Finance Roll

President Barack Obama will need to act fast to begin his plans for a set of more drastic measures to extricate the United States from its present weakening economic condition. This is what Newsweek International Editor Fareed Zakaria wrote in his February 2 Newsweek essay entitled "I Got It Bad (And That Ain't Good)". "The American financial system is effectively broken. Major banks are moving toward insolvency, and credit activity remains extremely weak. As long as the financial sector remains moribund, American consumers and companies -- who collectively make up 80 percent of GDP -- will not have access to credit, and economic activity cannot really resume on any significant scale. We have not turned the corner. In fact, we can't even see the corner right now," Zakaria writes.

No relief in sight - yet

Under normal conditions, the presidency of Barack Obama would bring a lot of great benefits for your billfold. During his campaign, he promised to transfer the tax load toward the moneyed sector, provide the uninsured with health coverage and subject financial products to more stringent rules.

The country, however, is not under normal conditions, not by a long stretch of the imagination. The big financial establishments have virtually vanished overnight. American carmakers are just about ready to follow suit. Retirement funds are nearly depleted and last year alone, job losses have run into the millions. There is no relief in sight as yet for the current economic crunch which is getting worse by the day.

Runaway train

Obama's "change you can believe in" should more likely be "change we hope that Obama can sustain". President Obama and a Congress controlled by the Democrats will have to roll up their sleeves as they have more to do, and more taxpayer money to spend, than anyone would have foreseen several months back.

Former International Monetary Fund chief economist Kenneth Rogoff in a statement said that the current recession is like a runaway train and Obama's effort is all about preventing it from running off a cliff. According to Zakaria, President Obama "faces a terrible dilemma. He needs to act quickly and on a massive scale."

Massive scale action needed

Large scale action is needed to keep the financial system from bleeding to death. The general American public, however, believes that far too much money have already been spent on bailing out the ailing banks.

Zakaria believes that the U.S. has not spent enough. According to him, the present economic crisis has caused an extreme degradation of American power. Even during the Iraq war, when much of the global community was infuriated by ex-President Bush's unilateral stance, it was highly held that America possessed the world's most advanced economy and its financial system were the most advanced and developed.

That system is now perceived globally as a fraud, and the reactions of political and business sector range from utter disbelief to rage at the image the U.S. now projects.

Senior Editor Daniel Gross writes of how an alarming number of firms and companies are giving up their finance-restructuring work and instead sell off their inventory and shut down. "Rather than soldier on, many operators have opted to simply fold, returning money to investors.

Companies, homeowners and money managers willing to quit rather than fight is both a symptom of the nation's deep economic woes and emblematic of the challenge the Obama administration faces," Gross writes. "Our 'Yes, We Can' president is going to have to fix a 'No, We Can't' economy."