Obama’s Real Challenge

One hundred days of Obama’s presidency – and a 6-percent recession, an abysmal national deficit, and the largest job loss of the past 30 years. Friday, Exxon Mobil announced worse-than-expected results. The two burning questions on the tip of all tongues in the United States are: “Are we at the bottom?” and “Where are the green shoots” of the recovery?

As in Europe (there will be long months during which immediate results will be nothing more than an accumulation of bad news), they’re just waiting for results on the state of the banks: the stress test. And at the same time, earlier than in Europe, the so-called “buds” are starting to bloom – the end of the real estate collapse that’s been going on now for nearly three years.

As Barack Obama, himself, has said, it’s not enough to “rebuild the foundations” to save the financial system. The American president must also “remodel the house and its interior,” as economics professor Patrick Artus and journalist Marie-Paule Virard have shown in a very educational little book [Is It Too Late To Save America? (La Découverte)].

The mechanisms that have led to the disaster are known: the real estate dream, fueled by easy loans based on the hope of increased prices, and the whole thing stuffed – in the true sense of the word – with savings products, foggy to savers the world over. Once investment, consumption, and jobs are gone, it will be necessary to devise another society. No more and no less. The current crisis marks the end of a model born in the mid-1980’s.

First feature: rampant de-industrialization by a transfer of factories into emerging countries. Society has become bipolar with, on one hand, an increase in the number of service jobs and, on the other, the elite in new technologies celebrated as the vector of “modernity.” Even before the collapse of the automobile industry, there were proportionately fewer factories in the U.S. than in France or the United Kingdom. The middle class, heart of manufacturing America, has all but disappeared.

Second feature: upward social mobility blocked by an explosion of inequities. At the top, wealth creation has been taken over by a minority; on the bottom, generalized private debt has created a fictional sense of purchasing power.

Third feature: creation of the Sino-American couple. American consumer debt finances Chinese products and the country’s debt. Today, American consumption and, thus, Chinese growth are backed by the national debt.

It’s for Obama to reconstruct: to remake the collective infrastructures (transportation, roads, schools); to create more even growth that is more protective of the individual; and, to regain a “real” motor, undoubtedly a green economy.

Will everything go back to the way it was? As Americans say, that’s the several-trillion-dollar-question. Barack Obama’s “new growth” can create the next bubble. Or a new model. One thing is certain: Our own future depends upon his success. To save America is still to save the world.