The Legacy of Obama's 1st Year: The End of American Economic Dominance

America has been an economic force for the last 175-years. From building ships to building cars to building planes to building computers, we ruled the world. We developed and implemented weapons programs that brought the Nazi's and Soviet Union down and sent a man to the moon using our great American ingenuity and the power of American business.

Boeing, Lockheed-Martin, Procter and Gamble, Walmart, Microsoft, Xerox, IBM, Exxon...the list is endless. American business was the engine that drove our prosperity. We all enjoyed the highest standard of living because of the men and women who came up with ideas, secured funding to make them reality and sold them to the world.

Alas, those days are gone.

Why do I say this? The following is all from today:

First Obama's cutting a small business lifeline:

The Obama administration will stop American banks from taking gambles--a practice that has worked for a century:

The president's proposal aims to remove private-equity investments, the hedge fund business and proprietary trading from banks, and put a stronger lid on bank acquisitions.

The proposal might prevent Wall Street giant J.P. Morgan Chase & Co. (JPM) from buying another bank, or diversifying in some areas--though it wouldn't mean the bank's end. Shares of the bank fell 6.6% Thursday.

...Private-equity investments have done little harm to banks. "Virtually every regional bank in the country has some amount of private equity," for example in small business development co-investments, the banker said. Ceasing such investments "pulls a huge amount of money out of small business" at a time when the economy has just begun to recover, the banker said.

Regional banks might also run into problems with a ban on proprietary trading. Regional banks often have small investment banking operations to help business clients access the capital markets, and the banks have to hedge a clients' bond offering with proprietary positions, the banker said. Strictly speaking, a bank's investment portfolio could be considered a proprietary position.

We've slipped on the list of "economic freedom" as well, falling below Canada:

Jan. 21--Blame government spending and industry bailouts: The U.S. economy is not the freest in North America, according to the 2010 Index of Economic Freedom.

The index, issued by the Washington-based Heritage Foundation and the Wall Street Journal, ranks the United States as the world's eighth-freest economy in 2010, a slip of two places from 2009.

And finally, Russia is diversifying and the big gainer will be...Canada:

Canadian Finance Minister Jim Flaherty said Russia’s decision to buy Canadian dollars reflects the North American country’s relatively strong fiscal position, and “substantial” pressure on the U.S. currency to depreciate.

Flaherty, speaking to reporters today in Windsor, Ontario, said the U.S.’s budget deficit and “other challenges” in the world’s biggest economy are making the U.S. dollar less attractive compared with other currencies.

“Investments by other central banks in Canadian securities and the Canadian currency is a recognition of the fiscal health, relatively speaking, of Canada, which is strong,” Flaherty, 60, told reporters. “There’s downward pressure on the U.S. dollar, which results in upward pressure on other market currencies.”

The U.S. dollar has declined against all but one of the 16 most-active currencies over the past 12 months, prompting major reserve-holding countries such as Russia and China to express concern that their U.S.-denominated investments may decline in value. Canada’s dollar gained 21 percent against the U.S. dollar over that time.

Damn, I say we invade Canada, take their oil and sell Quebec. Er, on second thought, we'd pretty much have the equivalent of a really large Vermont.