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Reflections on the big, sick dog

Around the world economy in 100 days

Faced with these serious, complex and interlocking challenges, it is no surprise President Obama has spent so much time and energy on the economy. But what has he done so far in response? And is it working?

  • To help restore U.S. consumer confidence, in February the president signed into law a $787 billion economic stimulus plan, largely tax cuts and government spending. To address rising home foreclosures, in March the administration announced a plan to give lenders financial incentives to renegotiate troubled home mortgages.
  • To address the collapse of the U.S. auto industry, the Obama economic team took a harder line on Detroit, forcing both General Motors and Chrysler to re-do their restructuring plans before receiving government bailout funds. Then it engineered the resignation of GM chief executive Richard Wagoner, and nudged Chrylser toward a merger with Italy's Fiat.
  • To address catastrophic problems in the U.S. financial system, in March Treasury Secretary Timothy Geithner announced a “Public-Private Investment Partnership” to create a market for the frightening amount of so-called toxic assets banks are holding on their books.
  • The administration is also applying “stress tests” to see if banks can withstand severe economic problems before providing additional money to repair troubled balance sheets. (For a cogent analysis of the administration’s handling of the Wall Street mess, read this report from the Baseline Scenario blog.)
  • Globally, the first 100 days were dominated by the G20 summit in London, where leaders of the world’s biggest economies agreed to give the International Monetary Fund a larger role in regulating the global economy, and $1 trillion to fight the crisis.

Is all this action working?

The simple answer is no. Or, at least, not yet. While, thankfully, the economy may no longer be in freefall, consumers are still spending less. Businesses are still laying people off. The U.S. unemployment rate — admittedly, a lagging indicator — is up to 8.1 percent, and 2.6 million people have lost their jobs the past four months. Credit is still hard to get, for companies and consumers. Real estate prices are still dropping. (If you’ve got the stomach, see this depressing data roundup from the economics blog Calculated Risk).

Of course, nobody expected these problems to be solved quickly. And if these first 100 days of  intensity and action are any indication, President Obama will keep doing what he believes is the right thing to do.

But we are a long way from puppies and sunshine.

So forget the 100-day framework. President Obama’s economic focus is likely to dominate the next 100 days as it has the first. And the next 100 after that, and the next 100 after that, and after that, and after that.

Only then — just maybe — will we be able to worry about other important matters of state. Like Bo, the First Family's healthy new Portuguese Water Dog.

For Which it Stands: 100 Days

Click here to go to the For Which It Stands Complete Guide

For more on the global economic crisis:Click here for the full report