The 44th president of the United States will inherit some tough challenges when he is sworn into office today. But since his election victory, Barack Obama has moved swiftly to put the tools in place to promote economic growth – good news for investors in US equities.

Despite his assertion that there is “only one president at a time,” Mr Obama hit the ground running after his November election win, and has moved quickly to put the tools in place for swift action on the economy.

Last week, the Democratic Party unveiled its much-anticipated USD 825 billion stimulus plan, a package of tax cuts and public spending designed to stem the economic slide and kickstart growth. Mr Obama said the plan, which he is keen to see passed before Congress goes into recess in mid-February, aims to save or create up to 4 million jobs.

In addition, Mr Obama has successfully lobbied Congress for the release of the second half of the USD 700 billion set aside by the Troubled Asset Relief Program (TARP), avoiding a potentially messy battle in the first few weeks of his administration. Lawmakers criticised the Bush administration’s use of the first half of the funds, citing the lack of transparency and lack of conditions attached to bank aid, but Obama’s team have provided assurances that these concerns will be addressed.

The “who’s who” list of choices to fill key positions in Mr Obama’s cabinet has also generated positive marks. Among the appointments are Hillary Clinton as secretary of state and Timothy Geithner, the former president and CEO of the New York Federal Reserve, as treasury secretary. Other economic hard-hitters in the team include Lawrence Summers, former treasury secretary in Bill Clinton’s administration, and Paul Volcker, a former Fed chairman.

Consequences for investors
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For investors considering increasing their allocation to US equities, all this may be good news. Valuations are becoming extremely attractive by many measures, with price/earnings ratios near historic lows, but the market has remained highly volatile. For a sustainable equity rally, investor sentiment undoubtedly needs to improve.

A change in leadership from the Bush administration, with its historic-low approval ratings, to a new Obama administration with a focus on change, has led many Americans and non-Americans alike to feel a new optimism. This may be just the catalyst the market needs, particularly if leading economic indicators begin to bottom out during the spring. The swift progress through Congress of Mr Obama’s stimulus package should also have far-reaching effects for the economy and for US businesses, with infrastructure, clean energy and technology companies among those set to gain.

While it is difficult, if not impossible, to predict when the economy will begin to stabilise and eventually grow again, it is worth remembering that markets typically recover well ahead of the economy. In addition, many economists and market strategists are predicting the US will be the first economy to recover due to the speed and extent of the actions taken by US authorities relative to the rest of the world.

These steps appear to have succeeded in avoiding the event investors most feared in autumn 2008: a total collapse of the financial system. Whether they will succeed in bringing the US out of recession is another question; however, we are now, at least, in more familiar territory, compared to the extremely uncertain future we faced only four months ago.

Moreover, the US equity market has historically generated strong returns after downturns

This election is particularly important: the American economy is going through the most serious financial crisis since The Great Depression. And the international scene is littered with the debris of Bush’s disregard for the rule of law, and his confrontational strategies.

Barack Obama has promised to undo the damage eight years of Bush policy has caused. The other contender, John McCain, if he unexpectedly surmounts the odds and becomes president, will likely build on the Bush legacy, notwithstanding his recent disclaimer: “I am not President Bush.”

To be sure Obama has said he would use force to defend American interests, and would be ready to act outside the framework of the United Nations.

It may be that being the president of a superpower carries with it some obligation to brandish the use of force as an instrument of foreign policy, or else risk being disqualified from the race altogether.

Nevertheless, the possibility of an Obama administration choosing dialogue over confrontation, engagement over hostility, is real.

Therefore, the new president would be well-advised to send a message that his defence of American values is genuine and not a rhetorical device to justify oppressive foreign policy choices.
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Denouncing the Bush doctrine would be a good start. The Bush doctrine of aggressively promoting American hegemony around the world contains two unsettling elements: The concept of pre-emptive war and the possibility of the use of nuclear weapons.

‘Axis of evil’

In January 2002, Bush told Congress that North Korea, Iraq and Iran represented “an axis of evil”. He also signalled America’s readiness to launch pre-emptive strikes against such regimes.

The Nuclear Posture Review presented by the Pentagon to Congress on January 8, 2002, stated: “The Pentagon needs to be prepared to use nuclear weapons against China, Russia, Iraq, North Korea, Iran, Libya and Syria.”

The Review listed three specific scenarios for an American nuclear strike: “an Iraqi attack on Israel or its neighbours, a North Korean attack on South Korea, or a military confrontation [with China] over the status of Taiwan.”

