaring unemployment rate has cut short Obama's post election honeymoon interlude and the road ahead is filled with economic uncertainties.

The financial crisis which began in August 2007 among subprime mortgages in the United States has spread to other markets and has inflated into a global recession. When will America's slowing economic pace come to a halt- and then go into reverse? The question ought to be bothering the whole world as their very economic future is linked with America, one way or the other.

World growth is projected to fall to its lowest level since World War II to just 0.5 percent in 2009, the International Monetary Fund said in its latest World Economic Outlook, released on Jan. 28. And to make the matter worse, American economy is deteriorating further and the Unemployment rate soared to 8.5 percent in March.

The economy lost 663,000 jobs in March, for a total of about 5.1 million since the slump began according to the Labor Department reports. But critics say that the current unemployment rate of 8.5 percent would hover around 15.6 percent if it included those workers who in their utter frustration have given up looking for new jobs or have to sneak in part-time jobs for their very survival as full job jobs are no where around the corner.

Moreover, the dust has far from settled in and the future looks ominous. Economists are predicting that one million additional auto industry jobs may be consumed by the greedy recession should General Motors Corp. be forced into bankruptcy. Chief Executive Officer Rick Wagoner was quoted as saying by the media last week that a $5 billion rescue package for auto-parts suppliers and a proposal to provide consumer car-buying incentives may spark a revival of the US auto market.

But President Obama and his team, who were lenient to the banking sectors by bailing several of them out, are being rigid to the proposal of the auto makers. Obama team believes in a negotiated bankruptcy for the GM to reshuffle it and metamorphosis it into a competitive automaker.

There are innumerable statistics to make the American mood gloomier and the work of Obama tougher. According to the Federal Reserve, the aggregate net worth of Americans has fallen by 23 percent largely due to declines in home values and investment portfolios. Recent statistical reports suggest that the aggregate net worth may further slide down.

American economy is in tatters. At this stage, confidence is lacking in Americans. Feelings of helplessness are reflected in speculation. Speculation is difficult to define even more so when the economy is faltering. But one thing is sure: America is trying and the Obama administration is doing all it could be done to curb the crisis.

Not only America is showering money by providing various stimulus packages. It is also taking preventive measures.

US Treasury Secretary Timothy Geithner proposed for a general risk watchdog to supervise big financial institutions to boost the morale of both - consumers and investors. "The new framework has four parts: containing systemic risks; protecting consumers and investors; streamlining the regulatory structure; and international co-ordination," according to the report published by The Economist.

President Obama is leading from the front and since taking the office in Jan. 20, he has endorsed various economic measures to curb the recession. The major being the Feb. 17, $787 billion stimulus plan that included spending on infrastructure projects to open more economic doors for those who are unemployed and boost the morale of the investors. Likewise, according to the reports, the Treasury Department is also working to mend the seriously maimed financial system and diminish the foreclosures. Meanwhile, the Fed is raising the velocity of the money in the market.

Yet, there are those who think the stimulus package won't work until the people's morale is lifted. One such scholar is world renowned economist and Yale University professor Robert Shiller.

"Governments should work more on raising people's morale rather than relying on stimulus packages. If people can be made to believe that there is an end to the current economic situation, rather than being overwhelmed by the magnitude of it, the communal psyche will improve and the economy will rebound," said Shiller during a weekend business lecture at Canada's University of Western Ontario.

Obama administration can't afford to turn deaf ear to Shiller but there are signs that the economic stimulus is already showing some results. The recession grappling the US throat may be receding as reports showed improvements in the areas hit hard by recession -- manufacturing and housing.

"The Institute for Supply Management's factory index climbed to 36.3 in March, a third consecutive increase that brought it closer to the breakeven point of 50. The number of contracts to buy existing homes in February rose 2.1 percent, according to the National Association of Realtors. The smallest drop in orders in seven months propelled the advance in manufacturing. Stocks reversed earlier losses after the reports as speculation grew that the worst of the economic slump may have passed," according to the report published by the Bloomberg.

Nonetheless, the mayhem of the financial crisis is very deep and some analysts fear the very future of capitalism -- the system which had made America the richest nation in the world but not without faults, as it has been reported that the top 0.1 percent of Americans earned 20 times the income of the bottom 90 percent in 1979 and 77 times in 2006. What a paradox? Critics of the Capitalism argue that the Capitalism is bankrupt and it cannot help the world to stand in its feet yet again.

However, no matter how hard they preach, pure socialism could not be the answer to the today's problem. Perhaps, a mixture of both could be the remedy. CASOLISM: a fusion of capitalism and socialism may be the answer to the American misery, if implemented properly. What you say?

Finally, President Obama's economics team, which includes top guns such as Larry Summers and Christina Romer are optimistic about solving the economic problem. The recession may waft off at the end of this year -- Federal Reserve Chairman Ben Bernanke and many other analysts foresee that possibility.

Economy will certainly take some more time to revive given the gravity of the slump, but in the space of a year, America will be a different place. Consumers will be confident and so will be the producers and investors.


©2009 OhmyNews
Other articles by reporter Bhuwan Thapaliya

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