Like it not, Kevin Rudd and co follow the lead of the US. So, once again, I have been thinking about the US economy and what it might hold for our future.

Barack Obama was elected on a platform of change. And Washington was ready for change after eight years of the Bush Administration’s mucking up on the world stage.

The war in Iraq, the war in Afghanistan – despite the deep tragedy the world experienced on September 11, 2001 (and indeed, it was a world tragedy), we aren’t any safer. We aren’t any better off and, in fact, the financials are scary despite recent, sustained gains in the larger stock markets.

U.S. unemployment reached the symbolic 10% level, coming in at 10.7% in the last quarter.

It was a little over a year ago that Lehman Brothers announced it was defaulting on its debts and received and immediate infusion of government bailout money.

Insurance giant, AIG, also announced it was facing bankruptcy. AIG insures all of the home mortgages in default in the U.S. The feds pumped in an instant $80 billion to prop up a company that was “too large to fail.” So much for free economy.

The fact is, the US Government cherry-picked which companies would survive with federal loans, subsidies and tax breaks. When Merrill-Lynch came, hat in hand, they refused to bail out this commercial lender and the company collapsed under the weight of its own debt.

Agreed, President Obama inherited the perfect storm of economic disasters, but it’s been well over six months – an eternity in stock and real estate markets – and have we seen progress?

At a press conference a few months back Obama’s Press Secretary, Robert Gibbs could not answer a reporter’s question about who was in charge at AIG – the entrenched AIG fat cats or the feds. After all, the Americans bought themselves an insurance company and a manufacturing company – one you may have heard of – General Motors, the one-time megalith of automobile manufacturing. Now they want answers, but even the Press Secretary couldn’t provide any.

Remember the old saying, “What’s good for GM is good for America.” That’s no longer the case. In fact, General Motors in the US has just launched a campaign to move more cars – a 60-day, no-questions-asked guarantee. You don’t like the car bring it back.

It may work. At least the company is trying, and they stole the idea from Hyundai, so it’s not ground-breaking.

The “Stim” (Stimulus Package)

Obama has an expansive, open mind and personally I like the style of guy. He seems to be good for America and good for the world. However, I also think he tends to listen to his advisors way too much.

The US has have already pumped over $1 trillion dollars into an economy with an eroding manufacturing base. Hey, Barack, where are all of these new jobs going to come from?

So, what are Obama’s options? In my opinion, slim to none. The Obama number crunchers face a list of critical issues.

Lending nations, like China and Saudi Arabia, are putting their revenues in Euro-based investments. Confidence in the stability of the dollar continues to erode on FOREX exchanges on a global scale. I predict that within five years, the Euro will be the world’s currency, not the American dollar.

Defaulting on debt isn’t an option. If the U.S. did go into default, it would only be defaulting on itself. How many Americans are invested in U.S. loan assets – T-bills, notes and bonds?

Here’s what scares me. Obamanomics is this amorphous term. No one (including the U.S. Congress) has a clue what’s at stake here. But I see them at a crossroads. The U.S. has been a debtor nation for more than 15 years. And they owe a lot of money to countries that aren’t friends – countries like China and Venezuela where Hugo Chavez is a loose cannon who threatens to destabilize all of South America.

Obamanomics pumped over $1 trillion in to the U.S economy (a jump start), yet jobless claims increase at about 6.7% each week. That’s a frightening number when you consider that one in 10 Americans is already out of work. And that doesn’t include the under-employed or those who have simply given up looking for a job.

Another point: the “Stim” was supposed to free up mortgage money for homeowners who were suckered into sub-prime loans they could never afford. Yet, according to a colleague in the states, who lives in a well-to-do Connecticut suburb, the HOME FOR SALE signs line the back country roads.

People can’t afford the homes they could even three years ago. When the housing bubble burst in July of 2008, it created a domino effect across the entire world economy.

The Stimulus package the Obama team put together hasn’t had an impact on the growth of the American economy. So here’s my question to Mr. or Ms. Small Businessperson in Australia: what impact can we expect on our businesses in the months and years ahead.

I see two possible scenarios. Obama’s plan works, he passes health care reform and is declared a hero for saving the world. We need heroes today and I hope this is the scenario that ultimately comes to pass.

The second scenario is a doomsday scenario. The only way the U.S can pay its debts and keep the economy afloat is to have the Treasury print more and more money, essentially flooding the market with cash in an attempt to keep lending rates low.

This didn’t work in Japan in the ‘90s or in Brazil in the new millennium. And I fear that if the U.S. Treasury does continue to pour cash into a shaky market, the result will be some form of hyper-inflation. Right now, there’s no sign of significant inflation in the U.S. or Australia.

However, if Obamanomics drive world economies deeper in debt, if the U.S. were ever to default on its debts, and/or if the U.S. Treasury continues to print money with nothing to back it up, we could be heading for world-wide hyper-inflation. I don’t know about you but I don’t feel like spending $100 for a loaf of bread.

And let me leave you with one thought that’s been niggling at me for years now. After World War II, the U.S. had the most powerful, manufacturing-based economy ever known. Pittsburg steel, GM, FORD, Chrysler – Made in the USA was a good selling point.

Today, foreign automakers are eating GM’s lunch. Nucor is the only viable steel company in the U.S and those millions and millions of manufacturing jobs have moved overseas.

So, here’s what’s really bugging me. If the U.S. has lost its leading role in a variety of manufacturing sectors, how will the country replace manufacturing jobs? And with what?

Short-term, I’m pulling the wagons into a circle and burying my retirement in the backyard.

Long-term, I think the Obama economic team faces numerous challenges. And all we can do in Australia is hope for the best and prepare for the worst because another 50% tax break or $1,000 handout is unlikely to save the day.