The “day of reckoning has arrived”. After years of financial irresponsibility, President Barack Obama told Americans on Tuesday night that “we will rebuild, we will recover and the United States of America will emerge stronger than before.”

In the opening passage of his address to a joint session of Congress, Obama said “the impact of this recession is real, and it is everywhere,” the result of extravagant buying, gutted regulations and inadequate financial planning.

The president spared no one in his analysis of who was at fault: Too many everyday Americans bought homes they could not afford and did not think about their next mortgage payments. Too many banks handed out loans to people who could not pay. Politicians allowed the surplus to disappear with tax cuts for the rich. Regulations were gutted to help companies make a quick profit.

“Well, that day of reckoning has arrived, and the time to take charge of our future is here,” the president said.

Out of the rubble, Obama said, was an opportunity to remake the economy and build a foundation for lasting prosperity.

“The weight of this crisis will not determine the destiny of this nation,” he said. “The answers to our problems don’t lie beyond our reach. They exist in our laboratories and universities, in our fields and our factories, in the imaginations of our entrepreneurs and the pride of the hardest-working people on Earth.”

The trappings of a State of the Union
Obama, who is only five weeks into his term, did not cast the speech as a formal State of the Union address, although it had all the same trappings. Instead, he described it as a “frank talk” about his economic agenda, which he is to flesh out in his official budget blueprint to Congress on Thursday.

Obama praised lawmakers for passing a $787 billion version of his economic rescue plan, which he said would save or create 3.5 million jobs.

But more is needed, he said. After a line-by-line review of the budget, the president said he had identified $2 trillion in savings over the next 10 years, which he promised would cut the deficit in half by the end of his first term. He said he had appointed Vice President Joe Biden to lead a “tough, unprecedented oversight effort, because nobody messes with Joe.”

Obama also touched on foreign policy, but that was largely left for other speeches. This speech was devoted to filling in the details of the budget approach Obama has outlined in broader terms during his first few weeks in office.

Uncle Sam as neighborhood banker
The president said that the government would be getting into the consumer end of the banking business agressively, by creating a federal lending fund to help provide auto loans, college loans and small business loans “to the consumers and entrepreneurs who keep this economy running.” He gave no details but forthe effort to be underway immediatelly. It seems the American government is going to maximize it´s economic leverage with the people where it really matters to help the economy. For the size of the American small loans indicated this is the equivalent of a Microfinance institution for the country. 

That´s the best and the most fiscally responsible way to create money in the economy in a real people´s banking exchange.  My experiences from our African and Indian Microfinance initiatives and the Bphone Mobile Money and Mobile banking for the bottom of the pyramid folks,  as a labaratory in another part of the world,  indicate this to be the best way forward…

Obama smartly declined the banker´s pleas for no strings attached financial begging and listened to the clarion call of the true change makers. namely the people. He chose the bottoms up method of popular finance that worked in Kenya to be applied to America. By allowing poor people and working class folks access to cheap banking services and effective credit, both the economic output increases as well as the rate of spending and surprisingly also the rate of savings increases, creating money within the economy by allowing the multiplier effect to take hold among the people.  Direct uplift is the result.

It is also the best way to create new savings and long term growth into the system. 

As an example the Kenyan economic landscape looked like all the rest of Africa in a postcard of underdevelopment. The English fostered banking system needed 100 years to reach the 2 million accounts  stable economy level. Yet in 199 a people´s bank called Equity bank was created and it added more than 3 million accounts in the next 8 years…  This in turn spawned a Microfinance revolution and it was followed by the Mobile phone banking services.  The mobile banking service M-Pesa has added more than 5 million accounts since it´s commercial launch in March of 2007.  This is exclusiveluy the territory of the poor and working classes and thos edeemed unbancable by the large sum zero counting bankers.  These mobile money accounts are the only strong engine of growth within the Kenyan economy.

Something to consider for those fat bankers and especially the hedgies and their brethren, the Private Equity and Venure folks who don´t get the Mòbile Money concept…

All the above data about Kenya´s unbanked peoples access to banking services and growth of Mobile banking and mobile money in Kenya as well as the growth rates and all figures are from the UN and the World bank circa 2009.

Change begets Change. A virtuous cycle indeed…

Well Done. Bravo.

Yours, 

Pano

PS:   Especially poignant is also the unintended message President Barack Obama´s choice of Rebuilding plan and direction, sends to the City of London and the Gordon Brown administration who in bed with the banking sector chose to give them all the money they wanted ´´Carte Blanche´.´. Without any strings attached they were given the wealth of the nation, so they can come back again and again to begg and steal from the public trough. The day of Reckoning shall come for England too with a new administration to rid us of the nincompoop darlings…