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US President Barack Obama has Rock Star appeal among the investing class, except in the USA. The Quarterly Bloomberg Global Poll of financial investors and analysts finds attitudes about the new president in Asia and Europe are overwhelmingly positive. In the US, by contrast, they are slightly negative. In Europe and Asia, 87% of respondents say they view Obama positively, compared with just 49% in the US. His standing among American investors is even lower on economic matters: only a quarter of US poll respondents rate his economic policies as “good” or “excellent,” compared with more than half in Europe and Asia. President Obama’s “stratospheric favorability ratings” outside the US after five months in office are related to attitudes about his predecessor, former President George W. Bush. “It speaks as much to the visceral distaste for George Bush outside of the US,” she says. In Europe and Asia, more than four of five poll respondents choose Obama over Bush as the president offering better economic leadership. In the US, investors pick Bush, 43% to 41%.

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At the end of Obama’s press conference following the Group of 20 Summit last Thursday, a large crowd of journalists did something journalists never do: they gave a politician a standing ovation.

In a week that began with a flurry of meetings between the US president and his counterparts from China, Russia, India, Saudi Arabia, Britain and others, and ends with Saturday’s NATO summit, the media’s uncharacteristic behavior might easily be forgotten. However, it will likely linger because it matched a sincere response over and above the supplication shown towards any occupant of the White House by the leaders of the G-20 countries.

The same cerebral and low-key approach used by President Obama in dealings with fellow leaders came out in often lengthy, but nuanced, answers to questions. “He actually answered the questions he was asked,” says one startled Asian reporter. President Obama he is being accorded high ratings from almost every quarter barring his conservative critics in the USA. In part, this comes because of the contrast Mr Obama strikes with the widely derided George W. Bush. Partly it has been prompted by the celebrity cult the new leader has generated in the US. But most of all, it is about Mr Obama’s unusual approach to foreigners. “I have come to listen, not to lecture,” he said several times this week.

Much of the time he appeared to mean it. The least expected endorsement came from Russia’s president Medvedev, who until he met President Obama had developed a taste for rubbing Americans the wrong way. But last Wednesday the Russian president unexpectedly invited him to visit this July, observing that Moscow’s warm weather that month would reflect the new warmth in US-Russian relations, Mr Medvedev said: “After this meeting, I am far more optimistic about the successful development of our relations and would like to thank President Obama for this opportunity.” Mark-to-Market Rule Gives More Clarity

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Barack Obama is poised to sign an executive order on Monday lifting restrictions on federal funding for human embryonic stem cell research. The move comes almost eight years after George W. Bush, the former president, imposed strict limits that critics said hindered medical research and hurt US science.

Stem cell research is fiercely opposed by some religious groups because it involves the destruction of human embryos. But scientists and health activists argue it could reveal treatments for conditions ranging from diabetes to Parkinson’s disease. Under Mr. Bush’s restrictions, funding was allowed only for a relatively small number of existing cell lines to prevent taxpayer money being used to destroy additional embryos.

The announcement marks the latest in a series of early steps by the president to roll back his predecessor’s legacy. Some science advocates had grown nervous about why the stem cell research ban was not overturned in the first wave of announcements but the White House issued assurances that it was coming soon. Mr. Obama has already thrilled the science community by appointing Steven Chu, a Nobel prize-winning physicist, as energy secretary, and reversing the Bush administration’s skeptical attitude towards climate change.

However, the stem cell ruling threatens to alienate evangelical Christians at a time when Mr. Obama is facing mounting partisan opposition from the right.

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The United States and Europe have committed a lot of money to rescuing ailing banks to date. Japan’s veterans have just two words of advice: More and Faster.

The Japanese have experience as they endured a decade of economic stagnation in the 1990’s, because their banks struggled under crippling debt, and successive governments wasted trillions of yen on half measures to restore them.

In 2003 the Japanese government finally took actions that led to a recovery: forcing major banks to submit to merciless audits and declare their bad debts; spending two trillion yen, or US$22.23B at today’s rates. Thus effectively nationalizing a major bank at the expense of shareholders; and allowing weaker banks to fail.

But by the time that went into effect the Nikkei 225 stock index dropped by about 75% from its highs. Prices for real estate ultimately fell for 15 consecutive years, and public debt grew to exceed gross domestic product as deflation took hold. Some scholars of the Japanese debacle see the USA heading to a similar fate.

“I thought America had studied Japan’s failures,” said Hirofumi Gomi, a top official at the Japanese Financial Services Agency during the crisis. “Why is it making the same mistakes?”
Some US critics of the plan announced last week by US Treasury Secretary Timothy Geithner said it lacked details. Experts on Japan found it timid at best, especially given the size of the banking crisis the Obama administration faces.

“I think they know how big it is, but they don’t want to say how big it is,” said John Makin, an economist at the American Enterprise Institute, referring to administration officials. “It’s so big they can’t acknowledge it.”He added: “The lesson from Japan in the 1990s was that they should have stepped up and nationalized the banks.”

Instead, the Japanese first tried many of the same remedies that the administration of President George W. Bush tried and the administration of President Barack Obama is trying, i.e., low interest rates, fiscal stimulus and ineffective cash infusions, among other things.
The Japanese also tried to tap private capital to buy some of the bad assets from banks, as Geithner proposed.

One of the reasons Japan was so timid was fear of public outrage, which grew with each act of the bailout, but the Japanese experience shows that resolving the mess will require a firm government hand and will be extremely expensive. Delay in doing it now will only cause the cost to soar, and the bank rescue will determine the fate of the wider US economy. While President Obama has prioritized his stimulus plan, no stimulus is likely to succeed unless the banking sector is repaired, and the United States probably will not be able to count on a growing demand for its products as the global economy worsens. A further lesson is that the bank rescue will determine the fate of the wider economy. While Obama has prioritized his stimulus plan, no stimulus is likely to succeed unless the banking sector is repaired.

“The way things are going right now the U.S. taxpayers’ burden will keep going up and up.” said Takeo Hoshi, an economics professor at the University of California at San Diego.

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