Archive for May, 2009

The entire point of the Obama bailout plan was to revive the US economy from the massive slump it is currently in. This necessarily entailed taking steps to ensure that the greenback stayed well within the country, as opposed to the huge trend that characterized the period just before the recession: huge outsourcing contracts. The huge trend in outsourcing provided American companies with a vast opportunity to contract various services for almost a fraction of the amount they would normally spend if they had the service done locally. The premise of outsourcing also presented a self-contained manpower solution to the companies that largely outsourced their manpower needs to other countries; American companies didn’t have to devote time to seeking and building a workforce, maintaining back operations, and handling other internal necessities of a company. Outsourcing companies largely packaged their business solutions as a complete and full service manpower and staffing business where they would provide the American companies with people who are already trained and ready to work at a moment’s notice, since outsourcing companies also included product training during the orientation of the people they hired. The large outsourcing trend, however, meant even less jobs for more Americans, and this is on top of an already growing unemployment and underemployment problem in the US. The outsourcing trend also meant more US dollars were going out of the country, and in an economy that was less than a hundred percent stable, this is an unwanted thing.

President Barack Obama now seeks to turn this around by taking away all the incentives initially offered to companies that outsourced, and giving the incentives instead to companies that employed people within the US. This is actually part of the major changes the president had explained while delivering his speech on the Obama bailout plan, saying this is a move to start repairing the damage to the US economy. Offering incentives to companies that prefer to hire within the US rather than outside of the country is definitely a deterrent to companies that are looking to heavily conduct their operations offshore, and may very well prompt them to hire from within the US instead, thus opening more work opportunities for undemployed and underemployed Americans everywhere. This may be quite a problematic development for a lot of people that were outsourced for American companies, since this will definitely mean that they will soon be seeking employment elsewhere, and there is also a good chance that this would mean the closing of many outsourced companies on foreign soil, although the entire point may be moot, since the global economic pinch that swept across the greater part of the world pretty much did that already. The recession has claimed the lives of a countless businesses everywhere, with corporations closing their doors and leaving countless millions unemployed. While this may not be the true goal of the Obama bailout, it is a natural consequence of the move.

There are those, however, that believe that an improvement in the US economy is bound to benefit everyone, because the US economy is inextricably tied in the with global economy. Hence, if all American companies subscribe to the incentive of the president to pull their offshore operations and simply continue operations on US soil, the countries where they pulled out their businesses may suffer significantly for a time, but may very well benefit from an improved global economy once more. This, however, is one big “if”. There is absolutely no guarantee that this is indeed the way things go. At best, all everyone can do is cross their fingers and hope for the best and pray that the obama bailout does wonders for the economy, without having to sacrifice significantly.

The Obama Bailout always had opposition from some angles, but now it is slowly getting more bad raps. This is because the plan is not working well enough for people to see results. Obama bailout plan architect, Geithner and the president has been telling everyone that the government will do its best to alleviate the situation. The administration is on the frontlines of the news always reminding people that the government is on top of the situation and whatnot. With the massive amount of money that has been diverted to the bailout, people are expecting to see noticeable results. Unfortunately, this isn’t happening yet and the people’s disappointment has grown.

The problem is that people’s hopes were set too high due to common misconceptions. First of all, people think that Obama has a new plan. Although the administration would like you to think that, this is just not true. The strategies that were available then are still the only ones available now (slightly revised because now they have the advantage of having seen the events take place). The problem of housing mortgages is definitely Herculean. We can visualize the system this way: it was a system that was seemed to satisfy so many people at first. But what it was feeding on were loans, non existent money. Soon it was feeding of itself and nobody realized it until the ripple effect caught on, industries went down, jobs got lost, Wall Street crashed and burned. Obama had to try some plan, or else it would look like he’s just been letting the bank heads get all the money while those below suffer the consequences. This was basically what happened to George Bush.

The President has stressed this again and again, but when people look at the numbers in the Obama bailout plan, they feel like it should at least show results in a year. The same is true for the investors in the stock market. The bailout will take time before people will have enough confidence on the market and make it flow again.

The problem of accountability is another issue that people tend to misinterpret. The fact is that more accountability should have been included in the first bailout handout to companies. Unfortunately, this is not what happened. Accountability, if handled well, should incite the needed confidence on the market. However, this will only lead to a small push forward to restarting the economy. It will not however heal the major wound of the economy which is namely the inability of our most prominent banks to lend any more money for people who needs to do business. So even if these banks are held accountable, it still won’t change the fact that they are now bankrupt.

It seems that the bailout has gone down from the pedestal of people’s hopes. Now, some people are acting like starved animals demanding their cut from the Obama bailout. But in the end, all they can really do is wait and keep doing business despite the hard situation. The Obama bailout plan cannot, for example save all the millions of homes that are facing foreclosure; it can only save a handful. One must remember that most of these home are no longer the banks property since shares have been chopped up and bought all around. To recover all of those for loan modification would require the cooperation of so many other sectors and that will of course cost more time and money.