The euphoria and promise of Barak Obama’s election triumph will soon be tempered by the stark prospect of US weakness and decline. The new president has a power of work ahead of him if he is to restore the tarnished US brand and repair the financial mess that is likely to be his predecessor’s most enduring legacy.

Rightly castigated for his foreign policy failures, President Bush’s stewardship of the US economy has also been a disaster. On his watch, Bush has turned a 2000 Clinton surplus of $128 billion into a one trillion plus deficit, private debt has skyrocketed, the nation’s infrastructure has deteriorated alarmingly, and the defence budget is under serious strain.

These economic realities present Obama with two major challenges as he contemplates his domestic and foreign policy agenda. First is the Herculean task of repairing a dysfunctional financial system and dealing with the consequences of what may be the worst recession since the 1930s. Already burdened by unrealistically high expectations, Obama will have little financial wriggle room to implement his planned domestic reforms which, as a consequence, are likely to be less transformational than either he, or his supporters, would like.

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