Tuesday, November 6, 2012

What Obama's win means for the economy?

US has voted and re-elected their president Barack Obama for a second term. As I was writing this article the counting was not over but the television networks projected that Obama will have a second term as a president. So what does this mean for the world or Singapore?

The main theme of the US election 2012 was economy centered around a very simple basic question: Will we start to do something to fix the underlying problems of the economy and take a pain (as recession) now to prevent a catastrophic disaster (a huge financial depression) in the future, or will we continue to kick the can down the road to prevent pain today (as ballooning the US debt to multi-trillion dollar levels) but risk a huge catastrophic disaster in the future?

I do not like Obama so much and I also did not heat up to Romney. But I believe Barack Obama was leaned to prevent pain now, print more money, balloon the debt and Romney was leaned towards doing something now to start to fix it. And hedonism won once again.

So, there is a good news and a bad news.

Under President Barack Obama, the national debt has ballooned past the $16 trillion mark — a number once inconceivable — and is growing by the second as the federal leviathan feeds on borrowed money.[1] Good news is that, Obama now has motivation to continue to kick the can down the road so the change of having a near future recession is less now.

Bad news is that since he will absolutely do nothing to fix the economy and US debt and worse he will continue to do a lot of things to make them worse (i.e. letting Ben Bernanke to print money and cause more job destroying malinvestments around the globe), the change of a catastrophic financial disaster in the future has increased. So be prepared.

Japan is continuing to throw everything two generations saved and accumulated into debt and is a bug looking for a wind shield. Europe is the same. US is the same. As I said, be prepared.

[1] - Obama's pricey gaffe that's worth talking about

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