What Obama Must Do...

...which of course I believe he won't. From David Seaton:

[T]he legendary prosperity of the American middle class, their massive home ownership and dizzying consumption have long been based on easy credit, that with the end of the cold war, America's credit binge went out of control, that the days of easy credit have just ended with an enormous bang or thud and that if Barack Obama, probably the next president of USA, has any specific ideas about what to do about the whole thing, he is playing his cards very close to his chest, indeed.

The reference to the cold war is very relevant, in my opinion.

If a worldwide banking meltdown, such as we are experiencing right now, had occurred in the 1960s or 70s, the large soviet backed, communist parties of France and Italy, and their trade unions, would have been out in the streets in force rapidly destabilizing those countries: the reaction in Asia, Africa and Latin America might have been even more explosive. Certainly the risk of strengthening such political movements would have been a conscious restraining factor for regulators all over the capitalist world. Those parties and those unions no longer exist. At the end of the cold war, as William Pfaff writes, "without the enemy, the machinery of power begins to race, with nothing to resist it; megalomania sets in."

With this crisis the era of easy private credit is surely drawing to a close and we will see a revival of traditional, conservative, lending practices. This means, for those too young to remember, that to get money you will have to already have money. Nouriel Roubini gives a short list of things that you will find yourself paying up front for besides a house: anything you usually pay for with a credit-card, or a college education, or an automobile, etc.

As you look at the list of things that you will have to save up to buy, James Stewart's, Charles Bailey voice may echo in your ear, "Do you know how long it takes a working man to save five thousand dollars?" In 1946 you could buy a house with five thousand dollars, nowadays you can't buy very much with that sum, but it is still hard for anyone on minimum wage, or not so minimum wage, to save five thousand dollars.

A great many people are going to discover for the first time in their lives that they are poor and they are going to resent it.

Many more people than today are going to feel bitter and in Barack Obama's prescient phrase, "cling to guns or religion or antipathy to people who aren’t like them or anti-immigrant sentiment or anti-trade sentiment as a way to explain their frustrations”. As another major new voice in American politics might add, "you betcha".

With nothing to threaten it, the system has set out to destroy itself. Now the danger to our system is right wing populism not socialism. Socialism or at least some version of a Scandinavian social democracy is the only way to stabilize this situation and stability is the most truly conservative of values.

This ultra-right, Le Pen-like populist anger is going to sweep America and make an already horrible situation much worse, unless very proactive, openly social democratic, anti-poverty programs are put quickly into place: universal, free health care, grants, not loans, for higher education, government sponsored, high quality subsidized rental housing with option to buy, etc. And make no mistake, this means cutting back defense spending, closing tax havens and raising taxes on the very rich and moving the money into education, health and infrastructure... right away.

Nothing original here, the plans are already drawn up, all you have to do is translate them from Swedish.

The wing nuts are accusing Barack Obama of being a "socialist radical", oh, but were it true.

I think he should quickly announce his future cabinet choices and give a detailed outline of the legislation he aims to pass in his first hundred days.

If Obama doesn't move strongly with vigorous social democratic measures to stabilize the situation of America's seething masses of nouveaux pauvres, he will simply be fattening frogs for snakes... keeping the Oval Office chair warm for Sarah Palin or even worse in 2012.