CAIRO: Around the world, people watched the US elections with interest, a certain amount of admiration, and a healthy dose of skepticism.
There’s no doubt that an Obama victory was better received worldwide than a McCain win would have been. But with the US mired in two wars and with the world in an economic bog, people around the world are anxious for solutions.
With the economic crisis topping many people’s list of priorities, more than a few have wondered how the global economy would react to an Obama victory and what a President Obama might mean for the economic situation in the Middle East.
As the polls failed to tighten and an Obama victory seemed assured, the markets reacted favorably. The Dow Jones Industrial Average closed up 305 points, roughly 3.3 percent, as Americans made their way to the polls on Tuesday.
The Nasdaq closed up 3.1 percent at $1,780, while the S&P 500 rose 39.44 points to $1,005.74.
Egypt’s benchmark stock indexes ended in the green on Wednesday after a steady decline from a sharp spike early in the day.
Brokers said investors had been buying up shares since the start of the week in anticipation of the outcome of the US elections, boosting the market, and were taking profits on the first day after Democrat Barack Obama won the White House.
“People had been buying in anticipation that markets abroad would rise after the US election, Mohamed Tawfiq of Delta Rasmala Securities told Reuters.
“People were buying in expectation and today were selling on the fact, said Mohamed Kotb of Jazira Asset Management.
But the buying spree ended within minutes of the start of trade as investors began taking profits. The CASE 30 index closed 0.75 percent up at 5354.35. The Hermes index closed 0.4 percent up at 481.60 points.
As a stern reminder of the turbulent times, international markets were mixed following Obama’s victory. The Nikkei closed up 4.46 percent at 9.521.24.
London’s FTSE sank over the course of the day.
US markets had not opened by the time Daily News Egypt went to print, but overnight futures sank, indicating at least that investors did not see Obama’s election alone as a key to ending economic troubles.
Diaa Rashwan of the Al Ahram Center for Political and Strategic Studies worries that unless Obama makes a clean break with Bush economics, he may be tied to the crisis by some in the global community. “In the context of the financial and economic crisis, perhaps [Obama] will be linked to the slow economy, he said.
Rashwan, though, celebrates Obama’s brand of liberalism. Government intervention is positive, he said, when it serves to improve people’s livelihoods. He argued that the Bush Doctrine of preemption is the wrong kind of government intervention.Obama, he said, will bring “a kind of sympathy with the intervention of the state in private life.
He argued that stricter regulation by a US President might save the Middle East, and indeed the rest of the world, from future economic heartburn.
Many economists predict that an Obama presidency will be heavy on regulation, especially now as many blame deregulation for the financial meltdown turned global recession.
One of the most contentious economic parts of the presidential campaign, that is likely to affect the Middle East particularly, was the issue of corporate taxes.
US businesses pay among the highest corporate tax rate in the world. At 35 percent, this tax rate has seen jobs flee overseas as executives sought to find tax shelters in places like Dubai.
Presidential nominee John Mccain (R) argued that lowering the tax rate to 25 percent would encourage jobs to stay in the country and boost productivity.
Obama clashed with McCain on this issue in the presidential debates, arguing vehemently that reducing corporate taxes amounted to a handout to top business executives. Arguing opposite sides of the same populist coin, Obama better appealed to people’s anger over the corporate greed they largely blamed for the financial mess.
If Obama keeps his campaign promise and keeps the corporate tax rate high, he may struggle to keep jobs in the US.
This could mean good news for employment in the Middle East if corporations in the US continue to move jobs overseas.
Whatever approach Obama takes to handling the financial crisis, he will need to restore confidence in the US economy. If he fails, the US loses, and with it the world. -With additional reporting by Reuters.