The New York Times rightly observed: “If another country were planning to develop a new nuclear weapon and contemplating pre-emptive strikes against a list of non-nuclear powers, Washington would rightly label that nation a dangerous rogue state.”

America certainly needs to defend itself against threats and aggression, but the Bush doctrine is an open-ended commitment to the use of force regardless of its legality and a guarantee of a permanent state of conflict and tension.

Pre-emptive strikes and the use of nuclear weapons are not only violations of international law, they are also dangerous strategies for a world desperate for leadership that promotes peaceful resolution of disputes.

If the new president is committed to promoting American values, then surely he would want to re-establish the primacy of the rule of law over the disregard the Bush administration showed for it.

Illegal war

A good beginning would be to acknowledge the illegal nature of the Iraq war. Under the Nuremberg principle articulated by US Supreme Court Justice Robert L. Jackson: “Launching a war of aggression is a crime and… no political or economic situation can justify it.”

Moreover, the Bush administration set up a global prison system where detainees were subjected to abuse and torture. It used torture in Iraq and in Afghanistan and outsourced torture to other countries in its extraordinary rendition programme.

The editors of the New York Times lamented the kind of America Bush was creating: “A nation that tortures human beings and then concocts legal sophistries to confuse the world and avoid accountability before American voters?”

Obama has repeatedly stated that America is a better country than that. To his credit, the republican candidate John McCain also condemned the use of torture.

A friend of mine is an unabashed and very sane Obama supporter (not Obamabot in the slightest). When I asked him why he bought the t-shirt, he said:

It’s all in good fun. Win or lose, this presidential election season is just full of grade-A entertainment!

Presidential politics is serious business!

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But now my serious political friend is finding this presidential season entertaining and humorous? I wonder how many other Americans feel the same way about Election ‘08? Are they feeling this way because they are coping with a very strange election season? And is this a worrying sign for American politics as a whole?

Picture Courtsey – Stylinonline

Senator Obama himself, revelling in the biggest political extravaganza the US has ever seen, seized the opportunity on prime-time, coast-to-coast television to switch gears in campaign strategy – and the nation witnessed non-confrontational Obama morph into combative Obama.

“If John McCain wants to have a debate about who has the temperament and judgment to serve as the next commander-in-chief, that’s a debate I’m ready to have,” he roared with the characteristically brilliant, soaring oratory that has stirred so much enthusiasm across the world. “I’ve got news for you, John McCain. We all put our country first… John McCain likes to say that he’ll follow bin Laden to the gates of hell, but he won’t even go to the cave where he lives.”

McCain, meanwhile, also took advantage of the evening to spring a surprise, one-upmanship campaign ad on the nation’s television screens. Oozing supposed sincerity, McCain looked straight into the camera and congratulated his opponent: “Senator Obama, this is truly a good day for America,” he said. “Too often, the achievements of our opponents go unnoticed.” Minutes later, viewers saw an Obama campaign ad featuring a negative personal attack on McCain – all with the overall effect that Mr Nice Guy seemed to have transformed into an attack dog during the course of the evening, while the veteran old toughie McCain had changed into the warm and fuzzy of the two candidates.
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All of which is to say it was a thoroughly political, highly calculated evening. To make certain the 80,000 seats in the stadium were filled, the Obama campaign had distributed 20,000 more tickets to supporters than there were seats – leaving many who had waited for hours to get through secret service security fuming that they were unable to get into the stadium for the big moment.

In fact, they had already missed a monumentally choreographed event in which entertainment and politics became inextricably intertwined: the likes of Sheryl Crow or Stevie Wonder were entertaining the teeming thousands in the so-called “mile-high” stadium one minute, Al Gore and Joe Biden thundering away the next.

No longer was there any pretence that American politics has not merged imperceptibly with entertainment and showbiz, sometimes making it hard to distinguish between them. I gather it will be somewhat similar at the Republican convention in St Paul, Minnesota that begins on 1 September – except that it will be country music entertaining the Republican masses, and the convention will intentionally and conspicuously be much less of a spectacle.

That is why the dramatic final day of the Democratic convention, perfectly timed to co-incide with the 45th anniversary of Martin Luther King’s “I Have A Dream” speech, was something of a risk for Obama – that it could re-enforce Republican attacks that he is all show and no substance. His speech, partly a shopping list of all the positive things an Obama administration would do – delivered, as ever, in spectacular fashion – was intended to pre-empt such charges.

