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President Obama's First Step: Reset Expectations

Posted Nov 05, 2008 12:15pm EST by Henry Blodget in Newsmakers, Recession, Election

From ClusterStock, Nov. 5, 2008:

If President Elect Obama were the incoming CEO of a corporation, he would now be preparing for the first act of his tenure: A massive write-off of the mountains of rotted junk buried on the company's balance sheet and an announcement that recovery will take a long, long time.

This flush would clear the way for several years of better than expected results. It would also take advantage of the new leader's one chance to blame the sorry state of the organization on his sorry predecessor.

President Obama began this process last night, in his victory speech, when he noted that restoring the country's health might take more than a term. In the next few weeks, he should go well beyond this:

  • The deficit will be more than $1 trillion a year for several years
  • The country needs a massive new fiscal stimulus
  • The housing market will continue to decline through at least 2010
  • Interest rates and taxes will eventually have to rise (after the economy stabilizes)
  • Weak corporations have to be allowed to fail
  • Millions of homeowners will lose their house
  • Unemployment will probably rise to 10%
  • The government simply cannot "bail the country out" -- not because it lacks the will, but because it lacks the power

In short, Obama needs to acknowedge reality, erring on the side of overstating the problems and challenges, and he needs to prepare the country for several tough years. Because if he doesn't, within six months of his taking office, the country will have forgotten all about the prior administration and will instead be blaming everything on him.

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14726 Comments

Yahoo! Finance User
Yahoo! Finance User - Wednesday November 05, 2008 12:48PM EST

They all lie to get our vote. Once they have the vote then we take one for the home team. Term limits is the only way we can get Congress to act on our behalf.! It's now time to force Congress to call a constitutional convention and change the way this great republic is run!

- Wednesday November 05, 2008 12:49PM EST

The Democratic Party played the race card and it work. But as usual they only got it half right. They keep saying the first BLACK president, get it right people, he’s not BLACK, he’s simply not white. It may not be politically correct to say, but he is half white. But beyond that, it’s time for the working class to prepare for the worse, high inflation and high unemployment. God help America.

Yahoo! Finance User
Yahoo! Finance User - Wednesday November 05, 2008 12:50PM EST

Oh my, we are in for it now. What exactly is the point in working hard if the money you earn is to be distributed to others who are not motivated but instead insist on handouts and bailouts? I'm better off waiting to see what "entitlements" I can get for the government than waking up at 5am and working my a%% off...

- Wednesday November 05, 2008 12:50PM EST

I wonder where were these self acclaimed pundits/advisors before the economy started crumbling? Advice is cheap after the event and such pundits are found by the tons.

Yahoo! Finance User
Yahoo! Finance User - Wednesday November 05, 2008 12:50PM EST

To say Bush is responsible for the Economic crisis is ludicrous. Did he tell Fannie Mae and Freddie Mac to lend to unqualified applicants? No he did not. But Obama did help push for mortgages to underqualified lower class people because its every American's right to own a home. Oh wait its not. This crisis did not just happen because of recent events. Its been a long time coming. You cannot blame Bush for years and years of bad lending policies and greed on Wall Street.

- Wednesday November 05, 2008 12:51PM EST

I can't believe some of you people have the auducity to think that McCain/Bush would be a better President then Obama. McCain supporters do not reflect America and Obama's supporter, we are a melting pot like it or not. Hopefully the rest of the word can start envying us again and not hate us for our freedom.

- Wednesday November 05, 2008 12:51PM EST

I"m moving to Europe with Billy Baldwin. Anyone else want to join?

- Wednesday November 05, 2008 12:51PM EST

Give the guy a chance. there is no way he can do worse than the jerk we put in there for the last 8 years!!!

- Wednesday November 05, 2008 12:52PM EST

Wheres my government bailout, Wheres my new high paying government job, wheres my free health care, Oh ya and take 10years off my age, I guest we don't have to make our house payments anymore either. Socialism isn't it great, Can't wait, I'm all gitty with antisapaiton. No taxes any more, Every day is going to be sunny & water is gonna taste like lemonade. Good God Good Grief Can't afford to buy any Beef. Boy are the dems in for a let down.

- Wednesday November 05, 2008 12:53PM EST

"first step: reset expectations" Does that imply he wasn't telling the truth? "restoring the counties health may take more than one term" My God, the vote wasn't even tallied and he is running for another term.Please give us some time off from campaigning, at least wait til your sworn in .

Yahoo! Finance User
Yahoo! Finance User - Wednesday November 05, 2008 12:54PM EST

Adding to the comment by: versaxx - Wednesday November 05, 2008 12:27PM EST Well we now have a far left liberal (maybe socialist) president and a democrat controlled congress. Can we all remember back about 32 years with a president named Carter. I can remember further back to time that started the US into the worst long term recession since the great depression. I remember Lyndon Johnson and a Democrat controlled congress and the biggest liberal programs of my generation ("the Great Society"). Led to the 1970's high inflation and stagnating economy... and a lot of the socialist programs we take for granted today. We survived then; we'll survive again but it won't be pretty. I think we can depend on Obama to be just what he is: a politician. I hope everyone who voted for him because of the "need for (undefined) change" will like the socialistic changes which are part of his record.

