In November, Barack Obama will be elected president. People are fed up with George Bush and the Republican candidate wants to continue his policies -- tax cuts for the rich (even though he opposed them before), 100-year war in Iraq, etc. Americans know we can't afford a third Bush term.

President Obama will offer a middle class tax cut and raise the capital gains rate. This change will put more money into the pockets of consumers which account for 70% of GDP growth. And it will help balance the budget -- Bush's tax cuts have helped hit a record $410 billion deficit. Obama will also veto earmarks and implement pay-go rules which require a balanced budget.

These fiscally sound policies will strengthen the dollar which will help drop the price of gasoline and food. Obama will also create incentives to encourage investment in alternative energy. America knows that high oil prices enrich the enemy -- 15 of 19 9/11 hijackers were from Saudi Arabia -- our second biggest oil supplier. The sooner we can free ourselves of that devil's bargain, the safer we'll be.

For the sake of our economy, January 2009 can't arrive soon enough.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter.

Whatever your political ideology happens to be, I think we can all agree on one thing: Given the complex economic issues currently facing our country -- many of which will continue to be important for the foreseeable future -- our next president must be someone who understand economics.

To that end, the latest issue of Barron's looks at the backgrounds of each candidate (subscription required), showing something troubling: McCain's financial expertise is pretty much limited to having married a rich woman. That's a good strategy to be sure, but not necessarily the best background for someone charged with dealing with the current mess. Advising struggling homeowners to scan the obituaries in search of newly widowed socialites might not go over well.

Then there's Barack Obama whose experience in the market is, according to Barron's, pretty much limited to having once lost $13 thousand on stocks acquired through a blind trust. Barron's writes that "Small wonder he's giddy to raise taxes on interest and dividends. Obama has little skin in the game ... He's as insulated from his own dividend and capital gains proposals as a penguin is from the cold."

Hillary Clinton's net worth is very high, but she owns little stock. Her experience on the board of directors at Wal-Mart (NYSE: WMT) is intriguing but, looking at the available information, one thing is clear: None of these candidates can be considered an economics expert, something that we badly need, although George W. Bush's MBA from Harvard did little to avert the current mess.

Perhaps we'll get our economics expert from the other half of the presidential ticket. Private equity titan Mitt Romney is rumored to be a possible pick for John McCain, and there is some speculation that Barack Obama could pair up with New York Mayor Michael Bloomberg.

On Saturday, President Bush warned that the government must guard against going too far in trying to fix the troubled economy. "If we were to pursue some of the sweeping government solutions that we hear about in Washington, we would make a complicated problem even worse -- and end up hurting far more homeowners than we help."

"Democrats know that wait-and-see is not a responsible strategy for an economy that is teetering on the brink of recession," said Senate Majority Leader Harry Reid. "The president continues to convince himself that inaction is the cure-all for the economic problems hurting hardworking Americans." Democrats intend to strengthen the economy with measures dealing with housing, energy efficiency, and renewable energy.

President Bush said the recently passed program of tax rebates should begin to lift the economy in the second quarter of the year and have an even stronger impact in the third quarter. But he urged caution about doing more, particularly about the crisis in the housing market.

There has been so much crap thrown around about whether WE ARE in a full blown recession OR NOT that all the talk, is just that -- a lot of talk. Long time investors know well that if there is anybody left that thinks we are not in a recession than we have not reached final capitulation.

If we do not reach this level of pain, then we cannot get better. Admitting the problem is a major path to recovery. That is true for an alcoholic and our ailing economy. As long as the alcoholic keeps saying they can handle the problem, its not going away.

Our economy is drunk and falling over. You can call our current economic crises a "rose" for all I care, and for those that want to wait for the classic two quarters of negative growth to appear you can consider yourself followers not leaders. Leaders take action and try to avoid a crises. Followers, wait until there is a crises... and historians document and report on the difference between the two.

With home foreclosures expected to increase in 2008 as the second wave of variable interest rate mortgages reset, an influential member of Congress is expected to introduce legislation that would enable the Federal Housing Administration to buy at-risk loans, enabling them to be refinanced and preventing homeowners from being foreclosed upon, The Financial Times reported Wednesday.

U.S. Congressman Barney Frank, D-Massachusetts and chairman of the House Financial Services Committee, is floating a $15 billion initiative that would authorize the FHA to buy as many as 1 million at-risk mortgages, The FT reported. Some loans, such as those for investment properties and vacation homes, would not be eligible for the program.

