Barack Obama faces many daunting challenges both in foreign policy and domestic affairs. In foreign policy he has to pull out American troops from Iraq in 16 months time; win the war in Afghanistan; resolve the Israeli Palestinian problem that has defied all American presidents since World War II; deal with the potential nuclear power Iran and also take on an emergent and defiant Russia that is challenging inroads President George W. Bush has been making into what Russia considers its backyard.

But none are as daunting as the financial and economic crises he is facing at home even before he moves in to the White House on January 20.

The American automobile industry, the might and power of all American industry - as most Americans consider it to be and also most of the outside world - is facing collapse. The three mighty giants - General Motors, Ford and Chrysler are facing bankruptcy and said last week  that unless the government bails them out with a $ 25 billion package the roof will come down on them.

Millions of jobs in the industry, those in other industries dependent on the automobile industry as well as jobs abroad are at stake. But on Wednesday Democrats that control Congress refused the rescue plan of $25 billion until the industry can produce a plan to rebuild itself.

Law makers and car makers

As commentators pointed out 'the lawmakers and carmakers' are not seeing eye-to-eye. The lawmakers see the pathetic state of the industry as being due to the incompetence of the executives of the industry in not producing vehicles wanted by the public such as fuel efficient cars while the manufacturers have claimed the crisis to be the result of the economic meltdown.

The financial bailouts by the US Treasury are proving to be highly unpopular with the American public who are reeling under an approaching recession. The $ 700 billion bail out of financial institutions has been resented strongly by the people. That was perhaps why Nancy Pellosi the Speaker of the Congress told manufacturers, last week: 'Show us your plan before we show you the money.'

Top automobile executives turning out at Washington in their executive jets to collect the $25 billion with 'tin cans in their hands' have not amused Congressmen. However, Congress is likely to meet again next month to reconsider the plan of the automobile industry to rejuvenate their business.

Meanwhile President Elect Barack Obama will be on the sidelines till January 20 while unemployment has risen to the highest in 16 years. Last week it was reported that over 10 million Americans were searching for jobs and that Congress had approved money for unemployment benefits.

Challenges before Obama

Economic analysts point to three distinct challenges before Obama: The financial crisis, mortgages and the recession. Reports say that financial problems would be more or less under control by the time Obama takes over because of the steps taken by the Treasury and the Federal Reserve.

Both institutions expanded its lending to a wide spectrum of borrowers. This is seen in slight improvements in the stock market and decline in interest rates for some kinds of loans. But analysts say that this 'healing process' would have to continue and more government intervention would be needed. With the passage of time the demand for rescue passages will increase and that will be another challenge for the new president.

How long the recession will go on and the measures that would have to be adopted are unfathomable even to economists of renown and guesstimates have become the name of the game.

G-20 Summit

The meeting of the heads of the G- 20 countries summoned in Washington by President George Bush to consider financial strategies of the affluent countries including the newly emergent economies such as India, China and Brazil did not produce any instant solution. 

Even before the G-20 meeting The Economist wrote: 'Several have talked grandly of a sequel to the 1944 Bretton Woods Conference which created a post-war system fixed exchange rates, and established the International Monetary Fund and World Bank. This is nonsense. The original Bretton Woods lasted three weeks and was preceded by more than two years of technical preparation.'

The five hour Washington meeting called by President Bush will not remake global finance, yet it was worth having in that it could be the beginning of a better multilateral economic system, the journal contended.

An article in the New York Times said that leaders of the 20 countries agreed to work more closely but put off thorny questions until next year in an early challenge to the Obama administration. The next G-20 meeting was put off for April 30 giving the new administration 100 days for preparation.