Depression Ahead?

From Steven Gjerstad and Vernon L Smith in the Wall Street Journal:
The events of the past 10 years have an eerie similarity to the period leading up to the Great Depression. Total mortgage debt outstanding increased from $9.35 billion in 1920 to $29.44 billion in 1929. In 1920, residential mortgage debt was 10.2% of household wealth; by 1929, it was 27.2% of household wealth.
The Great Depression has been attributed to excessive speculation on Wall Street, especially between the spring of 1927 and the fall of 1929. Had the difficulties of the banking system been caused by losses on brokers' loans for margin purchases in 1929, the results should have been felt in the banks immediately after the stock market crash. But the banking system did not show serious strains until the fall of 1930. . . .
The causes of the Great Depression need more study, but the claims that losses on stock-market speculation and a monetary contraction caused the decline of the banking system both seem inadequate. It appears that both the Great Depression and the current crisis had their origins in excessive consumer debt -- especially mortgage debt -- that was transmitted into the financial sector during a sharp downturn. . . .
Why does one crash cause minimal damage to the financial system, so that the economy can pick itself up quickly, while another crash leaves a devastated financial sector in the wreckage? The hypothesis we propose is that a financial crisis that originates in consumer debt, especially consumer debt concentrated at the low end of the wealth and income distribution, can be transmitted quickly and forcefully into the financial system. It appears that we're witnessing the second great consumer debt crash, the end of a massive consumption binge.

Buffett's Bailout Bonanza

From Charles Piller in the Scaramento Bee:
Billionaire investor Warren Buffett has been lauded for his plainspoken denunciation of the greed and foolishness behind the economic crisis. He's pushed the massive federal bailout of imploding banks as the essential response to an "economic Pearl Harbor."
When Buffett speaks, people in high places listen. He's so highly regarded that in a fall debate, both presidential candidates said they'd consider him for Treasury secretary.
A Sacramento Bee examination of regulatory records has found that his extensive holdings in financial firms have made Buffett, the world's second-wealthiest person behind Microsoft Chairman Bill Gates, one of the top beneficiaries of the banking bailout.
Just 28 companies received more than 90 percent of the funds so far disbursed to financial firms by the $700 billion Troubled Asset Relief Program.
Buffett's company, Berkshire Hathaway, hasn't received any of that federal aid, but Berkshire, based in Omaha, Neb., owns stock valued at more than $13 billion in the top recipients of TARP funds, including Goldman Sachs Group, US Bancorp, American Express and Bank of America, which analysts all thought were in deep trouble before TARP was approved in October.
That total, The Bee found, ranks Berkshire fifth among all investors in TARP-assisted companies. Berkshire's TARP holdings constitute 30 percent of its publicly disclosed stock portfolio, and that proportion reflects at least twice as much dependence on bailed-out banks as any other large investor.
Berkshire, for instance, is the largest shareholder in San Francisco-based Wells Fargo, which got $25 billion — 91 percent of the TARP funds invested in institutions headquartered in California.
Buffett increased his bank holdings in September, while he was arguing in the media that Congress should approve the bailout to prevent the collapse of the global financial system.
"If I didn't think the government was going to act, I would not be doing anything this week," Buffett told CNBC after investing $5 billion in Goldman Sachs. "I am, to some extent, betting on the fact that the government will do the rational thing here and act promptly."
The more the bailout props up these financial companies, the more secure Berkshire's and other shareholders' investments in them are. Berkshire shares have risen sharply with the financial sector stock rally in recent weeks, but they're still down nearly 40 percent since September. In Friday trading, they closed at $92,490 a share. . . .
Buffett, whose company is also the largest investor in Goldman Sachs and American Express, declined to be interviewed. In a February letter to Berkshire shareholders, he said that without government intervention, the consequences for the economy would have been "cataclysmic." . . .
Experts agree that preserving a functional banking system, TARP's goal, benefits everyone. In dispute is whether the bailout was the fairest and best approach.
Some say that large shareholders such as Buffett have been the primary, and perhaps only significant beneficiaries of TARP. Bank stocks have recovered significantly in recent weeks — Goldman's share price has more than doubled since November — and no TARP bank has failed.
Critics, however, worry that TARP propped up Wall Street against bankruptcy at the expense of taxpayers. The Treasury Department expected TARP to get loans flowing again, but the market has barely thawed, and unemployment has surged. . . .
When told of The Bee's findings, Robert Kuttner, the author of a recent best-seller on the economic crisis, said they reveal a bailout program designed out of public view, and one that "reeks of favoritism and special treatment."
"TARP was designed that way," Kuttner said, "to concentrate power with almost no effective oversight. That, to me, is the scandal."
The lack of clear criteria for awarding TARP funds continued after the recent change in government, according to Kuttner and other experts.
"The Obama administration said it would offer transparency and openness. But the single most important thing they are doing is being done largely behind closed doors, and the design is by, for and in the interest of large banks, hedge funds and private equity companies," he said. "Because there are no explicit criteria, it's very hard to know if a Citigroup or a Goldman got special treatment."
The Bee's findings follow a recent controversy over some Buffett holdings that may have contributed to the economic crisis.
Berkshire owns more than 20 percent of Moody's, a top credit rating agency, making it by far the largest stakeholder. Moody's has been faulted for enabling the global crisis by overvaluing mortgage assets.
Although Buffett has been outspoken about the need for government intervention in the crisis caused by the mortgage meltdown, he's said nothing publicly about the role of a company in which his firm is a minority holder.

