There comes a point when you can’t take any more of a good thing.

Specifically, there comes a point when you can’t absorb any more overblown rhetoric about something that can never live up to its billing.

Barack Obama’s coming Presidency is like that.

Obamamania has hit a tipping point when it’s just beginning to shapeshift into its opposite. Ominously, we’re starting to feel jaded by the hype. We know it can’t possibly all be true. We’re aware that some people are talking through their hats bigtime.

Let’s face it, one man can’t possibly be … Barack Obama. The burden would be too great.

The achievement so far — that of a god not a man with smelly feet who snores (Michelle Obama’s words, not mine) — has happened on the back of yet another phenomenal bubble.

We should pity the man. Does he know what he has taken on? Has he the self-knowledge to realize that the greater part of the world’s population is projecting its desires and fantasies onto his frail shoulders?

My opinion is that a measure of competent administration, while keeping his country out of more wars, and gradually purging the vast indebtedness of the nation without bringing it to a shuddering halt, will be the very best he can hope for. Even that short list may not easily be achieveable under current conditions.

It would be a bravura performance if accomplished, given Obama’s political and economic inheritance from the previous administration. It would also deeply disappoint and disillusion two-thirds of the world’s population. As a realist where politicians are concerned, I would regard those simple goals achieved as close to heroic.

The future will be built around carefully-crafted technical solutions to almost unresolvable problems across the board. A truly intelligent President will know that like a bad case of fever, the cure must be to let it run its course, especially given the massive interventions that have already occurred.

The danger for Obama is that expectations are running so high that he will feel impelled to make grand gestures both at home and abroad. Such gestures are never neutral in their effects, though. They are often increasingly destructive well before the desired outcome has had time to make itself felt.

In terms of foreign policy decisions, reversals of current positions offer more hope than new, grandiose pronouncements.

Reversing Clinton’s sliding of NATO right up to Russia’s borders would be a good start. An offer of non-deployment of the “Star Wars” rocket shield to Poland in return for a Russian guarantee of the integrity of its neighbours’ territory, would probably reduce the tense standoff.

NATO is a busted flush, in any case, with Continental Europe refusing to contribute to its burdens.

At home, reducing government’s stake in the U.S. mortgage market, and an unpicking of Bill Clinton’s clumsy attempts to ensure “All must have prizes,” in the shape of houses they could never afford, would be a smart move, but I fear an unpopular one.

As for the last Bush to occupy the White House, Barack Obama will not need me to advise him on areas of policy reversal.

It won’t be spectacular. The times don’t call for that. But President Obama must rein in the “can-do, must-do” pressures from his wilder brethren who crave a Messiah in the White House.

Again, it won’t be easy, and disappointment will result. However, nothing will benefit his country more than a term or two of sobersides, thoughtful governance, stripped of declamatory passions and meaningless promises.

The phrase, “Mission accomplished,” must never pass his lips.

John Evans

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The crashing of America’s giant investment banks is beginning to sound like an Amazonian logging operation.

In quick succession Bear Stearns, Lehman Brothers and Merrill Lynch have all gone south to the lumberjacks. Of the Masters of the Universe, only Morgan Stanley and Goldman Sachs survive.

For how long?

With CDOs (Collateralized Debt Obligations) having poisoned the world’s financial system, like seeping toxic waste, a new danger is now forming on the horizon.

CDSs (Credit Default Swaps — insurance policies for bonded commercial IOUs), which are out there in their billions, are beginning to crumble in the face of massive defaults.

The world’s biggest insurer AIG is already in Lehman-style retreat — its shares plummeted by 70 percent in early trading yesterday — as is the monoline AMBAC. The CDS crisis is now with us. When optimistic Anatole Kaletsky of The Times (London) says we are getting into 1930s territory, you know we have a serious problem.

So what precisely are CDSs and how will their demise affect most of us in coming days, weeks, months and years?

George Soros estimates that the value of CDSs now equals half of U.S. household wealth, an almost unimaginable number, now put at $58 trillion.

CDSs are hedges made by investors in case a company defaults on its debts. In effect you bet on a company failing to protect your investment in the event it does just that.

The problem arises when large numbers of companies go bust and the CDSs themselves become worthless since no-one can pay them out.

A CDS seller undertakes to compensate a buyer if a corporate bond defaults. Since there is no limit to the size of cover taken out, the value of CDSs often exceeds a company’s debts.

Moreover, many CDSs are bought with borrowed money so the infection of the system drives deep into the financial heartland like veins in a blue cheese.

The danger now is debt deflation: a rapid reversal of debt issuance, or deleveraging as it is called.

Tim Congdon of the London School of Economics says, “Banking system capital is being wiped out. The risk is that this could lead to a contraction of credit and set off a self-reinforcing downward spiral, leading to the sort of debt-deflation we saw in the 1930s.

“It is already clear that money growth has ground to a halt over the past three months. We must prevent it from actually contracting. If the Fed and European Central Bank don’t cut interest rates soon, it is going to be a problem.”

The Bank of England’s rigid inflation target, set by Gordon Brown when inflation was low, is now a millstone around Governor Mervyn King’s neck at a time when energy, food and commodity price rises are being imported from global markets.

