To say that the President and the Democrats have shot themselves and the markets in the foot is the understatement of the new century. In 1962 President Kennedy made the mistake of attacking the steel companies in order to get them to lower prices. The result was the 1962 mini stock market crash. Kennedy finally got the message and backed off, thus causing the economy and market to recover.
Now we have a stubborn liberal President and an arrogant congressional leadership that are both hell bent on destroying the banking system and the fragile economic recovery. In my opinion a combination of hubris and political ignorance has caused President Obama to ignore all of the polls and the Massachussets election results. Both the public and the stock market are sending the President a clear message that he is defying. To quote the great philosopher Yogi Berra, "Its deja vue all over again" and the consequences are dire.
President Obama was elected because of President Bush's unpopularity which in turn was caused by the Iraq war and the economic meltdown. President Obama said that he would be open with the American people and offered a reasonable alternative to Bush. He was not elected to delegate his leadership to Congress which has gone on a liberal healthcare spending spree based upon corrupt secret back room deals guaranteed to bankrupt the country "The President proposes and the Congress disposes" has long been the way that legislation has been enacted in America.
President Obama has no mandate to arbitrarily look for scapegoats in the business community, stop the war on terror and kowtow to our foreign enemies. He certainly has no mandate to go on a populist campaign for political gain without thinking about the consequences.
The stock market is falling off a cliff right now for the following reasons:President Obama has no mandate to arbitrarily look for scapegoats in the business community, stop the war on terror and kowtow to our foreign enemies. He certainly has no mandate to go on a populist campaign for political gain without thinking about the consequences.
1 - After being repudiated by the voters of Massachusetts and in all of the popularity polls, President Obama decided to up the ante and go for broke in the healthcare controversy. In 1994 President Clinton had the good sense to back off his healthcare fight and live to fight another day.
2 - With signs of the inception of a fledgling economic turnaround and with still lingering high unemployment, President Obama decided to attack the banking industry using it as a scapegoat. Why on earth would any rational person try to kill the very industry that the economy so deperately needs for businesses to grow and prosper? The general idea of fixing the banking system is good, but the populist plan is bad and the timing is atrocious.
Hiding behind the great Paul Volker as his poster boy for change is very cynical. Changing the banking system should be well thought out and enacted over time. Slashing and burning the banking system at the very moment when the banks are struggling to help Americans get jobs is idiotic.
Even Democrat House Banking Committee Chairman Barney Frank agrees on that point. He has publicly stated that he will not permit the President's plan to be enacted. Furthermore, he has stated that he will make sure that any change will be enacted over a five year period. America needs a bi-partisan commission to study the issue and make prudent recommendations.
3 - To further complicate matters, the Congress has extended its Salem witch hunt against the banks to include Fed Chairman Bernanke. The guy may have been late to realizing the severity of the economic disaster of 2008, but once he figured out the severity of the situation he performed a yeoman's job. One can debate Bernanke's effectiveness, but to quote Lincoln, "you don't change horses in midstream." The markets are confident in Bernanke. More important is the irefutable fact that Alan Greenspan caused the economic bubble and ensuing disaster. He then very slickly retired and handed off the ball to Ben Bernanke just when he saw the what was about to happen.
So we have a very personable school smart President with no real street "cred" in business, foreign policy or economics. President Obama can have all the meetings with every expert under the sun to help him make decisions. But, without the experience, back bone and perspective of a person who has never run anything except for a law review, he is lost.
More scary, is that the President is on a mission diametricaly opposed to the centrist view of America that made us a great nation. He is a true believer with an enormous ego trying to make wholesale changes in our country without the consent of the populace. Moreover, the President appears to still be in campaign mode rather than governing mode. Somebody had better have the ability to speak to power and not be afraid of Rahm Emanuel or we are in big trouble.
The country and the markets are telling the President loud and clear that he is making some serious mistakes. The President is not listening. That is a recipe for disaster.
As a consequence I am mostly in cash and short the market via ETFs and special situation stocks such as Harley Davidson, which is going through a corporate sales and profits disaster. My only long position is RMBS which has just won some major victories on the road to collecting royalties for every DRAM computer chip sold by any company.
This stock market sell off will last as long as President Obama is asleep at the wheel. Let's hope that the economic recovery does not get destroyed in the process.
Hiding behind the great Paul Volker as his poster boy for change is very cynical. Changing the banking system should be well thought out and enacted over time. Slashing and burning the banking system at the very moment when the banks are struggling to help Americans get jobs is idiotic.
Even Democrat House Banking Committee Chairman Barney Frank agrees on that point. He has publicly stated that he will not permit the President's plan to be enacted. Furthermore, he has stated that he will make sure that any change will be enacted over a five year period. America needs a bi-partisan commission to study the issue and make prudent recommendations.
3 - To further complicate matters, the Congress has extended its Salem witch hunt against the banks to include Fed Chairman Bernanke. The guy may have been late to realizing the severity of the economic disaster of 2008, but once he figured out the severity of the situation he performed a yeoman's job. One can debate Bernanke's effectiveness, but to quote Lincoln, "you don't change horses in midstream." The markets are confident in Bernanke. More important is the irefutable fact that Alan Greenspan caused the economic bubble and ensuing disaster. He then very slickly retired and handed off the ball to Ben Bernanke just when he saw the what was about to happen.
So we have a very personable school smart President with no real street "cred" in business, foreign policy or economics. President Obama can have all the meetings with every expert under the sun to help him make decisions. But, without the experience, back bone and perspective of a person who has never run anything except for a law review, he is lost.
More scary, is that the President is on a mission diametricaly opposed to the centrist view of America that made us a great nation. He is a true believer with an enormous ego trying to make wholesale changes in our country without the consent of the populace. Moreover, the President appears to still be in campaign mode rather than governing mode. Somebody had better have the ability to speak to power and not be afraid of Rahm Emanuel or we are in big trouble.
The country and the markets are telling the President loud and clear that he is making some serious mistakes. The President is not listening. That is a recipe for disaster.
As a consequence I am mostly in cash and short the market via ETFs and special situation stocks such as Harley Davidson, which is going through a corporate sales and profits disaster. My only long position is RMBS which has just won some major victories on the road to collecting royalties for every DRAM computer chip sold by any company.
This stock market sell off will last as long as President Obama is asleep at the wheel. Let's hope that the economic recovery does not get destroyed in the process.
2 comments:
Why is that the politicians always first think about themselves. If the President would not have behaved in a similar manner then the people would have not lost so much money.
great stuff once again and good call on standing aside. No place for hero's but as you say with Rambus there is some room for growth in a few places without the money literally running from the market as per late 2008. Obama gave a clear sell signal.
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