Summers Raked In $$$

From at Timothy J. Burger and Kristin Jensen at Bloomberg:
Lawrence Summers, director of President Barack Obama’s National Economic Council, earned millions working at a hedge fund and speaking to banks such as Citigroup Inc. that later received taxpayer bailout money.
Hedge fund D.E. Shaw & Co. paid Summers more than $5 million in salary and other compensation in the past 16 months, according to a financial disclosure form released by the White House yesterday. Summers served as a managing director at the New York-based firm. Summers, a former Treasury secretary, also earned more than $2.7 million in speaking fees. . . .
Summers spoke to Citigroup, Goldman Sachs Group Inc. and Lehman Brothers Holdings Inc. audiences twice last year, according to his disclosure statement. Lehman, which went bankrupt in September, paid Summers $67,500 for an engagement on July 30, the filing showed.
Summers contributed a $45,000 fee from Merrill Lynch & Co. for a Nov. 12 speech to charity, according to his form. When the economist learned that Merrill would be accepting taxpayer funds because of its merger with Bank of America Corp., he tried unsuccessfully to cancel the appearance and then decided to donate the money, a White House official said.
“In ordinary times, a U.S. economic expert receiving honoraria from U.S. banks wouldn’t raise many eyebrows -- nor would a money-making stint in the private sector,” said Rogan Kersh, a public-service professor at New York University. “These aren’t ordinary times, and as populist anger at the banking and hedge-fund industries continues to spread, Summers could have some serious explaining to do.”
The American economy is now being run by a financial elite that constitutes a merry-go-round from big "private" financial interests into the government and back again.
Summers, and others who are part of the cash carousel seem to feather their own nests at the nation's (and taxpayers') expense!
For more on this read Simon Johnson's The Quiet Coup in The Atlantic.

Will Geithner's Head Roll?

From David Espo at the Associated Press:
For the first time since last fall's election, Democrats and the Obama administration are backpedaling furiously on an issue easily understood by financially strapped taxpayers: $165 million in bonuses paid out at bailed-out AIG.
Republicans, struggling to regain their political footing, are content to let Democrats try to dig their way out of this mess on their own.
Professing shock at the bonus payments, Democrats have embarked on a hurry-up effort to impose what amounts to confiscatory taxes on the bonuses, a maneuver that almost surely will be tested in the courts.
Treasury Secretary Timothy Geithner enjoys President Barack Obama's confidence, according to the White House.
But the mood is less charitable among congressional Democrats. Republicans have made Geithner their top target . . . .
"It's shocking that they would -- the administration would come to us now and act surprised about these contracts," said Sen. Mitch McConnell, R-Ky., the Senate GOP leader. "This administration could have and should have ... prevented this from happening. They had a lot of leverage two weeks ago."
That would be when the Treasury Department decided to make an additional $30 billion available to American International Group Inc., the huge insurance conglomerate deemed too big to fail by two administrations.
Which goes to the crux of the Democrats' current political problem.
Gone are the days when they could merely bludgeon the Bush administration and promise to seek bipartisan solutions to the nation's economic problems.
Now, in control of the White House and Congress, they are struggling to come up with an explanation for what no one in either party seems moved to defend.
Will Geithner be the first of Obama's aides to fall?
Vote in our poll at the top right of this page.
Vote now!