Yahoo! Finance User
Yahoo! Finance User - Wednesday November 05, 2008 12:54PM EST

Obama will have to move toward the center if he wishes to be re-elected but never the less I fear we will slip further into socialism. -- A form of govrnment which penalizes success; susidizes non-achievment and results in mediocraty. The populance will become more and more dependent on the government and will lose freedoms in the process. So much for "change"

Yahoo! Finance User
Yahoo! Finance User - Wednesday November 05, 2008 12:54PM EST

What a big surprise. Our new Liberal government is already blaming all the future failures of the Obama administration on the Republicans. I am not surprised, I expected this much. Since when has a Democrap actually admitted to their faults, and accepted accountability? It's time for our new "Golden Boy" to show us all the magic he has been promising. You wanted the job, now fix everything like you have promised! And please, adhere to your motto about "Change", and stop looking to the past as the reason for your future failures. It's going to be a long 4 years.

Yahoo! Finance User
Yahoo! Finance User - Wednesday November 05, 2008 12:55PM EST

RE: IS IT OBAMA OR THE FORMER CEO..... If you want to make an analogy to corporate governance, recall that stockholders (voters) elect the board of directors (congress) and the board of directors lay out the plans that the CEO must follow. The board of directors (congress) have been DEMOCRATS since 2006. So don't try to blame this on the outgoing CEO. If you think 0bama can't fix the problems then you should stop voting for democrats.

Yahoo! Finance User
Yahoo! Finance User - Wednesday November 05, 2008 12:55PM EST

Iam with James I - taht is I, too, am sticking with my guns and religion. In fact, more guns and more religion will probably be best. The people that elected him are TAKERS, they ALL want something - even though they were getting it already, they were told they weren't and they believed it. Amazing how 45 miilion plus people would elect a redical upstart over an experienced American hero - simply amazing (and very scary). I say give them THEIR country and we'll take evrything else (give em New York, California and Florida cause thats where they are).

Yahoo! Finance User
Yahoo! Finance User - Wednesday November 05, 2008 12:58PM EST

All the comments here are LAME!!!

- Wednesday November 05, 2008 12:58PM EST

So now that President- Elect Obama is about to take office, my simple Rick the Republican question is where do I stand in line to recieve the checks..Hmm maybe I could have them electronically deposited into my bank account so I wont have to waste gasoline driving around--- Healthcare, housing, childcare, college tuitition checks for my three children? Should I completly forget about personal responsibility and take a simpler nicer approach, admit that personal responsibility is no longer within my control instead rely on Nancy Pelosi, Harry Ried... wow Alan Combs and Katie Couric are right.. silly me for thinking and voting otherwise. But wait there's more.. where is my 2nd round of economic stimilus checks? I want more.. Wow this is easy.. Didn;t think Chirstmas was on Nov 5.. but hey who I am I to argue with so much wealth about to be redistrbuted ?? I agree that Mr. Obama and the country will be tested.. Biden's comments practically guaranteed it. I don't blame Bush for the economic times, In my humble opinion this was a direct result of the Democratic Congress policys as dictated by ACORN. The morgage mess started under the Clinton adminisration! Does anyone really read an understand the issues? The national debt is now over $35,000.00 per US Citizen and rapidly growing.. For a family of 5 that is over $175,000.00 and growing !! Unbelievable.. Who exactly will be paying that bill ? Ah I feel a bit better.. but fasten your seatbelts.. we are in for a wild times.

- Wednesday November 05, 2008 12:58PM EST

I am with the group the "Who" in their song "won't get fooled again" "meet the new boss same as the old boss"

- Wednesday November 05, 2008 12:59PM EST

It seems as though everyone is just scared of change? He's not even in the office yet and people are giving him grief! The thing about it is everyone wants to point the finger and blame someone else, like big CEO"s!!! Who knows it might surprise the heck out of everyone!!! Then what will yall say??? It didn't matter WHO went into office, it was gonna be a bumpy ride for either. And like Obama said last night, we need to become ONE United States and ALL help our country come back!!! So shut your whinning and see what he can do before you start packing up your desk!!!!!

Yahoo! Finance User
Yahoo! Finance User - Wednesday November 05, 2008 12:59PM EST

The country is not safe because of Bush. It became unsafe because of Bush. He destroyed our country by destroying the most treasured values like liberty and human dignity. Instead he gave us fear. We need a true leader like JFK. We need to go back to our constitution. The world will follow.

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