Inside the stadium, though, there was much genuine emotion. Journalists abandoned any show of impartiality by joining in the party, with CNN’s main anchorman getting up and dancing (off-camera) with an Obama strategist to the strains of Stevie Wonder. More touchingly, the likes of 68-year-old Representative John Lewis – the only surviving, still-active member of Martin Luther King’s inner circle – repeated remarks by many African-Americans during the evening, that they never thought they would live to see the day when a black man was nominated by a major party to be president.

I wonder. I just hope they’re right that a major racial rubicon has been crossed with Obama’s nomination, and that it is not wishful thinking that African Americans have now gained political equality with whites. But would America be ready to nominate a younger John Lewis, say, whose skin is much darker and whose ancestors were slaves – like nearly all African Americans? Because Obama is half-white, did not have ancestors who were slaves, and did not have an economically underprivileged upbringing, he is far from being an ideal representative of America’s still-repressed black population – and a man whose style and manner is very different from the likes of Lewis and other highly respected African-American politicians of all ages who have never come remotely close to being seen as potential US presidents.

Obama is unquestionably one of America’s greatest-ever political orators, though, and Thursday night’s speech encompassed a touch of JFK here, a dab of MLK there, with bits of Lincoln thrown in for good measure. Fireworks exploded from a mock Roman coliseum to mark the end of his acceptance speech as Michelle Obama and their two daughters, aged 7 and 10, joined Obama on stage and dodged the confetti raining down on them.

But now it’s straight back to politics as usual. Polls still show Obama only very slightly ahead of McCain, worryingly for the Democrats; Rasmussen’s Thursday daily tracking poll, taken before the extravaganza from which Obama should be able to expect a bounce, had them tied. The presumptive Republican candidate will unveil his running-mate on Friday, hoping to upstage Obama’s acceptance speech coverage and steal some of his spectacular thunder. In the words of McCain’s Thursday night’s surprise lovey-dovey ad, “Tomorrow, we’ll be back at it.” He can say that again: by the time McCain is officially enthroned by the Republicans at their convention next Thursday, real battle will have commenced. And much blood, I predict, will then be spilled.
Source – New Statesman

In spite of Barack Omaha’s clear advantage in the popular vote and committed delegate tallies – a mathematical dominance unlikely to be reversed even in the remaining primary contests – Mrs. Clinton says she is being bullied by the “big boys” and vows to stay in the race until the democratic convention.

Her relentless campaign has inspired reporters variously to compare her, with a mixture of admiration and horror. Even the coughing spasms that have seizes her with alarming frequency these past few months have become an emblem of her fortitude. After she muscled her way through a foreign policy address, the New Yorker praised her ability to “suppress the coughing through sheer will.

So what makes Clinton run, even as her win at all cost strategy threatens her party’s chances against John McCain the republican candidate? The answer lies in her innately combative nature that drew Bill Clinton to her when “she was in my face from the start”. She is equally famous for a preternatural focus and what one of her friends called her “tunnel vision” along with a determination so unshakeable that her husband once told a visitor to the Oval office: “I might as well lift that desk and throw it out of the window to change her mind.” To reach her goals, she long ago learnt to embrace any tactic, however destructive.

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For decades Mrs. Clinton has thought of herself as a woman of destiny. Even as a little girl “she would stand in a patch of sunlight” pretending “there was heavenly movie cameras watch my every move”. She willingly served in her husband’s shadow, in spite of the humiliations he inflicted on her with his womanizing on the assumption she would take her turn.

Back in 1974, Mr. Clinton said she could be president one day and one of their close friends remarked that when the Clintons “were dead and gone each of them is going to be buried next to a president of the United States.

The Clinton’s narrow escapes from political extinction haunt their memories like tribal drums in the night: from the suicide of their close friend Vincent Foster to an endless parade of scandals. In response they have built a fearsome political machine that attacks enemies and cuts loose friends they believe have wronged them.

A vital piece of this mythology is that, with the exception of Mr Clinton’s second race for governor in 1980, the Clinton’s do not lose in politics. The duo have spent their adult lives perfecting the permanent campaign, mastering its dark arts even as they went about the everyday business of governing.

But this time the dynamic is different, and therein lies the catch. To win in 2008, the Clinton’s have had to reverse their roles of Bill the candidate and Hillary his chief adviser and advocate. The demands of an unexpectedly tight campaign have brought out the worst in both of them, dragging their popularity ratings to new lows.

The virtuoso politician who feeds on the adulation of the rope-line suddenly finds himself playing an off-key second fiddle. The methodical, behind-the-scenes chief of staff finds herself center stage, her flatlander voice betraying a harsh edge as she experiments with slogans and personalities.