Recession: Two Years Plus

A new CBS poll shows that about two-thirds of those surveyed think the recession will last two years or more.
This mirrors the results of our own informal poll here. You told us you thought the stock market would drop substantially more before it turns around. And you also saw the recession lasting well into next year if not beyond. That's a long way back.
Still, ordinary people are not economists.
And ordinary people cannot predict the future. Polls can be wrong, especially when they try to foresee the future.
But then again, economists and prognosticators haven't done so well at predicting things either, have they?

Economists: Obama Fails

From Phil Izzo at the Wall Street Journal:

U.S. President Barack Obama and Treasury Secretary Timothy Geithner received failing grades for their efforts to revive the economy from participants in the latest Wall Street Journal forecasting survey.
In striking contrast to President Obama's popularity with the public, a new Wall Street Journal survey of economists gives the president and his treasury secretary failing grades. . . . .
A majority of the 49 economists polled said they were dissatisfied with the administration's economic policies.
On average, they gave the president a grade of 59 out of 100, and although there was a broad range of marks, 42% of respondents rated Mr. Obama below 60. Mr. Geithner received an average grade of 51. Federal Reserve Chairman Ben Bernanke scored better, with an average 71.
The economists, many of whom have been continually surprised by the depth of the downturn, also pushed back yet again their forecasts for when a recovery would begin. On average, they expect the downturn to end in October. Last month, they said the bottom would arrive in August. They estimate that U.S. gross domestic product will continue to contract in the first half of this year, with slow growth returning in the third quarter.
Economists were divided over whether the $787 billion economic-stimulus package passed last month is enough. Some 43% said the U.S. will need another stimulus package on the order of nearly $500 billion. Others were skeptical of the need for stimulus at all.
However, economists' main criticism of the Obama team centered on delays in enacting key parts of plans to rescue banks. "They overpromised and underdelivered," said Stephen Stanley of RBS Greenwich Capital. "Secretary Geithner scheduled a big speech and came out with just a vague blueprint. The uncertainty is hanging over everyone's head."
Mr. Geithner unveiled the Obama administration's plans Feb. 10, but he offered few details, and stocks sank on the news. The Dow Jones Industrial Average is down almost 20% since the announcement, as multiple issues have weighed on investors' confidence. The Treasury secretary has since appeared before Congress and offered more specifics but has said action on key parts of the plan still is weeks away. . . .

The economists' negative ratings mark a turnaround in opinion. In December, before Mr. Obama took office, three-quarters of respondents said the incoming administration's economic team was better than the departing Bush team. However, Mr. Geithner's latest marks are lower than the average grade of 57 that former Treasury Secretary Henry Paulson received in January.

How Low Will It Go?

Vote in our poll!
We want to know: "How low will the market go?"
Where will the bottom be? Will it bottom out at 6,500?
Or will it slip to 6,000 before it turns around?
Where is the bottom?
I hate to tell you this but not very long ago a banker told me it wouldn't bottom out until it reached 4,000. I couldn't believe that figure when it rolled off the banker's tongue just a few months ago. But now I'm starting to wonder.
How low will the market go before it turns around?
You tell us.
You can find the poll at the top right corner of this blog.

Obama Increasingly Culpable

From Russ Smith in Splice Today:
As the recession deepens, with even congenitally optimistic economists unable to predict any semblance of recovery in 2009, Obama will be held accountable by citizens who’ve lost their jobs, seen savings evaporate and the stock market—which Obama unwisely commented about last week, saying that daily DJIA/NASDAQ tallies are similar to gyrating political polls—is in the sewer. . . .
Largely forgotten in the euphoria of Obama’s election last fall was that just under half the voters cast their lot with John McCain; judging by the relentless stream of puff pieces on the new guy you’d think he’d been victorious in a landslide reminiscent of Ronald Reagan’s over Fritz Mondale in 1984. You have to wonder whether Obama, considering the enormity of his economic challenges, which weren’t apparent until the last three months of the campaign, wishes he’d had sat it out until 2012. Probably not, but I’ll wager that on Nov. 4 of last year Obama never imagined a New York Times reporter asking him in early March if he was a socialist. . . .
When more and more people lose their jobs in the coming months, increasingly it won’t be Bush who’s blamed, since they were still employed when he was in office. It’ll all be on Obama’s watch and his gift for magnificent speeches won’t matter as much as during his campaign. More and more of the President’s enthusiastic supporters will be forced to say, “No, he couldn’t.” . . .
Is the inexperienced Obama—not to mention Treasury Secretary Tim Geithner or the insufferable and glib press secretary Robert Gibbs—with his frenzy of activity designed to live up to the hype that he’d be a “transformative” president, in over his head? All level-headed Americans, one would assume, hope that’s not the case, and that he’ll modify his budget to conform with today’s economic reality. If he doesn’t change course, it’s a certainty that his reservoir of goodwill will be fully drained.

