Economies: He's not even President yet

We have, over the past eight years or so, become used to seeing what now seems to be an old man in the White House and Barack Obama looks very young in comparison. It was that which the older-still John McCain tried to play as his strongest card in a weak campaign to win the seat for the Republicans.

So is Republicanism dead? Is the USA aiming for a seismic shift to the left - and will it take the rest of the (democratic) world with it?

The answer, as always in these things, is a combination of yes, no, don't know.

At this stage, it is almost pointless to look at what Obama promised in his election campaign. As the election drew to a close, the economic climate was changing by the hour. In the early weeks, Bear Sterns sank - seemingly slipping beneath the waves with barely a ripple. No regulator, law maker or even Senate Committee raised the kind of stink that would have had the whole industry under scrutiny and foreshadowed the ultimate collapse of the US financial industry and through the contagion that spread the entire global economy. In a reverse of the "butterfly's wings" theory, it was bad decisions in the US that are leading to massive numbers of redundancies in China.

Obama had a part to play in that: as putative leader of the Democrats, who by then controlled both houses, and as a close ally of Senator Carl Levin, the most active crusader for financial services reform (albeit for the primary purpose of raising taxes) he should have focussed on what was, even by October 2006, becoming a bottom-up housing crisis. During the latter weeks of his presidential campaign, Obama talked non-stop of helping America's "middle class." He meant "middle income. " Class has nothing to do with it. And by that he meant those who have the biggest debt to service. Americans were losing their homes, their possession and their credit standing at a terrifying rate - but the signs were there throughout the time that the Democrats had, save for Presidential veto, power to deal with the looming crisis - or at least to make a stab at it.

Obama will move towards more - not necessarily better - regulation of the financial services industry. But Democrats have a poor history of designing regulation (the Republicans aren't very good, either). After all, it was Clinton's government that failed to get effective counter-money laundering regulation included in the Gramm-Leach-Bliley Act and had consistently failed to bring the USA into line with global counter-money laundering approaches whilst simultaneously lambasting developing countries for their failures, demanding that they reach standards that far exceeded those the USA applied for itself. The Bush Administration will be seen as having failed to implement law and regulation to address the sector - but the fact is that they merely left in place what the Democrats under Clinton - and with Levin's work - had put in place.

Obama will inherit an economy that has been sliding down the poop-chute for several years, disguised by conspicuous consumption, property development, spiralling upwards house prices and financial services. It has been fuelled with debt - and now we know that was debt funded with imaginary money.

For Obama's America, there will be the obvious problem that the debt was funded with imaginary money, but it has to be repaid with real money earned by real people with real jobs. And with more than 2.5 million Americans losing full time employment last year and untold McJobs being lost, too, there are pressures on that.

Obama has already made it clear that he will increase taxes. Largely un-noticed, he is co-sponsor of a Bill to target offshore earnings - and the offshore sector generally. He's offering support packages that amount to enlarged benefits. Yes, the fact that oil reached 35 dollars a barrel this week will, perversely, get Americans back behind the wheels of those gas-guzzling cars that proved so unsaleable when oil cost about USD150 per barrel, and that will help with both the economy and the feel good factor.

But the hard truth is that Obama is a socialist. He has expressed intentions to put in place the redistribution of wealth. He has announced massive public spending projects.

And he's not even president yet.