The presidential race opened in the US this April when incumbent B. Obama officially announced a re-election bid via various outlets including YouTube, saying that the second term in the White House would enable him to implement the plans that failed to materialize during his first presidency. Jim Messina is to take charge as the future campaign chief, and Obama expects to raise at least $1b – an amount unprecedented in the US history – to advance his candidacy.
Obama's campaign total was reported at $750m when he ran for president in 2008. The fund-raising was largely Internet-based, prompting talks about the importance in today's world of blogging and social media to a politician's public image. If re-elected, Obama will, on top of becoming America's first black president, be the first black president in the US to count two terms in office, the US presidential candidate with the biggest ever campaign fund, and the first presidential hopeful in the US history to avoid pouring his own money into the race to the White House.
These days, social media like Facebook and Twitter are instrumental not only in promoting political figures but also in coordinating mass protests, as the recent unrest in Tunisia, Egypt, Algeria, and Yemen clearly showed. To a large extent, Obama can be credited with pioneering the wide-scale use of new media in politics.
Truly speaking, the incumbent cannot boast considerable success over the three years since being elected. While Obama relied on a reformist image to sell his candidacy, his policies in many respects failed to depart from those of his Republican predecessor G. Bush. Some watchers even went as far as to liken Obama to the Soviet Union's first and last president M. Gorbachev, the leader who epitomizes overturned expectations, though there was a time when Obama's promised role – beating the crisis, achieving economic growth, reducing unemployment – seemed almost messianic.
In the meantime Obama won the Nobel Peace Prize, a paradoxical combination with the reputation of a leader unleashing a war against a country which in no way threatened the US or its NATO allies. A hypothesis constantly popping up in the US media is that great efforts will be made to bring the offensive in Libya to a happy end by the time the 2012 presidential race is due to begin, but at the moment NATO's prospects in Libya are dire. Hardly by coincidence, the confirmation of Obama's fresh presidential ambitions came together with the announcement that Washington suspends active combat missions in Libya: on April 3 Pentagon head R. Gates said the US stops launching air raids and cruise missile attacks against the country.
On April 4, former congressman Curt Weldon headed for Libya on M. Gadhafi's invitation with a mission described as his private negotiating initiative. The US President and Congress were nevertheless notified of the visit. On April 6, the media featured Gadhafi's letter to Obama in which the Libyan leader – addressing the US president as “son” and wishing him re-election – asked to stop the “unjust war against a small people of a developing country”. Gadhafi wrote that “We have been hurt more morally that physically” and stressed that “democracy and building of civil society cannot be achieved by means of missiles and aircraft”, further charging his opponents with being Al Qaeda members. The message reportedly left Washington unperturbed.
Also on April 6, CNN correspondent Nic Robertson broke the news that Curt Weldon was to unveil a compromise the White House is offering Gadhafi. The deal implies an immediate ceasefire on both sides, a withdrawal of government forces from rebel cities, and unobstructed access of humanitarian convoys to Libya. The linkage between the initiative and Obama's plans for another presidency is not deeply hidden.
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R. Enikolopov from Russia's New Economic School expressed the view that in the coming presidential elections Obama would have to compete against unemployment in the US rather than against a Republican rival. Capping unemployment is a staple of Obama's economic policies, while the stimuli packages come at the cost of wider budget deficit. The strategy draws fiery criticism from the Republican camp whose candidates built their programs on debt reduction during the Congress elections last fall. Washington's soft approach to fiscal issues also outrages developing countries like China and Brazil which face the inflow of cash from the US, the results being reevaluations of their currencies and, accordingly, the threat of bubbling. In the US, the suppression of unemployment by such means can have the side-effect of heightened inflation, meaning that the remedy can cause greater harm than the illness which is being treated. It is a well-known fact that inflation is what voters in the US never forgive. The commonly adopted re-election probability model developed by Yale University economics professor Ray Clarence Fair assumes that inflation, along with GDP growth, determines the incumbent's chances to retain office.
Actually, the politically significant food and gas prices in the US are rising due to reasons unrelated to Obama's economic policies, and voters may easily run out of patience if galloping inflation mixes in. While the limited success in fighting unemployment does reinforce Obama's re-election prospects, an inflation surge will kill the hope. As a result, Obama's Administration is forced to gradually tone down the economic stimuli policies.
Aiming at a new presidential term, Obama faces both old challenges – the economic downturn, unemployment and deterioration of the social climate – and the new ones including the war in Libya, a conflict with Iran that permanently looms on the horizon, and the risk of dollar devaluation. The escalation of military conflicts across the world – a process for which Washington bears the lion's share of responsibility – shows that a world war may end up being the likeliest solution to the global crisis.
New evidence that a global war is emerging as the scenario of breaking out of crisis surfaced recently – a few months before NATO attacked Libya – when US banks took to massively converting their assets to cash. The figure below reflects the analysis conducted by Russian economist E. Susin.
It is hitherto unclear where the assets were drained from, but the trend evidently started gaining momentum before the current global escalation. The hypothesis that banks diverted assets to meet their obligations does not go through as the assets ended up converted to cash. Notably, not only US banks but also foreign banks operating in the US were in the pursuit. Considering that they showed $305.5b in cash in mid-December, 2010 but $672.1b as of March 23 on balance sheets, 2011, the increase was to be more than twofold. The money simply fled external markets and, interestingly, did so before the now-obvious reasons for the flight came into being. At the moment foreign banks active in the US are sitting on huge currency holdings (their assets totaling $1.68 trillion, the above data means that 40% of the amount exist in liquidity form). The inescapable conclusion is that at least the financial world was bracing ahead for the global escalation.
Banks continue to service their obligations, but that cannot last forever. Consequently, soon the money will be back to work in the situation where the US – the country with a minimal level of cash circulation and predominantly electronic payments, where carrying more than $20 in the wallet is unusual – is saturated with cash.
US banks are taking measures to endure serious infrastructural crises which may be accompanied by electronic banking blackouts, which are only possible in the settings of a severe military conflict. It is a major war that can put the greatest obstacles in loudly anti-militarist President Obama's way to the White House. A lot will depend on when the next phase of the drama underway in Libya starts to unfold. It is relatively unimportant where – in Iran or North Korea – it will unfold, it is not the geographic location but the timing that currently matters.