Look back at the polls just two months ago and you will see that John McCain was nipping at Barack Obama’s heels in the race to the White House. The candidates were essentially tied.
But in the following few weeks Obama was able to open up as much as a 10 percentage-point advantage over McCain, winning a famous victory on election day this week. Obama’s share of the popular vote came in at five percentage points above McCain.
What was looking like a close fight turned into a landslide, with two key factors explaining McCain’s precipitous collapse. The first was of his own doing. His choice of the folksy Sarah Palin resonated with many of his constituency, but her ill-preparedness for high office alienated at least an equal number of potential supporters.
But McCain and his team of strategists had not prepared for the financial tsunami which engulfed global markets starting in early September after the nationalisation of Fannie Mae and Freddie Mac.
The ensuing market meltdown, triggered by the failure of Lehman Brothers on September 15, turned what could have been a close-run race into a rout.
Blame for the meltdown was laid at the door of the Republican administration which had insufficiently regulated financial markets. The unflappable Obama was seen widely to have responded to the crisis better than the grandstanding McCain, who suspended his campaign to rush back to Washington but produced little action from his input.
The economy came to dominate the election and the meltdown saw a big swing away from McCain to Obama.
But the fallout from the meltdown will be the new president’s greatest challenge. Some pundits say that only two presidents, Abraham Lincoln and Franklin Roosevelt, have faced as daunting a task as that confronting Obama.
Obama warned in his acceptance speech before 200 000 Chicagoans that it may take more than one presidential term to fix the problems the country faces.
The Dow closed up strongly on election day in the United States but were mixed in Asia and Europe the following day as investors assessed the worsening global economy.
There are two major interconnected challenges. The first is a rapidly slowing US economy, perhaps best seen in the 45% fall in sales by car giant GM. This is a 25-year low.
Manufacturing output, as measured by the Institute of Supply Management, similarly fell last month to 1982 levels.
Jobless figures due out at the weekend were forecast to come in at 250 000, Reuters reported.
The second challenge is the amount of money which the US government will have to raise from investors to pay for the various bail-outs to which the government has agreed to ward off the feared financial meltdown.
Latest estimates are that this bill will come in at $2,1-trillion. The US budget deficit is projected to rise from its present record level of $455-billion this year to $1-trillion next year.
Interviewed before the financial meltdown, Obama said he did not believe his biggest challenge would be the budget deficit. Dealing with climate change was a greater problem, he said.
In his acceptance speech he acknowledged the political, economic and environmental challenges the country faces. “I know you didn’t do this just to win an election and I know you didn’t do it for me.
“You did it because you understand the enormity of the task that lies ahead. For even as we celebrate tonight, we know the challenges that tomorrow will bring are the greatest of our lifetime – two wars, a planet in peril, the worst financial crisis in a century.”
The country will have to find funds now to meet election promises such as in healthcare reform and to move the economy on to a cleaner, greener footing.
It will need to fund a fiscal stimulus to help get things moving again and to ward off the worst effects of a recession. A fiscal stimulus package could be enacted as one of the last measures of lame duck George W Bush, with perhaps a much larger one next year coming from President Obama.
There is much more bad rather than good news in the market, but at least the credit markets are thawing as the banks start lending to one another again.