As usual the President’s State of the Union address was made to the US Congress in January by Barack Obama. By its nature it is insular as he speaks to “my fellow Americans”. Given that both Houses of Congress are now under Republican control, the last two years of his presidency are likely to be dominated by deadlock. He appears to be resigned to this situation, where he is unable to make progress on new initiatives and finds himself defending attempts to reverse policies that are unpopular. There is no doubting his rhetorical skills, but the substance is somewhat lacking, and he has yet to make his mark on the pages of history with a memorable quote. His attempts to emulate Martin Luther King and John Fitzgerald Kennedy have been a failure. Time is running out for him and frustrated by gridlock he is about to enter the ‘demob happy’ phase of his presidency. So, what was his message – “tonight, we turn a page” and “the shadow of crisis has passed, and the State of the Union is strong”.
Dream on Mr President. He cannot turn the page until he has completed the Quantitative Easing cycle by reversing the asset purchase programme. Only when this crutch is removed, along with the crutch of artificially low base interest rates, will it be seen that the US economy can stand unaided and has recovered. Having scrutinised his full address, hoping to discern any indication that he is aware of the gathering storm that is transforming crisis in to an economic crash to surpass anything that has gone before, I must report there is no awareness. He promised to fix it and the job has not been completed. His last two years should prioritize that task and not leave it to his successor to sort out. Our message to Barack the engineer is, ‘wake up and put the locomotive in to reverse before it is to late’.
We have described the mammoth and growing US national debt, caused by $ printing for quantitative easing, as the Tsunami that threatens to engulf all of us. Like every tsunami, the sea withdraws before crashing back with an unstoppable force. This withdrawal is misunderstood; those who don’t realise what is happening stand in awe, while those in the know head for higher ground and safety. The passing of the crisis and recovery that he sees is not a natural cycle of the ebb and flow of the sea. If quantitative easing is not reversed, with money supply brought back into equilibrium, there will be dire consequences.
Without action in the US, nothing that we do in the UK will prevent the tsunami. Our only hope for survival is to repair and strengthen our sea-defences. The problem in the UK is that our political leaders are not alert to the danger and are bickering about how long the repair work should take. They have had enough time to carry out the repairs. They should now be agreeing that the defences should be made stronger and also increased in height. The danger is not just on our Atlantic coast. We are a group of islands and should also be alert to the hurricanes strengthening across the North Sea. Fixated with the Euro zone problems of the Mediterranean EU countries, nobody is asking why the storms are brewing in the Baltic and Scandinavia. The question should not be when will Greece exit the Euro, but when will Germany throw in the towel and exit the Euro? We are truly caught between a rock and a hard place.
Was there any glimmer of hope in the President’s address that he understands how much the US impacts on countries around the world? Final words to Barack Obama; “At this moment – with a growing economy, shrinking deficits, bustling industry, booming energy production – we have risen from recession freer to write our own future than any other nation on earth. It is now up to us to choose who we want to be over the next 15 years and for decades to come.” and “Because I want this chamber, I want this city to reflect the truth – that for all our blind spots and shortcomings, we are a people with the strength and generosity of spirit to bridge divides , to unite in common effort, to help our neighbors, whether down the street or on the other side of the world.”