Obama and the “Era of Responsibility”

Shortly after arriving to the United States in 1969, Cristopher Hammer, now 66 years old, gained the nickname “black Jew.” It was like this that Native Americans referred to recently arrived black immigrants like him.

“Jew” was a prejudiced way for North Americans to say that Cristopher and other immigrants were conservative, and many times miserly, In regards to their financial decisions, a vestige of the difficult times that they lived before coming to America.

Americans, on the other hand, were used to debt and snowballing debt when one thing tightened. They lived like cicadas, but spoke poorly of ants.

“With time, I turned into a big spender also, and ran myself into debt like many North Americans. Now, the expression that offended me so much brings a sense of pride. I want to go back to being a “black Jew” from now on,” said Cristopher at the Washington Mall on President Obama’s inauguration day.

Minutes later in his inaugural speech, Obama declared that the United States needed to enter a new era—in a spirit that was interpreted as the “Era of Responsibility,” where one ought not postpone or fail to confront difficult decisions.

The most painful challenge that the United States faces is a profound adjustment to be made in regards to the debt of families. Together, North Americans today owe nearly $20 trillion in mortgage debt, consumer debt, and other debt, such as debt for their children’s education.

The amount is enormous: divided equally between each of the 300 million North Americans, taking into account even babies that don’t know how to walk yet (let alone use a credit card), the debt is $66,600 per capita (R$ 154,000 per capita).

It isn’t for nothing that the United States grew so much in the last five years, driven by the irresponsible concession of credit on the part of the banks. It’s also not surprising that these same banks are now going broke in domino effect and need government aid to continue. The guarantees that they required in yielding loans and the assessment of borrowers were completely lax.

Coming from Detroit for the inauguration, Laurie Taylor, a stewardess for United Airlines, also said she had “not one cent in savings and a lot of debt.” She is also a proven example of how the real estate “bubble” inflated until it exploded.

In debt “up to her neck,” Laurie purchased four pieces of real estate between 2004 and 2008. For the first property, she took out a mortgage of $150,000. Today, with the explosion of the “bubble,” the property is worth $20,000. For the last property, purchased in 2008 and also financed, she paid $20,000 (four years ago, it was worth $150,000).

“Now I don’t know what to do. I can’t find people willing to rent two of the houses that are empty and pending payment to the banks,” she says.

It’s logical that accounts like Laurie’s couldn’t end well, as it already seems unreasonable that a stewardess alone, in a market impaired for years, like that of commercial airlines, found banks reckless enough to give her not only one mortgage, but four to buy four different properties.

The problem with the financial “Era of Responsibility” is that following it exactly will depress economic activity even more, feeding the vicious cycle of less spending and credit, more unemployment and less spending in the global economy.

Perhaps only coincidence, but the New York Stock exchange yesterday had the biggest downfall in the history of U.S. presidential inaugurations. It fell 4%.

For Obama’s inauguration, Washington lived her great day of “modern Rome.” A little decadent, it’s true. But the crowd that went to welcome Barack Obama with enthusiasm and the endless processions that the poor president tolerated didn’t differ from what we see in films during the period of great emperors and kings.

Obama’s inauguration only shows yet again that the human spirit doesn’t change. It is naïve and credulous by nature in any “savior of the country” that presents himself with a more brilliant varnish and surrounded by good intentions.

OK, Obama is young, calm and intelligent—and he replaces Bush, which is already a big thing. He is also the first black man to hold the office of president of the United States, and that deserves tribute, especially by the black majority (that was the impression) that went to the Washington Mall to honor him.

But when the expectations are so great, the disappointment can be even greater.