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  • November 5, 2008 10:16 AM EST by Brian Sullivan

    Time to Get Down to Business

    A funny thing happened this morning following last night historic win by Barack Obama.   I got on the 6:45am train in New Jersey, hopped on the subway for my short ride to Fox studios, and realized that things seemed relatively ... well ... normal.

    My fellow commuters sipped their coffee, read the paper and tapped away furiously on their blackberrys.   In other words, doing what they do day in and day out.  Get up, rush to the train, go to work.   And now President-Elect Obama needs to do the same; get to  work.   There is much to be done.

    Now that the confetti is being cleaned up and the last of the balloons popped, there is no time to delay in working on the major financial pain still on the horizon.   It was telling that in his elegant victory speech last night the President-Elect said:

    "The road ahead will be long. Our climb will be steep. We may not get there in one year or even in one term. But, America, I have never been more hopeful than I am tonight that we will get there. that the economic problems we face may "take more than 1 year, more than 1 term" to correct.

    A tacit acknowledgement at the highest levels that this is going to be a multi-year slowdown.

    The first priority will be to name a new Treasury Secretary to replace the retiring Hank Paulson.   We cannot afford to have a two month lag in action and guidance from the Treasury.   There are many names being bandied about in various circles.  I won't list the names as they are merely rumors at this point, but someone needs to be named officially very soon.   There may be no more important job in Washington right now.

    This plays into the overall biggest issue: getting the American economy going again and to prevent the continued destruction of the credit and housing markets.   The latest lending data show that credit is tight and getting tighter.  Non-financial firms saw their access to credit sharply restricted in the three months to October and the proportion of domestic banks reporting tighter lending standards on commercial and industrial loans jumped to 85% in October from 60% in July.  Mortgage rates have also jumped recently, with spreads well above current interest rate historical norms.   Experts we've interviewed recently expect some type of push to lower mortgage rates and provide more direct assistance to hurting homeowners.   There is not only an economic risk here, but a political one.   Many Americans are upset over the level of help provided to those who overstretched to buy a home and who are receiving new, favorable terms while they sit on higher interest payments because they are not in trouble.   The sense of anger is palpable.

    Another big issue is employment.   Jobs continue to be lost at an alarming rate.   The ADP jobs report this morning showed that companies who use ADP payroll services cut an estimated 157,000 jobs in October, the most in six years.   While Obama has made somewhat negative comments about big business and taxes, his new administration will have to face the reality that higher taxes - or lack of cuts - may result in companies firing more workers.   Companies must be profitable to survive for long, and as the economy and business slows the single biggest part of any companies budget is always the easiest to trim first, in this case payroll.

    Speaking of jobs, another major issue will be the growing problems at the automakers.   Unions and organized labor were big backers of the Obama campaign and they are going to expect something for that help.    They will want help for General Motors (GM), Ford (F) and Chrysler and more job protection.    The primary problems though run deeper than the UAW can fix by potentially demanding financial help from the government or trade tariffs on imported autos.   First, the companies simply aren't selling enough cars in this weak economy.   That's an economic problem, not a union or GM problem.   Today GMAC announced a staggering $2.52 billion dollar loss in the third quarter due to losses on loans.   Again, not a car sales issue.   Additionally,  the current union workers' problems lay largely with their predecessors in the form of crushing pension and health care obligations to former workers.   Much like the rest of America, the number of retirees is growing and pension fund returns are being hammered by a sinking stock market.   How to balance the promises to the autoworkers while dealing with the dire realities of the numbers will be a delicate dance.   And don't expect the unions to wait very long before they come calling with a long list of demands.

    There is also the business of alternative energy.    Finding new sources of power and relying less on fossil fuels was a big part of both campaigns.   The problem is that many of the companies that were thought to be the next leaders in alternative energy are having funding problems.   VeraSun Energy filed for bankruptcy last week, marking an amazingly fast rise and stunning fall for the ethanol company.   Other companies in this space are also in tougher financial conditions than a year ago when credit was loose and money was easy.   If Obama is to keep his promises, he will need to help keep these companies in business.

    This is clearly just a starter to-do list.   But today Barack Obama and his new staff must start.   There is no time to waste.  Time to get down to business, just like all of us did in the pre-dawn light of the New Jersey Transit train station this morning.

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6ftrabbit

For the Democrats a word of warning: Don't screw it up.

