Times, they are a changing
Well, in what has been something of an historic two weeks (Obama we're referring to you here, not that we really need to as a simple Google currently yields 211,000,000 results for the name), and while the warm aftermath of a people empowered stays with us, the pertinent questions is; what does it mean for the current financial situation and the short-term future?
We've already seen the effects of the Barack bounce, as markets soared upon hearing news that the Saviour in Chief of the decaying Washington Right has been elected to the White House. At Corporate Finance Journal we're glad about the win, while Senator McCain undoubtedly aided and abetted the gung-ho capitalism of the past decade with calls for decreased regulation on Wall Street and a well documented approach to ingrained financial systems, the mess that the Bush administration has presided over (whether its entirely to blame for it is a different matter) needs a significant shake up.
So, what does the immediate future hold? Already Obama has started putting together a cabinet with the experience and ideas to take us away from the neo-conservative consensus. What's expected is that the confidence imbued by the President elect is going to help soften the slump. Although major financial institutions have taken significant hits and are suffering, with numerous job cuts already implemented, the bail out led by the UK Treasury has secured the foundations of the system. While nationalising banks was widely perceived as a significant step, its not been heralded as an unnecessary step.
What we know is that Obama has already begun to curb the rhetoric of change. It's there, but has been tempered with the economic reality of the country that he's inheriting leadership of. Not since Roosevelt has a President had to deal with such widespread economic woe. If Obama can instill confidence, and we've seen that he can; and remove the lingering toxic debt from the system, either by freeing liquidity for investors, or taking companies under the stewardship of the government. Once the economy has been stabilised it will be up to Obama to reverse the current trend of job losses in America.
Unemployment rose to around 6.5% in October with more jobs lost than at any point in previous months. The effect of the financial crisis, and the long-term migration and outsourcing of jobs away from traditional American industries (the North East's rust belt and the continuing decline of Motor City being prime examples) mean that innovation is going to be key to kick starting the reversal of the downturn.
The news that Obama is keen to reverse decisions on stem cell research and oil drilling in wildlife reserves give rise to new areas of industrial innovation. Green energy, while not an immediate solution, is key in the long-term American recovery. Lack of domestic oil production can be countered by investment in renewable and clean energy resources. The US has the capacity in research and development, and production to be the world leader in new energy sources, and with the support of a Washington administration keen on progressive policy, can realise this. Stem cell research, while often controversial, has the capacity to birth numerous products and industries from its research.
It's apparent that there's no quick fixes, and that the financial markets will continue to exist in a state of flux for the time being, but with the candidate who promised hope nearing the start of a four year term, the world's optimistic that he can deliver on that promise.