Cramer: Obama Thin-Skinned

From Jim Cramer at Mainstreet.com:
President Obama's team, unlike Bush's team, demonstrates a thinness of skin that shocks me.
When I somewhat obviously and empirically judged that the populist Obama administration is exacerbating the crisis with its budget and policies, as evidenced by the incredible decline in the averages since his inauguration, I was met immediately with condescension and ridicule rather than constructive debate or even just benign dismissal.
I said to myself, "What the heck? Are they really that blind to the Great Wealth Destruction they are causing with their decisions to demonize the bankers, raise taxes for the wealthy, advocate draconian cap-and-trade policies and upend the health care system? Do they really believe that only the rich own stocks? What do they think we have our retirement accounts in, CDs? Where did they think that the money saved for college went, our mattresses? Do they think the great middle class banks at the First National Bank of Sealy and only the wealthiest traffic in the Standard & Poor's 500?"
They exacerbated their insensitivity when President Obama proclaimed that he wasn't worried about the averages, dismissing them as traffic polls that go up and down in the short term. Ah, if only they went up occasionally and not down endlessly then I would believe the President's logic.. . .
The indecision of Geithner, who has floated to the media every single idea in his head, only to announce none orally, has created a vacuum that has allowed short-sellers to dictate policy.
As someone who just wants to help people preserve capital and help it appreciate when the time comes when it is not too risky to do so, I am appalled at the attack and badly want to engage in the issues and tone down the rhetoric. What's the point? The country's in crisis. . . .
When Obama trounces both unemployment and house-price depreciation, he will have the power to enact anything he wants. But all the initiatives he wants to rush, like tax hikes, changes in health care, tinkering with the mortgage deduction -- good grief, right now in the midst of the worst housing downturn ever -- and the tough cap-and-trade rules, will derail any chance we have of turning this economy around.
Instead, they put the Second Great Depression smack on the nation's table. The markets thought he could stop it; hence the giant relief rally when he was elected. But in fewer than 50 days of his ascendancy, the markets' hopes were totally dashed and the averages are now forecasting the worst decline since the Great Depression. As someone who listens to what the averages are screaming, I think they are accurately predicting the future.

Obama's Growth-Killing Policies

From Stanford University economics professor Michael J. Boskin in the Wall Street Journal:
The illusion that Barack Obama will lead from the economic center has quickly come to an end.
Instead of combining the best policies of past Democratic presidents -- John Kennedy on taxes, Bill Clinton on welfare reform and a balanced budget, for instance -- President Obama is returning to Jimmy Carter's higher taxes and Mr. Clinton's draconian defense drawdown.
Mr. Obama's $3.6 trillion budget blueprint, by his own admission, redefines the role of government in our economy and society. The budget more than doubles the national debt held by the public, adding more to the debt than all previous presidents -- from George Washington to George W. Bush -- combined. It reduces defense spending to a level not sustained since the dangerous days before World War II, while increasing nondefense spending (relative to GDP) to the highest level in U.S. history. And it would raise taxes to historically high levels (again, relative to GDP). And all of this before addressing the impending explosion in Social Security and Medicare costs. . . .
From the poorly designed stimulus bill and vague new financial rescue plan, to the enormous expansion of government spending, taxes and debt somehow permanently strengthening economic growth, the assumptions underlying the president's economic program seem bereft of rigorous analysis and a careful reading of history.
Unfortunately, our history suggests new government programs, however noble the intent, more often wind up delivering less, more slowly, at far higher cost than projected, with potentially damaging unintended consequences. The most recent case, of course, was the government's meddling in the housing market to bring home ownership to low-income families, which became a prime cause of the current economic and financial disaster.
On the growth effects of a large expansion of government, the European social welfare states present a window on our potential future: standards of living permanently 30% lower than ours. Rounding off perceived rough edges of our economic system may well be called for, but a major, perhaps irreversible, step toward a European-style social welfare state with its concomitant long-run economic stagnation is not.