November 5, 2008 at 10:54 am

David in Sarasota

Being a student of history, I see history repeating its self. It is amazing how quick it is repeating, only 76 years. In 1932 America was at a very similar cross road, a very dangerous cross road. And in that historic year America elected its first socialist president. And the recession turned into a depression that lasted until WW2. So if I'm right, then we are only beginning to hurt, as a matter of fact we really aren't in pain yet. We can look forward to "enjoying" the following under NObama: NObama wants oil at $200 a barrell, what do you think a gallon of gas will cost? NObama wants to spread the wealth, do you really think he will stop picking pockets at $120,000 a year? He has voted at least once, maybe twice, to tax incomes starting at $42,000 a year. Capital gains will go to 30%, don't forget this includes you house now. So if you sale 30% of the profit goes to NObama. Marxist/democrats came out of the closet yesterday, purposing to take 5% of your 401K and put it into social security. Once a marxist/democrat gets his creedy little hands on something does he ever take it off? I promise 5% is only the beginning. So if you think you will have a 401K in 5 years or more think again. That's just for openers, more bad news is on its way. Lock and load...

November 5, 2008 at 12:18 pm

Keith

No worries, all will be blamed on Bush and the Republicans. . . . for the next 8 long years. . . I'm just curious as to where BHO is going to hold his weekly rallies at the White House since that has been his biggest management victory to date. . .

November 5, 2008 at 12:26 pm

frank johnson

Batten down the hatches we are in for a wild ride. If obama makes good on his promises we will be looking at 10% unemployment and 12% inflation within two years. The stock market will continue to deline slightly unless there is further news about increasing the capital gains tax and with that there will be a rush to sell driving the market down to close to 7,000. Companies anticipating tax increases will continue to eliminate jobs, benefits, etc and with many wealthy people looking at muni bonds the tax revenue will decrease causing an increase in inflation which will be double whammy on the very tax payers who voted obama into office--not very good prospects.

November 5, 2008 at 1:24 pm

chuck

News for the left: don't decieve. Don't play games with us. We're not stupid. One more thing: no fairness doctrine. But the most important thing time to produce results and show how much of a change agent you really are. No going backward. Only go forward.

November 5, 2008 at 1:24 pm

AMB

Why aren't all the high priced Obama supporters putting their money where their voting fingers are? Come on, jump back in the market if he is soooooooooooo great.

November 5, 2008 at 2:33 pm

Steve

Well, the Dow seems to love Obama... well, actually, not so much.

November 5, 2008 at 3:15 pm

Ward

I disagree with you on how America can have a strong economy again. I am 26 and have started more businesses than Obama ever will. He cannot DO anything that will fix our economy. The only thing he should (but won't do) is nothing at all. Pleace let the free market be the free market. No dancing needs to be done by Obama. He is married and the free market is supposed to be for SINGLES (Free actors) only. So when the dollar is worth nothing and gas is at 5 dollars a gallon next summer. We just need Obama's dancing and "Yes we can" to fix all of our problems. The only problem is that people don't want free markets. They want socialism which means by by to prosperity.

November 5, 2008 at 4:32 pm

6ftrabbit

Obama is not the President or even A President. He's just the SOB who's going to stink up the office for the next 4 years - if he's lucky.

November 5, 2008 at 5:49 pm

B Scott

The President-Elect said the economic problems may take more than 1 term to correct,I didn,t notice any wild cheering after this comment,matter of fact the audience appeared almost "stunned".It,s a good thing he didn,t use the Kennedy line,ask not what your country can do for you, but what you can do for your country... you probably would have seen half the audience stampeding out the doors while the other half fainted to the ground.

November 5, 2008 at 7:24 pm

joe the capitalist

A bit difficult to get back to business ... capitalism does not work when the markets are nationalized and the population gets money for nothing from Uncle Sugar. Checking out the demographics of the election, Obama was elected by women, twenty-somethings, minorities, unions and gender challenged males. They will have to figure out how to make this work. Capitalism was rejected by our elected representatives before the election, and confirmed last night by the winning constituency.

November 5, 2008 at 9:35 pm

Sheri P

To David in Sarasota, I could not have said it better myself. On the 401(k) issue; unless I read the proposal wrong, I believe the gov't is going to take it ALL 401k money into the Social Security System (restoring participant balances at 08/31/2008 values). From there they are going to fix the rate of return (total return) at 3% per year, and will allow you to make contributions of 5% per year maximum. Again, this is what I have read.... maybe it has changed??? It's nothing more that SOCIALISM and I am ticked!

November 6, 2008 at 2:36 pm

Sheri P

To David in Sarasota, I could not have said it better myself. On the 401(k) issue; unless I read the proposal wrong, I believe the gov't is going to take it ALL ... 401k accounts... into the Social Security System (restoring participant balances at 08/31/2008 values). From there they are going to fix the rate of return (total return) at 3% per year, and will allow you to make contributions of 5% per year maximum. Again, this is what I have read.... maybe it has changed??? It's nothing more than SOCIALISM and I am ticked!

November 6, 2008 at 2:38 pm

about this blog

  • Brian Sullivan joined FOX Business Network (FBN) in April 2008 as an anchor. He co-anchors the 10am-12pm ET hours of the FOX Business block. Prior to joining FBN, Sullivan served as an anchor for Bloomberg Television where he hosted the programs Morning Call and In Focus.

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