The overlooked FHA

Overlooked during the "Roaring 1990s" economic expansion and this decade's housing boom, the Federal Housing Administration is a Depression-era agency that insures loans made to borrowers with poor credit.

The comments on a recent blog post by Sarah Gilbert, about Starbucks retraining efforts took an interesting turn towards discussion about whether or not that company supports our troops. This seems to be a subject which elicits strong passion among many blog readers, which prompts me to ask this question of you: Does a company's position, openly declared or not, regarding support for our troops, affect your perception of that company and whether or not you'll intentionally do business with them?

This issue can be difficult to assess, because often times a company's position on the matter is cloaked, unavailable or skewed by misinformation. The comments on Sarah's blog post give clear evidence of that. Some folks seem convinced that Starbucks doesn't care about our troops, yet packages bearing its logo are reported to arrive at military addresses every day. What's more is the fact that often companies elect not to state a position regarding our restructuring efforts in Iraq. To some people, silence on the matter is interpreted as contempt rather than consent.

I must admit that my own opinions about individual companies regarding their stance on our military involvements are sometimes colored by unconfirmed email commentary and careless internet banter. That is why I generally refrain from discussing the issue. What about you? Do you base your opinions on random emails which purport to reveal a company's stance regarding our military, or do you research the topic before coming to your conclusions?

Here's an item that's so laced with irony it defies comment -- I can't come up with a metaphor that does it justice. It's sort of like rearranging deck chairs on the Titanic, but it's much, much, much more pathetic.

President Bush's 2009 budget is expected to lead to a deficit of more than $400 billion. But not to worry, our fearless leader has a plan to cut back on spending.

According (subscription required) to the Wall Street Journal, "In years past, the White House's Office of Management and Budget distributed about 3,000 copies of the budget free to media outlets, congressional offices and elsewhere in the capital. This year, those folks must buy a printed copy or access one free online."

Members of Congress can get a copy for $67.50. Ordinary taxpayers hoping to get the details on how their elected officials plan to waste their money and then some will have to pay $213 -- or read it online.

The plan will save taxpayers an estimated $1 million over 5 years.

So $400 billion divided by $200,000... The President has found a way to shave off 1/2,000,000th of the projected deficit for 2009 that will be passed on to future generations.

Keep up the good work!

Since September, the Fed has cut rates from 5.25% last September to 3.50% and it's poised to cut them an additional 25 basis points today. Moreover, the House last night passed a $146 billion economic stimulus package. The problem with all this is that with inflation raging and consumer spending weakening, the cure could be worse than the disease.

This sequence of events brings back memories of the chorus that led us into war in Iraq. We heard mournful dirges about Weapons of Mass Destruction (WMDs) and Saddam Hussein's ties to 9/11. The cresting of national fear unleashed a war that's killed almost 4,000 soldiers, over 80,000 Iraqis, and cost $1 trillion. Meanwhile, it turned out that the WMDs were an illusion created by Douglas Feith, a Cheney aide, and there was no Saddam Hussein tie to 9/11.

The beauty of creating a policy based on no evidence is that in the right hands this very lack of evidence can be spun to reinforce the need for the policy. The political genius of this White House is its ability to turn an argument's weakness -- the lack of evidence for a desired policy outcome -- into a strength. In the case of the liquidity measures, there is scant evidence of a recession. And that lack of evidence has been turned into the basis for all the rate cuts and stimulus.

It goes without saying that the U.S. economy has had its share of negative data points and projections recently.

Continued subprime mortgage defaults and related asset write-offs. Declining corporate profits. A perpetual trade deficit. The first yearly decline in median home prices in more than 40 years. Declining consumer confidence. Paraphrasing the understated former U.S. Federal Reserve Chairman Alan Greenspan, these are not the most encouraging signs with respect to economic activity.

Are there any rays of light on the U.S. macroeconomic horizon? Indeed there are, and one originated from an unlikely source: the Congressional Budget Office.

The Congressional Budget Office projects that the U.S. economy is unlikely to fall into a recession in 2008, and that an economic rebound could start as early as next year.

Want to know how much the Republicans are the creek in this presidential election? A Bloomberg News/Los Angeles Times poll found that voters believe Democrats are better able to handle the economy than President George W. Bush by a margin of 51% to 29%.

Moreover, more than two-thirds respondents said they believed the economy was doing badly, up from 56% in December. More people -- about 80% -- see a recession as likely, up from 71%. A Wall Street Journal/NBC News poll found similar results.

Is it any wonder that President Bush buried the bipartisan hatchet and worked out a fiscal stimulus package?