Mrs Clinton’s political mettle had never been tested. Her opponent in her 2000 Senate race was a lightweight and she had token opposition in 2006. Her candidacy for president was based on the assumption that she would face a weak field and again coast to victory.

Perhaps what propels Mrs. Clinton more than anything is a determination to prove she can be as good at politics as her husband, who she once said “makes it look so easy”. But months on the hustling have shown she lacks his legendary political talents.

Clinton and Obama face voting contests today in North Carolina and Indiana, the next steps in their battle for the Democratic presidential nomination to take on presumptive Republican nominee John McCain in the November election.

The Democratic rivals set off on last minute campaign swings through Indiana and North Carolina, which hold primaries today which offer Obama the chance to finally knock Clinton out, or for her to ignite a comeback.

Obama and Hillary renewed their battle over gas tax relief yesterday in a late push for support on the eve of critical presidential showdowns in North Carolina and Indiana.

The candidates, embroiled in a grueling nominating struggle that has split the party, wooed working-class voters and launched new television advertisements attacking each other ahead of today’s votes.

For the first time in three months, the former first lady led her rival in the survey of national Democrats, by seven percentage points. Two weeks ago before the latest storm over Wright hit, Obama was up 10 points.

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Another poll, by Suffolk University in Indiana, showed the New York senator leading Obama in the state by six points 49 per cent to 43 per cent.

Clinton’s muscular talk on Iran puts her well to the right of her Democratic challenger Barack Obama in their heated White House rivalry, but could also presage a new US policy of containment.

Clinton standing by her threat made last month to “obliterate” the Islamic republic should it use nuclear weapons on Israel, whose US backers form one important constituency in the Democratic nominating race.

Obama and Clinton made last-ditch appeals for votes ahead of North Carolina and Indiana’s Democratic presidential primaries today, conceding that regardless of who wins those crucial contests, their bruising battle was likely to drag on for weeks.

In a day of frenetic campaigning, Clinton and Obama argued over her plan to combat surging petrol prices – a key issue for voters hard hit by the struggling US economy.

All Obama could do was have a big laugh and say “How silly can you get Hilly?”

To deafening cheers Obama, 46, hammered home to party activists that he was the candidate of change, as he laid claim to the Democratic Party’s nomination and down the track the presidency.

Tomorrow’s contests have been dubbed the Potomac Primary, Obama, bidding to be the first black president, is expected to do well in tomorrow’s vote due to the large African-American population in the region.

Hillary Clinton was seen as the inevitable Democratic nominee. She has run a strong campaign, and been an impressive candidate, but much has changed in a short time. Instead of finding a clear path to the White House, has run into the rather extraordinary movement set in motion by Barack Obama.

In reflecting on all of this, I am reminded of a haunting line in one of Bob Dylan’s more memorable songs from the 1960s (Ballad of a Thin Man) It was written in the midst of the upheavals of that period, as the civil rights and anti-war movements and the just-dawning cultural revolution were converging into a social movement.

What is clear now, months later, is that the threads of Obama’s appeal and inspiration, woven together, spring from a powerful philosophy of change that has resonated across generational lines.

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It is a philosophy of redemptive self-empowerment that calls for collective action to recognise, address and resolve long-standing social problems – in Obama’s words, “to heal the nation”.

For Obama, change will not come from the top-down. Winning an election, by itself, is not enough, since it only provides leadership with a fraction of the leverage needed to make fundamental change.

When Obama says, “We have been waiting for so long for the time when we could finally expect more from our politics, when we could give more of ourselves and feel truly invested in something bigger than a candidate or cause. This is it: We are the ones we’ve been waiting for, we are the ones that we seek” – he is both empowering his supporters, and challenging them to become the instruments of radical transformation. And it has worked, at least so far.

Hundreds of thousands of volunteers have been organised, either working directly in the campaign or making calls on its behalf. Well over $100 million has been raised from over 700,000 donors. (In just 72 hours last week, $7.5 million was raised from 40,000 donors.)

The momentum that Obama has recorded is measurable, and appears to be growing. Just two and half months ago his campaign was viewed with skepticism, and dismissed.

“Once I’m elected, I want to organize a summit in the Muslim world, with all the heads of state, to have an honest discussion about ways to bridge the gap that grows every day between Muslims and the West,”

The movement he has unleashed is not focused on just winning. That is too limited and too cynical a goal for his supporters. They do not seek power for its own sake, they seek to bring about fundamental change.

This election is important, but, more than that, it is also interesting.