OBAMA FACES ECONOMIC WORLD WAR II

“…We’ve essentially gone from $5 trillion in debt to $15 trillion of debt, and considering that our economy is a $14 trillion economy.” Linda Blimes

We are in trouble! The Great Depression of 1929 pales in comparison to our current economic woes. President Obama and is not half-stepping in his war against economic implosion, and it shows in his pick of economic advisers, and his upping the ante of creating 3 million jobs.

But for all this to work it will take not only leadership, and a well thought out and executed economic stimulus package, but it will also require an economic austerity program that rivals that of World War 2, where every sector of the economy and every person in America is pitching in for the war. Well, where is the leadership for this?

President Bush left President Elect Obama holding the bag in Bush’s eight years we have amassed a debt greater than all of his presidential predecessors combined. The economic team President Elect Obama has selected will not be enough to hold back the probable collapse of the economic dike.

What Obama’s team will attempt to do to save the economy conjures the image of the little boy putting his finger in the dike to keep it from collapsing. The problem is we have several leaks occurring at the same time, and the proverbial economic waters are about to crest the proverbial economic dam.

The stress cracks keep running and the leaks are as follows: Our financial markets are illiquid, our credit markets are over extended, our stock market is unstable, our industrial base has eroded, our economy is in a recession, our debt is soaring, millions have lost jobs, millions more have lost health insurance, our residential real estate sector of our economy exploded, we had an astronomical increase in the price of fuel that almost bankrupted us.

Our manufacturing sector is in disarray and we are about to lose an important part of our economic engine, our own industrial base. Add another catastrophe like the collapse of our commercial real estate sector or another spike in fuel and we will all lose our shirts.

Nothing in modern history will matter more than how we handle this "Economic War." It will either mark the fall of the United States or catapult us as an economic powerhouse beyond the 21^st century. But we need more troops on the ground to win this “Economic War” like Joseph Stglitz and Linda Blimes, and we need every American from the wealthiest, and the most poor to cooperate. President Obama will need the brain trust of all of America to win this war.

Amy Goodman reports on Democracy Now!, how Nobel prize winning economist Joseph Stiglitz, and Linda Blimes, a lecturer in public finance at Harvard’s Kennedy School of Government and co-author with Joe Stiglitz of The Three Trillion Dollar War. Spoke about and wrote the article in Harpers magazine called “The $10 Trillion Hangover: Paying the Price for Eight Years of Bush.” Linda Blimes notes:

Well, first of all, it’s important to know that we started with a debt that was about $5.7 trillion. And that debt had been growing for some period of time. But in the time since the President took office and now, that debt has more than doubled. So, in another words, we have amassed more debt over the past eight years than we have under all the previous forty-two presidents combined.

Now, in addition, we have taken on the debts recently of Fannie Mae and Freddie Mac. And if you follow standard accounting practices, that $5 trillion of debt for Fannie Mae and Freddie Mac should be counted as part of our debt. So we’ve essentially gone from $5 trillion in debt to $15 trillion of debt, and considering that our economy is a $14 trillion economy, you can quickly see that the ratio of debt to the economy has gone from something that looked relatively healthy to something that looks extremely unhealthy.

For the rest of the Amy Goodwin’s interview with Linda Blimes go to:

http://www.democracynow.org/2008/12/22/linda_bilmes_the_10_trillion_hangover