Obama Inauguration—Hope Amidst Geopolitical, Macroeconomic Challenges

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"The new President faces monumental challenges, the poisoned chalice of a very uncertain global geopolitical situation and the worst financial and economic crisis since the Great Depression."

Barak Obama's inauguration as U.S. President is a historic and hopeful day for America and the world, and stock markets have opened on an optimistic note. The new President faces monumental challenges, the poisoned chalice of a very uncertain global geopolitical situation and the worst financial and economic crisis since the Great Depression. While all right-minded people wish him well and hope that he can succeed in confronting and overwhelming these challenges—it is important as ever to remain realistic.

Bailouts are now heading into the trillion mark, and the quasi nationalization of the western banking system continues. Central banks internationally are engaged in an unprecedented monetary experiment involving 0% interest rates, quantitative easing and money printing on a gigantic scale. The Federal Reserve is most active in this process and, therefore, the dollar may come under pressure this week after the ECB interest rate reduction last week, which saw the euro under pressure and the dollar rise.

On the geopolitical front, there are significant risks in the Middle East (particularly after the Israeli invasion of Gaza), with Iran, in Afghanistan and the risk of a war between Pakistan and India. Resource nationalism remains strong in Venezuela and Russia, either of which may test the new President.

Colin Powell, Madeline Albright, Joseph Lieberman and Vice President elect Joe Biden have all warned of the possibility of a geopolitical event confronting Obama in his early days in the oval office. Biden said that he "guarantees" there will be an "international crisis" within the first six months of an Obama presidency. "Mark my words. . .I promise you it will occur. As a student of history and having served with seven presidents, I guarantee you it is going to happen." Biden added, ". . .we're gonna have an international crisis, a generated crisis, to test the mettle of this guy."

Let us hope that Obama can rise to these monumental challenges and put the world back on the path to sustainable economic growth and peaceful coexistence between peoples and nations.

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