Radio Australia Today Editorial

Barack Obama and the Magic Money Pudding

26 November 2008

Here in Australia we have a fabulous childrens’ story by Norman Lindsay called the Magic Pudding.

The Magic Pudding told of a living, breathing pudding that could be eaten, but always grew back. It was created at the close of ther First World War, when the times were not so good, and kids dreamed of the luxury of having as much of what they wanted whenever they wanted (hence a pudding that never got smaller no matter how much you ate).

Barack Obama is about to inherit George W. Bush’s Magic Pudding. Except that his pudding is made of money. The current adminstration has just announced that it’s going to spend another 800 billion US dollars to shore up America’s economy. This comes on top the the 700 billion dollar bailout from last month.

The markets reacted failrly well to this announcement, going up overnight by a little bit, after the previous two days’ great gains. Clearly the aim of the extra injection was to keep up the momentum in the market recovery.

The Magic Pudding aspect to this is that it seems that no matter how much the administration spends, the pudding appears to be full again. The money just keeps on being there.

Of course the money is not there. This is deficit spending. The money needs to be borrowed.

And repaid.

With interest.

And it is that repayment, and interest, that will cost the US government. It won’t cost George W. Bush. It will cost his successor, Barack Obama, big time.

He’s come out this morning to say that waste is out. There will be no more wasteful spending, and instead he’ll be making investments that stimulate the US economy.

Taken at his word, this means no more bail-outs of sickened companies. Instead the money would be targetting future success.

But political expediency is bound to bind the new president. Would any president allow a company like GM to fail, even if it’s been making wrong decisions and caused a lot of its own problems. It would be a brave president who let this company fail, taking with it all the workers from other companies that rely on GM.

One thing’s for sure, the Magic Pudding is a fairy tale. In real life, puddings get eaten, and there just isn’t any more to go around.

– Phil