President Obama continues to show his inexperience when discussing the economy in public. Americans need reassurance, not more depressing news from our President. Yet Mr. Obama did it again this week, according to Reuters:
"Obama joined leaders from the OECD group of developed countries and the International Monetary Fund in predicting a difficult way out of the (economic) crisis, which Federal Reserve Chairman Ben Bernanke said required still more bold steps to prevent a costly, long-term catastrophe.
"’The economy’s performance in the last quarter of 2008 was the worst in over 25 years. And frankly the first quarter of this year holds out little promise for better returns,’ Obama said in a speech."
The President wised up a day later and said, in the most tepid terms possible, that the stock market is now so (unbelievably) low, now might, perhaps, if you take a long term view, present a good buying opportunity. The insertion of "unbelievably" is my word, not his. Nonetheless it makes the point that even a presidential endorsement of the economy these days comes with so many qualifications it becomes almost worthless.
Thanks, Mr. President, for saying something positive. Trying being a little more positively positive next time. We need reassurance — not puffery — just reassurance.
Clearly any president understands he needs to manage expectations. But he does not need to manage those expectations so far down they end up in Australia. This President is so "frankly" negative and tentative that his comments seem to be succeeding to drive the market down further.
This is supposed to be the president who "gets it." But he sure as heck doesn’t "get" how to make public pronouncements that don’t add to the doom and gloom environment on Wall Street. He needs a better message management staff.
Last week, CNBC ran a story with the headline, "Dark Clouds Gather as Obama Presidency (Scares) the Markets." Author Gerard Jackson wrote that the Dow had experienced its worst January ever in 113 years. Clearly, President Obama inherited an inexcusable fiscal mess from the Bush Administration, which did more to wreck the economy than just about any presidential administration in U.S. history. But President Obama’s handling of the economy so far is less than stellar. In fact, it’s becoming downright troubling.
First, several of Mr. Obama’s cabinet selections, including Treasury Secretary Timothy Geithner have not only dragged with them the baggage of personal financial (to wit, tax) issues, they have also gained little by way of credibility with members of Congress.
As Jackson wrote further: "It is self-evidently true that markets drop during recessions just as production does. But there is something else going on here. The straightforward link between recession and declining markets is not operating as it should. If one tracks recent market trends it seems to me that they correlate not with changes in the ‘real economy’ but with the rise and election of Obama. In short, the markets are not signaling that recession is here: They are signaling that Obama’s economic policy will damage the US economy. Never ever forget that markets always look to the future. And what the markets now see they don’t like."
I’m not sure I agree with Jackson about the markets not liking what they see. If they’re still at record lows in six months, he will have been right. If they’re significantly higher, he will have been wrong.
What I think is scaring investors is the fact credit is not thawing. It’s still very tough to get a mortgage or a business loan. As long as that remains the case, the markets will remain in frigid mode. Of course global economic crises mimicking our own don’t help, either.
Add to those factors Mr. Obama’s less-than-reassuring attitude, and of course investors are scared.
I’m not suggesting the President offer rosy scenarios, when the landscape is undeniably tundra-like. But a reminder from Mr. Obama that all cycles are temporary and we will come out of this, soon, would help. It’s time he realize that what he can say as a two-term state senator from Illinois and what he can say as U.S. President are two entirely different things and that he start acting accordingly.
(Bonnie Erbe is a TV host and columnist. E-mail bonnieerbe(at)CompuServe.com.)