We now have a very powerful American President. And the Obama lesson will not be lost on Australian Prime Minister Tony Abbott.
Obama stood his ground with steely determination and the ‘compromise’ is really close to a total Obama victory because the deal makes it much harder to bring on a crisis again.
Those who had shorted the US stock market were desperately covering last night and that covering will continue in Australian and Asian markets today.
Buried in the cables is the fact that Republicans cracked because they feared what would happen to the markets and the value of their supporters’ investments. I am delighted to be wrong that the Republicans would have had to actually experience the pain before they would change.
Perhaps it was the singing of the hymn Amazing Grace at a key Republican meeting earlier this week that transformed them. The author of that hymn, John Newton, was involved in slave trading but in 1748 his water-logged sailing ship was caught in a violent storm and seemed certain to sink. It was saved and Newton’s life was completely changed by the experience and the hymn Amazing Grace describes the transformation. Since singing that hymn the Republicans have also been transformed, although they are still not united.
What’s next? Let me be bold: President Obama will proceed quickly with his plan to ‘legalise’ the 11 million ‘illegal’ Hispanic immigrants. America is becoming a lot more Hispanic and they will almost certainly ensure that the 2016 President will be Democrat. Iran has also been transformed and wants to do a deal. I think there is a very good chance it will happen. But on the bad news front Obama needs to strip away the public relations spin and face the disaster that is the Joint Strike Fighter, which will substantially reduce American air power unless significant decisions are made in the next 12 months (JSF denials are in defence of vested interests, October 3).
And then of course there is the conflict between the money printing of the US Federal Reserve, which is being prolonged by the automatic spending cuts installed when the Republicans were stronger than they are now. Those US spending reductions will prolong the required tapering of the money printing but next to Hispanic migration and Iran, tapering the money printing will be the next big item on the US agenda.
Back in Australia we are basking in the unexpected strength of the iron ore market, which will boost the profits of the big miners like BHP and Rio Tinto and make Australian tax revenue much higher than was expected at the time of the election campaign. The confidence that is coming from better export revenues, the end to Canberra chaos, higher house prices and another supermarket price war (A mammoth supermarket price war is brewing, October 15) will help the current sluggish consumer sentiment.
Meanwhile Tony Abbott has seen from the Obama experience the benefits of taking the challenge up to your opponents. The carbon tax helped drive the Coalition into power and Abbott will now use it as a weapon to make Bill Shorten damaged goods – just as Obama’s determination has done to the Republicans.