It's Obama's Bear Market

From Eric Martin at Bloomberg:

President Barack Obama now has the distinction of presiding over his own bear market.
The Dow Jones Industrial Average has fallen 20 percent since Inauguration Day, the fastest drop under a newly elected president in at least 90 years, according to data compiled by Bloomberg. The gauge has lost 53 percent from its October 2007 record of 14,164.53, slipping 4.1 percent to 6,594.44 yesterday.
More than $1.6 trillion has been erased from U.S. equities since Jan. 20 as mounting bank losses and rising unemployment convinced investors the recession is getting worse. The president is in danger of breaking a pattern in which the Dow rallied 9.8 percent on average in the 12 months after a Democrat captured the White House, according to data compiled by Bloomberg.
“People thought there would be a brief Obama rally, and that hasn’t happened,” said Uri Landesman, who oversees about $2.5 billion at ING Groep NV’s asset management unit in New York. “It speaks to the carnage that’s in the economy and the lack of confidence in the measures that have been announced.”
A bear market is defined as a decline of 20 percent or more. . . .

The Dow average has dropped 31 percent since Obama’s election. The 30-stock gauge trades at 8.04 times annual earnings, the cheapest since 1995 and down from 10.06 times on Inauguration Day. . . .

“It’s the Obama bear market,” said Dan Veru, who helps oversee $2.8 billion at Palisade Capital Management in Fort Lee, New Jersey. “We don’t know what the rules are in so many different areas the government is touching.”

Economic Prognosis: Bleak!

From Kevin G. Hall at McClatchy Newspapers:
When Republicans and Democrats in the nation's capital want to make a point about the economy, they often cite Mark Zandi. A middle-of-the-road economic forecaster who speaks in plain English, Zandi increasingly has become the economic oracle of record.
The chief economist of Moody's Economy.com sat down Thursday with a small group of reporters and offered a sobering view of what he sees ahead for the U.S. and global economies.
The short version: It could be a decade before the Dow reaches 12,000 points again, the economy will grow much more slowly than the Obama administration envisions and larger, more controversial bailouts are likely to be coming soon.
Here are some of Zandi's thoughts, edited into a question-and-answer format.
Q: Will things get worse?
A: Yes, measurably worse.
Q: The administration sees strong growth from 2011 to 2015, and a solid 3.2 percent next year. Agree?
A: I think those are roughly reasonable, but they are much too optimistic for 2009 and 2010.
Q: How bad will the job market get?
A: I think the peak unemployment rate will be 9.5 percent in Q2 (second quarter) of 2010. That will be consistent with total job losses of almost 7 million from the peak in December 2007 to the trough, which will be sometime in early 2010. . . . That's a quarterly average, so there will be a month that we hit a double-digit number. That won't be outside the realm of possibility.
Q: Are there bright spots?
A: I think the hallmark of the current downturn is how broad-based it is across occupations, industries and regions. You know, by our accounting 42 states are in recession . . . that leaves you eight states that are not. And they are all weakening very rapidly and they are mostly in the central part of the country, Texas being the largest of the eight. They are energy, ag and other commodity-producing economies, and they are still benefiting a bit from the very high prices that prevailed through last fall. Obviously they are weakening now because prices are down and exports of these products are falling.
Q: Are the only bright spots dimming?
A: It's very possible, in fact I'd say likely, that all 50 states will be in recession at some point in the next year or two, and that would be unprecedented. Certainly you'd have to go back to the Depression to find something like that.

