Another $700 Billion in Aid Scares Europe

European partners fear the next administration’s “protectionism.”

Citigroup saved by U.S. Government with 20 billion dollars

The future president of the U.S., “Europe’s chosen one” (80% of which would have voted for him) has put fear into the hearts of European Councils with a 700 billion dollar ambitious plan to stimulate the economy.

The plan is seen as extremely “protectionist” as it envisages the rescuing of American jobs no matter the cost, which could lead to barriers being imposed on free trade. Barack Obama has promised his fellow citizens that by 2011 he will have created 2.5 million jobs, and that in other to achieve this he will set up the biggest budgetary spending plan since F. D. Roosevelt’s “New Deal” 75 years ago. The $700 billion will be spent in the following two yearsm, surpassing the cost of the war in Iraq. The money will go into massive repairing of roads and bridges, building new schools, and to companies that are investing in regenerable energy sources or who create new jobs.

Basically, Obama has promised that only firms who will create new jobs in the U.S. will receive tax brakes and not those who merely relocate their production, which could slow down the rhythm of American foreign investment in countries that will suffer for this. Meanwhile, at the Asia Pacific Summit (APEC) that just ended on Sunday, acting President George W. Bush declared that, “One of the enduring lessons of the Great Depression is that global protectionism is a path to global economic ruin.”

World commerce threatened by the decrease

Although in Lima, Canadian Prime Minister Stephen Harper talked about 40 million jobs (more than the population of Canada!), Obama expressed critical opinions with regard to the agreement. During his campaign, he repeatedly declared in front of the voters who had recently become unemployed due to NAFTA that the agreement could be “revised.”

Now, E.U. and Asian states, many of which have similar agreements with the U.S., fear that after Bush has been the “champion of free trade,” the White House could now get an extremely “protectionist” president. At the moment though, Obama hasn’t appeared prepared to unconditionally jump to the rescue of American firms, such as auto giants Chrysler, Ford and General Motors. The president could be willing to ask the Congress to give the firms the help they need, but only if they come up with real restructuring plans. It has been a lot easier for Citigroup to get money from the Treasury, which in return became a stakeholder, but a warrant for $306 billion of unsafe credits as well.

Lower taxes in the U.S., higher in the U.K.

The economic stimulus foreseen by Obama will entail the lowering of taxes for the “middle class” (with incomes under 100.000 USD a year), but a delay in the increase of taxes for those who earn more than 250.000 a year. Although he made a promise during his campaign, Obama will not interfere with the taxing system advertised by Bush until it expires in 2011. In the U.K., however, along with a reduction of the VAT, the Brown Government is preparing to raise taxes for people who earn more than 150,000 pounds a year by 45%. That is the biggest tax increase since Labour came to power in 1997 and it’s justified by the need to raise the money the Government promised to use in the aid of the economy – 20 million pounds.