Barack Obama's New Deal.

Barack Obama’s New Deal.

This is certainly not how president-elect Barack Obama imagined the first few weeks after his historical victory in the presidential elections. There was supposed to be a quiet preparation for the inauguration on January 20, instead there is economic fire rapidly spreading around.

Obama cannot wait. The spiral of crisis is turning faster and faster and George Bush has achieved his true greatness during the last few months of his presidency as “the great absentee”. In normal times, the president has a limited impact on the economy. But we do not live in normal times, the market, which Americans have usually a lot of faith in, has gone crazy and without strong leadership America might face a catastrophe. Obama has to act as soon as possible. During this Saturday’s speech, he announced that he would have economy and employment rescue plans for the next two years ready by the inauguration day.

In practice, it might mean spending hundreds of billions of dollars more on large public investments by means of the already indebted Treasury. It is going to be the biggest government economic program since Roosevelt’s New Deal. Up to this day historians and especially economists have been arguing if the New Deal healed America of the depression or just deepened it. Time will show whether similar disputes will take place with regard to Obama’s program and whether the enormous input on the part of the Treasury will be accompanied by further government intervention in market mechanisms.

It is hard to find better prepared people to take up the monumental task of rescuing the American economy than Timothy Geithner who will be probably nominated today for the Secretary of Treasury position by Obama or Lawrence Summers who is supposed to become the president’s economic advisor, and eventually the head of the Federal Reserve.

None of them can be really called the supporters of an omnipresent country. It is a good sign. What is also promising is the fact that Obama wants to treat this crisis as an opportunity to push disoriented America on new tracks.