Obama Critic List Grows

The number of Obama critics grows by the hour if not the minute.
Obama "conservative converts" Chritopher Buckley and David Brooks have already largely rescinded their previous support for the President and have begun to separate themselves from his policies. Most recently, New York Times columnist Maureen Dowd began to part ways with Obama.
In the Congress, prominent Democrats (including Senators Russ Feingold and Evan Bayh) have jumped ship on the Obama spending plan. And Bayh and Feingold are joined by more than a dozen Democrat House members.
In fact, Obama proposed (and bloated) budget is now in jeopardy.
And there's more. Here's the latest from the Los Angeles Times:
First Limbaugh, then Santelli, now Cramer: Is Obama White House empowering its critics?
Now comes Jim Cramer, of CNBC's "Mad Money," blasting the White House for wanting to rob Wall Street to pay Main Street. Cramer:

In slow motion, I felt the total lack of control that we all feel right now --
the ‘it’s out of my hands,’ the ‘where’s the authority,’ the, ‘Hey, it’s amateur
hour at our darkest moment.’ It’s the feeling of capitalism vanishing,
businesses capsizing under their own weight -- thanks to an administration that
doesn’t seem to know or maybe doesn’t care.

Obama Dismisses Market Plunge

President Obama doesn't seem to care much about the stock market.
Yesterday he compared the market to political polls, claiming the marking "bobs up and down from one day to the next." But the political campaign is over. Last I checked, Obama is President now. He's in charge.
And, in truth, the stock market and politics don't have all that much in common.
Lately the market has simply been going down -- not "bobbing up and down."
In fact, since Obama was elected the market has lost three trillion dollars in value.
That ain't politics, Mr. President. That's real money. And these are real lives that are hanging in the balance.
This ain't no game, Mr. President. This is life.
And since you said you'd be on the case from "day one," we're holding you accountable from day one.
So, start sloughing off the market and start paying attention. Now.

How Low Will It Go?

We've got a new poll!

We want to know: "How low will the market go?"

Where will the bottom be? Will it bottom out at 6,500?

Or will it slip to 6,000 before it turns around?

Where is the bottom?

I hate to tell you this but not very long ago a banker told me it wouldn't bottom out until it reached 4,000. I couldn't believe that figure when it rolled off the banker's tongue just a few months ago. But now I'm starting to wonder.

How low will the market go before it turns around?

You tell us.

You can find the poll at the top right corner of this blog.

'O' Chills As Capitalism Burns

Have you noticed?
We seem to be drifting further and further back in time.
With each new Obamian plunge in the stock market the years peel off the calendar.
2008, 2007, 2006, 2005 . . . they're all gone.
And you can forget agout '04, '03, '02 and 01, also.
All of the gains made in those years are gone.
In fact, we've drifted all the way back to 1997 - the Clinton Era. Our money is so devalued and our nest eggs so depleted that we've lost 14 years of savings and growth in a wink - 14 years of progress.
At the rate we're going, it seems inevitable that we will drift back into the Carter Era (forget the Regan era, you can skip that as it seems destined never to return!).
Many people (including Dick Morris) predicted that we would suffer such a decline once Obama was elected.
It's been four long months since Obama's election now and it's been all downhill. We've dropped years and years in four months - and the pace of decline seems to be quickening!
Still, Obama seems unfazed. When it somes to any ideas other than his own, his legendary "cool" has turned to a frigid detachment characterized by disinterest in anything that does not advance his plan for redistribution of the wealth. He appears to have turned as cold and seemingly calculating as the frigid weather here in the east.
And meanwhile, we sink lower and lower into the economic depths.
Where will it end?
Where will it end?

Obama Inducing Catastrophe?

From Dick Morris at The Hill:
Obama has been instrumental in purveying fear and spreading doubt. It is his pronouncements, reinforced by the developments they kindle and catalyze, that are destroying good businesses, bankrupting responsible people and wiping out even conservative financial institutions. Every time he speaks, he sends the markets down and stocks crashing. He doesn’t seem to realize that the rest of the world takes its cue from him.
He forgets that he stands at the epicenter of power, not on the fringes campaigning for office. This ain’t Iowa.
Why does Obama preach gloom and doom? Because he is so anxious to cram through every last spending bill, tax increase on the so-called rich, new government regulation, and expansion of healthcare entitlement that he must preserve the atmosphere of crisis as a political necessity.
Only by keeping us in a state of panic can he induce us to vote for trillion-dollar deficits and spending packages that send our national debt soaring. . . .
So, having inherited a recession, his words are creating a depression. He entered office amid a disaster and he is transforming it into a catastrophe, all to pass every last bit of government spending and move us a bit further to the left before his political capital dwindles.
But the jig will be up soon. The crash of the stock market in the days since he took power (indeed, from the moment he won the election) can increasingly be attributed to his own failure to lead us in the right direction, his failed policies in addressing the recession and his own spreading of panic and fear.
The market collapse makes it evident that it is Obama who is the problem, where he should, instead, be the solution.

