Tuesday, March 3, 2009

Obama Makes a Market Call

Each day is a new revelation. Now the White House is making market calls. Today, the young President said that "buying stocks is potentially a good deal." Wow! Since his election the market has sagged 30 percent, so that almost half of the market's collapse is now dated from the moment that investors realized that Obama was going to be the new President. This has not been a "recession stock market" since November. This is an "Obama stock market" as investors, terrified of Obama's new tone in Washington race for the exits. If the Obama budget passes look for employers to push many, many more employees to the exits. An Obama budget victory could produce a generation or two of economic stagnation.

Obama's comment on the stock market may have been prompted by musings of Jim Cramer of Mad Money who calmly noted today that the Obama Budget, which Cramer referred to as a "radical agenda," would "create the greatest wealth destruction by a President." I guess Cramer doesn't like the Obama budget.

Cramer was pretty tame compared to comments from the legendary investor Jim Rogers. Rogers see its this way: "I think it's astonishing, they're ruining the US economy, they're ruining the US government, they're ruining the US central bank and they're ruining the US dollar. You are watching something in front of our eyes, very historically, which is basically the destruction of New York as a financial center and the destruction of America as the world's most powerful country....The idea that you have too much debt, too much borrowing and too much consumption and you're going to solve that problem with more debt, more consumption and more borrowing? These people are nuts."

I guess Jim Rogers doesn't like the Obama budget (or much else about the Obama adminstration) either.

The public seems to have an opinion as well. The much ballyhooed NBC/WSJ poll, released today, which the headlines said supported Obama, actually reached a much different conclusion about the Obama agenda. Over 60 percent feared the government would spend too much while only 30 percent thought the government would spend too little. Wonder how they will feel when they find out what is in the Obama budget.

i still believe that the President is well meaning. I think he believes all of these programs that he is pushing are good for the country.

The folks that I no longer think are well meaning are Larry Summers and Paul Volcker. I have always been a great admirer of these two, but no longer. Nothing in their history is consistent with the absurd programs of the Obama Administration. I can only conclude that they are maintaining their silence to protect their prominent positions in the new administration, not exactly an admirable thing to do given the potential consequences to the country of the Obama budget.

I have to wonder about Warren Buffett. Is this budget and mortgage "cram down" program what he voted for and donated money to promote? Does he really thing trillions of new taxes on business and households is just what the doctor ordered? Does he support letting judges toss out legal contracts between borrower and lender? Why don't we offer that alternative to the companies whose bonds he owns? Perhaps Goldman should be able to go to court and change the terms of Buffett's preferred investment that he made last fall. After all, Goldman is a needy firm.

Obama can be forgiven because he has no background for any of this. It's like putting a junior high school class president into the role of President of the United States. I can see why he doesn't know what he's doing. He's just having a good time. It's the folks around him and that have supported him like Summers, Volcker, Geithner, Buffett, Clinton, Bernanke, various so-called moderate Democrats. Is this their agenda too? Or do they just like the limelight and the economy be damned.

No comments: