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Obama’s policy of stimulus trumps right wing austerity

-Economic stimulus and scientific innovation have returned the US economy to the strong economic growth of the early 2000s. That is good news for President Barack Obama and the Democrats, as 2016 approaches.
December 27th, 2014 | Tags: Barack Obama stimulus austerity Right Wing USA China
Dickson Igwe. Photo: VINO/File
By Dickson Igwe

The USA has regained its position as the main engine of world economic growth. As 2014 ends, the US is the fastest growing developed economy. The last quarter, July-September 2014, the US economy grew 5%. This was the fastest rate of American economic growth since 2003. It remains to be seen whether Barack Obama’s policy of stimulus has taken the US back to the era of the Clinton Presidency, when a sustained economic boom lasted for almost a decade.

The stock market in the US has been advancing north this December. On December 23, 2014, the DOW Index, a key economic measure, was at its highest point ever, at 18000. Investors in US stocks, both small and large, are smiling widely this December 2014. And that includes individuals with portfolios in various wealth management funds sourced in the New York Stock Exchange. US Consumers are confident. Consumer spending is at the root of the current US economic resurgence. Investment is pouring into the country.

The dollar is indisputably the strongest global currency. It will remain so for the foreseeable future. Strong growth should reduce budget deficits and the US national debt. The drop in oil prices will further put cash into the pockets of US consumers further boosting consumer confidence and economic growth. On the jobs front, the US has regained all the jobs lost as a result of the 2007-2009 Recession.

On the other hand, Western Europe, led by an austerity loving Germany, is in economic and social contraction. Europe appears to be facing a long period of recession. Anemic economic growth in Europe is further driven by an aging population.

Unemployment is endemic. The definition of insanity is doing the same thing over and over again and expecting different results. Germany appears to be Europe’s leader in pursuing an insane policy.

East of Europe, the Russian economy sits on hundreds of billions of barrels of petroleum that has been central to the strength of its currency and economy. The oil price has dropped like a stone in recent weeks. Oil slumped to $60 a barrel this December 2014, from a high of over $130 a barrel. The Russian economy has followed the price of oil into the abyss.

Western sanctions against Russia, owing to Russia’s stance on Ukraine have made matters worse.

Russia is the victim of an economy overly dependent upon one single product: oil. That lack of diversification is also a pointer to very poor governance. Russia possesses a scientific community second only to the US’s. It also has sitting within its boundaries a very resourceful and talented population. Then, Russia is the largest country on earth with vast natural resources. Russia also possesses a rich history and culture. There is no excuse for Russia’s present predicament.

And Chinese economic growth has slowed. Slow Chinese growth is a manifestation of export markets that are contracting economically, especially in Europe. China is further experiencing increasing manufacturing costs owing to higher wages on the factory floor: wage inflation. This is, using a trendy term, a DOUBLE WHAMMY for China. China can no longer grow at the 8% plus it has experienced in past years. Asian economic growth will have to depend less on an export oriented model, and more on Asian consumers, and local markets.

OK. The present US economic success is not chance. Post the Recession of 2007-09 the Feds and the Obama administration adopted a policy of economic stimulus. From Quantitative easing and the keeping of bank base rates as low as 0%, to protecting public sector jobs, and adopting policy to better the lives of the poor and middle class, the US government has engineered the present boom.

The US middle class is feeling better these days. It is spending once more. Middle class demand is at the root of the present US economic resurgence. The poor and middle class are hopeful about the future. Blacks, minorities, single women, Latinos, north eastern whites, and white liberals, feel justified in their backing of a liberal agenda and President Barack Obama.

There is new hope manifested in growing consumer confidence and rising demand. The present economic boom in the US is the result of the Obama Stimulus. It is also the result of a reduction in personal debt that has the US consumer feeling increasingly better off.

Strong US economic growth will become Barack Obama’s greatest legacy if sustained until 2016. It will pave the way for Democratic success in the 2016 US Presidential Elections.

Now, the US, post World War 2, has been the world’s most innovative and creative economy. US culture and media has dominated the world.

From Mickey Mouse to Donald Duck, McDonalds to Kentucky Fried, Nike to Jordan, Coca Cola to Budweiser, and CNN to Fox, US brands dominate.

From Jazz to pop; and soul and blues; add rap and hip hop: the world struts, dances, and waltzes, to American melody. Frank Sinatra, Dean Martin, and Nat King Cole continue to enchant and enthrall, decades after they went into eternity.

Fashion trends globally are driven by US culture. What the world wears; how it thinks, learns, and plays; what it eats and drinks; the design and manufacture of the world’s gadgets and devices; how the world is entertained; what the world watches on the TV, computer, and movie screen; and now, what it watches on the ubiquitous tablet; all is driven by US innovation, media, and culture.

Digitization is a metaphor for US creativity. The most successful internet businesses are US based: Google, MSN, Facebook, Twitter, Pinterest, and more. The most innovative digital software and hardware is created in Silicon Valley.

Modern manufacturing may be carried out in China, Taiwan, South Korea, and Japan. But it is US culture that determines what is manufactured, and when.

Innovation has kept the US military ahead in the technology curve. And the US continues to sit the world’s top foundations, institutes and universities: organizations renowned for the cutting edge research and development that feeds US society with the latest ideas on a wide variety of subjects: social, economic, and technological, contributing to American prosperity, and power.

These are monuments to innovation and new thinking, harboring the best minds internationally.

To be continued

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