Obama warns of more job losses, foreclosures

US president Barack Obama yesterday told Americans to be patient and brace for ''more job loss, more foreclosures, and more pain'' in 2009, saying the recession is not yet over.

Recent stimulus measures ''are starting to generate signs of economic progress,'' but more tough times are ahead, he said.

While addressing American workers, homeowners and investors at Georgetown University in Washington, Obama sought to justify the steps his administration has taken so far and to make the case for more regulation and spending.

He said that, "one of my most frequent questions in the letters that I get from constituents is, 'Where's my bailout?' And I understand the sentiment.

"But the truth is that a dollar of capital in a bank can actually result in $8 or $10 of loans to families and businesses."

Obama admits there is fundamental weakness in the political system as well as the economic system. "There's been a tendency to score political points instead of rolling up sleeves to solve real problems.

He says people respond to ''the tempest of the moment'' instead of confronting challenges in a sustained and focused way. He adds: ''This can't be one of those times. The challenges are too great. The stakes are too high.''

Obama said the economy can't be fixed within timeframes.
"I know how difficult it is for members of Congress in both parties to grapple with some of the big decisions we face right now," he said. "It's more than most Congresses and most presidents have to deal with in a lifetime. But we have been called to govern in extraordinary times."

He cites a parable from the Sermon on the Mount about a man who built his house on a pile of sand and another who built his house on a rock.

"We cannot rebuild this economy on the same pile of sand; we must build our house upon a rock."

He describes that rock as a foundation built on five economic pillars: "new rules for Wall Street that will reward drive and innovation; new investments in education that will make our workforce more skilled and competitive; new investments in renewable energy and technology that will create new jobs and industries; new investments in health care that will cut costs for families and businesses; and new savings in our federal budget that will bring down the debt for future generations."

''If we don't invest now in renewable energy or a skilled work force or a more affordable health care system, this economy simply won't grow at the pace it needs to in two or five or ten years'' and that ''it won't be long before we are right back where we are today,'' he reminded.

Obama said markets and economies ebb and flow, but "this recession was not caused by a normal downturn in the business cycle. It was caused by a perfect storm of irresponsibility and poor decision-making that stretched from Wall Street to Washington to Main Street."

He said he "absolutely" agrees that the long-term budget deficit must be brought under control; but economists across the spectrum say that right now, with families and companies curbing their spending, "the government has to step in and temporarily boost spending in order to stimulate demand."

Ananlysts say the timing of the speech suggests that the president wants to frame the debate on his terms as members of Congress return to Washington next week from their Easter holidays.

Upon their return, lawmakers must reconcile House and Senate versions of a $3.6 trillion budget.

Moreover, the Treasury's so-called stress tests for the 19 largest US banks, measuring their ability to withstand worse-than-expected conditions, are due at the end of this month. Obama may be trying to brace taxpayers for requests for more assistance to the banks, as his budget anticipated.