Mr. Obama has a big job: saving the world is not easy. Last year he took command of America in the middle of a financial crisis. And today, the problem seems to have disappeared. The recession is over and the banking system has survived. His plan seems to have worked. Even General Motors seems to have survived.
Like all other US presidents, Mr. Obama, is a great speaker. And tonight when he gives his state-of-the-union address, he will be most eloquent in explaining how effective his government has been since they took command in the middle of a financial crisis.
If he did such a good job, why is he losing ground in the popularity polls and why did the Democrats recently lose a senate seat in Massachusetts? [The January 2010 bi-election to replace the late Senator Ted Kennedy was won by the Republican candidate.] What’s wrong? Why is the President behind the 8-ball?
The answer lies in a mysterious place: the tiny European island nation, Iceland. Iceland is home to the particularly aggressive Bank of Iceland. The bank has failed and the government of Iceland is being asked to repay 3.8 billion Euros to the British and Netherlands governments. These two governments loaned the money to the Bank of Iceland in an attempt to save it in the dark days of last year’s banking crisis. The Icelandic government guaranteed the loan and now it’s pay-back time. But now it appears the people of Iceland are rebelling. 25% of the voters signed a petition: they don’t want to repay the loan. The president vetoed a bill that outlined the repayment schedule. And now they will have a referendum. On March 6 the people of Iceland will decide whether or not they are responsible for the big bank’s blunders.
The people feel cheated. They feel that the bank got to keep the profits in the good times, but in the bad times, the people pay for the losses. Icelanders are in a bad mood.
Maybe Icelanders are not the only ones who feel cheated and who are in a bad mood. Maybe Americans feel the same about US bankers’ blunders as Icelanders feel about theirs. Maybe Americans are losing faith in the banking system like their Icelandic counterparts. And maybe that’s why they’re ticked off with president Obama. Obama saved the bankers by putting the American people in debt. Are Americans looking for a better way?
According to the US Federal Deposit Insurance Corporation’s website, 140 US banks failed in 2009. 8 more closed their doors yesterday! [Jan. 26, 2010] Yes, there is a problem. Something is not working. There is a distinct possibility that the people are losing faith in the banking system and in their government’s ability to save it.
Remember Jimmy Stewart’s movie It’s a Wonderful Life? When the people lose faith in a bank, that loss of faith causes the bank to fail. If the Icelanders vote NO, their banking system will fail. They’ll likely be bounced out of the European common market too. Iceland could become the banana republic of the north. It’s like It’s a Wonderful Life: they need a local hero to persuade the people that they should keep the faith. And if they don’t get an eloquent local financial hero, Iceland will become a ghost town.
President Obama is the eloquent local hero for the American people. Somehow he has to persuade the people to keep the faith in big American institutions. Otherwise, America will go the way of the old USSR: she will collapse and have to be rebuilt. Good luck, Mr. President.
Ken Norquay, CMT, Jan 27, 2010.