The Eurozone is similarly caught in a time warp relating to Germany’s neurotic fear of hyperinflation. Add the growing divergence between euro economies and a far deeper than necessary downturn is guaranteed for Western European countries.

America, which is free from those constraints, already has 2 percent interest rates. It is, however, suffering a double blow: the fading of the effect from the summer fiscal stimulus and a loss of export competitiveness as the dollar rises.

What began as bad government, worse regulation, grasping banks, financial structures that lacked resilience because they were built on sand, has turned into a perfect storm that is about to come ashore and swallow much of our familiar financial and economic landscapes.

As we wrote here a year ago, while the current triple crises are different from the 1930s, and may not bite so deep, the damage will take just as long to repair.

When a bubble of such exuberant overconfidence bursts, the fallaway has to be profound before a new wave can summon enough energy to restart the cycle.

What consolations can we find among this heap of misery? As usual Einstein has a thoughtful response:

“We act as though comfort and luxury were the chief requirements of life, when all that we need to make us happy is something to be enthusiastic about.”

Happy enthusiasm.

So the American primaries are over. No one can say they were bored.

All that remains of Julius Caesar

In the end a bruised but elevated Barack Obama triumphed deservedly over his street-fighting Moll opponent, Hillary Clinton. Whatever anyone thought of the outcome, it was a bravura spectacle on both sides.

Here’s a quick recap of what I posted here nearly four months ago – this is to allow you to assess Syntagma’s forecasting skills.

America’s Presidential election could be decided by which of the three big isms — racism, sexism and ageism — the country is least susceptible to. [...]

1. Do Americans want the Clintons back in the White House?
I would wager a big cigar they don’t.

2. Is John McCain too old?
The country that re-elected Ronald Reagan is not going to be put off by a man of 70.

3. Will America go with Obama’s left/liberal internationalist agenda?
Apart from a few white supremacists, I don’t think this election will turn specifically on race. Obama cuts across many traditional boundaries in the population and has an intellectual stature that suggests it will not. But in the campaign proper, his policies will be increasingly examined. [...]

In a year that’s made for the Democratic party, its two, admittedly impressive, candidates are likely to eliminate themselves by recent memories of past imperfections on the one hand, and an excessive zeal for the lost world of the sub-Marx master plan on the other. [...]

My guess is that [McCain] will win in a tight finish. But not so tight that we again become absorbed by the hanging chads of Florida.

Well, not too bad so far. We got the Democratic candidate right and I think a tight finish is almost guaranteed, especially as Obama lacks Hillary’s clout in the big swing states.

After the scintillating primary campaigns, I’m more certain than ever of my final prediction — that John McCain will be the next President of the United States. I believe Obama may be also … but in four or eight years.

Whenever I watch Obama speak, I’m reminded of a young Tony Blair before he became British Prime Minister, minus the prancing show pony act. The same certainties are there, the evangelistic language bordering on the biblical, the near-identical belief in the nostrums of left/liberalism.

Still to come for the young(ish) Senator from Illinois is the realization that none of these things work in the end. He should look at Labour Britain after 11 years of Blair and Brown. A wasteland of lost hopes and dreams as substandard politicians, drawn almost exclusively from the student activist class, recognize the awful truth: that life is too complicated to be micro-managed by government. Years of simplistic formulations driven by secondhand idealism, not truth, inevitably end in failure.

So who will be the new American Caesar?

During the coming campaign, I believe America will awaken to the fact that decisions have to be taken at the point of maximum competence — or as near it as possible. And that’s not by a government machine.

McCain may not be perfect, but he surely knows that to be true.

I’ve never really thought that Warren Buffett (pictured left) would want to invest in Syntagma Media, but an entrepreneur can dream.

Buffett, CEO of Berkshire Hathaway, and one of the top two or three richest people on the planet — heck, he even owns a hedge fund, is known for making shrewd investments. Where Warren burrows, others follow — like rabbits.

Like all good business folk he’s noticed that the dollar has been on the slide for quite a while, agonizingly compensating for America’s huge foreign trade deficit. Meanwhile, the poor old pound sterling is about to hit the starry heights of $2.10, making the greenback worth all of 47 pence (45 on PayPal).

For those of us paid in Uncle Sam’s Monopoly money that’s quite a hit we’re taking over here in the UK and Europe. We’ll be reduced to Dickensian conditions by year end, mark my words. We may even apply for Marshall Aid.

Anyway, back to Warren Buffett. He’s now announced he is NOT investing in any business whose income is designated in dollars.

Shrewd? Yes.

Scrooge? You said it. That’s why I say Buffett has rejected Syntagma Media.

On top of all that we have the credit crunch? Is that a new breakfast cereal? It’s the result of American banks giving mortgages to the trailer-park poor who couldn’t afford to repay them. They then sliced, diced and packaged them into “collateral debt obligations” and sold these to banks around the world.

Now banks don’t trust other banks — or their own balance sheets — so lending short-term funds to other financial institutions is at a standstill. Result? The world suddenly has an acute shortage of liquidity.

The U.S. used to be good at banking. What happened?

To our many American readers — who outnumber Brits by four to one — Syntagma wishes you a very happy 4th of July, Independence Day.

It must be some consolation that independence from us is not so bad after all.

Have a great time.