Wouldn't the economy have gotten more of a kick if unemployment insurance was extended?

That issue will be hotly debated when the bill gets to the Senate. Sen. Max Baucus, the chair of the Senate Tax Committee, told the Wall Street Journal that leaving it out was a "mistake." Let's hope the new spirit of bipartisanship in Washington lasts a little longer.

But I wonder whether sending tax rebates -- mine would be about $1,500 -- will really stimulate the economy? Odds are pretty good that my wife and I are going to wind up handing a lot of that money right back to Uncle Sam which isn't very stimulating if you ask me.

This one may make the record books for an approved, federal stimulus package, if it becomes law within a month.

U.S. Congressional officials from both parties and White House aides announced Thursday morning they have reached a tentative deal on an economic stimulus plan, an aide close to the negotiations said, Reuters reported.

"We have an agreement in principle," said the aide, who spoke on condition he not be identified. Plan costs were not immediately available.

The Democratic Party-led U.S. Congress and the Republican Party-led White House have been negotiating a $140-160 billion fiscal packaged aimed at stimulating the U.S. economy, which most economists believe is growing well below trend-growth levels. Many believe the economy is growing at about 1.0-1.5%, if it hasn't already fallen into a recession.

George F. Will, a man so WASPy that he would be cast as a conservative TV pundit if he wasn't one in real life, is downright depressed about his beloved Republican party.

Writing in the Washington Post, Will said "Nov. 4 could be their most disagreeable day since Nov. 3, 1964. Actually, this November could be even worse, because in 1964 Barry Goldwater 's loss of 44 states served a purpose, the ideological reorientation and revitalization of the party. ... Today, all the usual indicators are dismal for Republicans."

Among the problems cited by the bow-tied commentator:

More people identify themselves as Democrats,

independents are sympathetic to the Democrats,

Democrats control the majority of seats in states with 303 electoral votes,

Most Americans believe the country is on the wrong track,

The major public policy players in Washington appear to be lining up in support of a fiscal stimulus package to help jump-start the ailing U.S. economy.

Professor Emeritus David E. RePass of the University of Connecticut once said that, "Congress doesn't react, unless not reacting will result in the Congress bearing the wrath of the American voter."

In this instance, it looks like the Congress has heard about, or has at least taken the pulse of economic conditions in their home districts, and is set to act on a stimulus package. And, by all accounts, it looks like they may do it in near-record time. (The late writer Mark Twain would add here, "Famous last words.")

Fiscal stimulus: full speed ahead

House Speaker Nancy Pelosi, D-California, said she expects to introduce an economic stimulus package after she meets with President Bush next Tuesday, CBS News reported. Further, on Friday, President Bush outlined a proposed $140 billion stimulus plan, which will include tax cuts and other tax credits, The Wall Street Journal reported. In his statement Friday, Bush did not provide specifics, but lawmakers close to the White House said the administration is set to propose tax rebates of $800 and $1,600, for individuals and households, respectively, and is set to provide businesses with a 50% tax deduction for new equipment purchases, The Journal reported.

The stock market is not exactly cheering about the announcement of a $140 billion stimulus plan which would give people $800 tax rebate checks. In a $14 trillion economy, that 1% of GDP rebate won't do much.

I think the money would go much further if it was used to recapitalize the banks that are writing down their collateralized debt obligations (CDOs). To maintain their capital ratios -- for instance, Citigroup (NYSE: C)'s Tier 1 capital ratio target of 7.5% -- banks that write down their assets need to either raise more capital or shed more assets or both.

But the great thing about recapitalizing banks is that they could lend out that capital to people who would put down some of their own capital and borrow the rest to make a purchase. $1 of capital invested in a bank could add almost $17 to GDP. Here's a rough example: if a bank trying to maintain a 7.5% capital ratio gets $1 of capital, then it can theoretically make roughly $13.33 worth of loans. If a person wants to buy a house with a 20% down payment, then that $13.33 can be used to buy $16.66 worth of real estate.

The nation's economy is more likely to experience additional economic weakness and slowing growth in the months ahead, according to data released by the Conference Board Friday.

The Index of Leading Economic Indicators declined again in December 2007, down 0.2%, worse than the 0.1% decline estimate, the Conference Board announced Friday in a statement (pdf). The index dropped 0.4% in November 2007.

Declines in 4 of 6 months

It was the third consecutive decline for the leading index, which has also dropped in four of the last six months.

The largest negative contributors to the index in December 2007 were housing permits, average working hours in manufacturing, new orders for non-defense capital goods, initial unemployment claims, and consumer expectations.