Obama Speaks, Stocks Tank

From Robert Bluey at Red State:
The best thing President Barack Obama can do for the economy is keep quiet. A day after delivering an address that won widespread praise from the chattering class, Obama’s big-government policies were rejected by traders on Wall Street.
Wall Street’s negative reaction to Obama is nothing new. Ever since Election Day, Obama’s words have failed to inspire investors. “When the President speaks, the market listens … and crumbles,” said Family Research Council chief Tony Perkins, who outlined the following pattern of the Dow’s drop after notable Obama addresses:
Nov. 5, 2008 (Wednesday after Election Day): -486 (5.0%)
Jan. 9, 2009 (one day after Obama speaks at George Mason University on “need” for $800 billion stimulus package): -143 (1.6%)
Jan. 20, 2009 (Inauguration Day): -332 (4.0%)
Feb. 10, 2009 (one day after Obama declares that without a stimulus, “an economy that is already in crisis will be faced with a catastrophe”): -382 (4.6%)
Feb. 17, 2009 (market opens for the first time after Congress passes $787 billion stimulus on Feb. 13; Obama signs bill into law, declaring, “The stimulus lets Americans claim destiny.”): -298 (3.8%)
Feb. 19, 2009 (one day after Obama announces potential mortgage relief plan): -90 (1.2%)
Feb. 25, 2009 (one day after Obama’s first speech to the full Congress): -80 (1.1%)

Santelli Speaks For Many!

From Phil Rosenthal at the Chicago Tribune:
CNBC's Rick Santelli's self-described rant on TV last week, bemoaning that "the government is promoting bad behavior" with Presideent Obama's mortgage bailout plan, clearly resonated with many Americans, made him a viral video star and drew a White House rebuke. . . .
With an allusion to communist Cuba and traders around him voicing their support, Santelli said from the Chicago Board of Trade floor early Thursday on CNBC: "This is America! How many of you people want to pay for your neighbors' mortgage that has an extra bathroom and can't pay their bills? ... President Obama, are you listening?"
Someone at the White House was. At his briefing Friday, Obama press secretary Robert Gibbs shot back—hard—likely out of concern for the traction the so-called Rick's Revolt could gain. "I feel assured that Mr. Santelli doesn't know what he's talking about," Gibbs said.
Yet Santelli's rant, the points he raised and the White House response were the talk of the Sunday-morning TV roundtables, an acknowledgment that he had given voice to many unhappy with where the bailout seems headed."About this populist backlash, I think they're worried [at the White House], and rightly so," National Public Radio's Mara Liasson said on Fox Broadcasting's " Fox News Sunday."
"In this kind of a situation, you want to be dishing out the populism if you're the president. You don't want to be on the receiving end."
Santelli said the issue, in his view, isn't political. It's philosophical. . . .
"I understand what derivatives and toxic assets are. I was in that business. These things are complicated, and I don't know that the taxpayers should own them."His goal, he said, was to spark a debate.

'Failed?' Already?

From Martin Wolf, Chief Economics Commentator for the Financial Times:
Has Barack Obama’s presidency already failed? In normal times, this would be a ludicrous question. But these are not normal times. They are times of great danger. Today, the new US administration can disown responsibility for its inheritance; tomorrow, it will own it. Today, it can offer solutions; tomorrow it will have become the problem. Today, it is in control of events; tomorrow, events will take control of it. Doing too little is now far riskier than doing too much.
If he fails to act decisively, the president risks being overwhelmed, like his predecessor. The costs to the US and the world of another failed presidency do not bear contemplating.
What is needed? The answer is: focus and ferocity.
If Mr Obama does not fix this crisis, all he hopes from his presidency will be lost. If he does, he can reshape the agenda. Hoping for the best is foolish. He should expect the worst and act accordingly.
Yet hoping for the best is what one sees in the stimulus programme and – so far as I can judge from Tuesday’s sketchy announcement by Tim Geithner, Treasury secretary – also in the new plans for fixing the banking system. I commented on the former last week. I would merely add that it is extraordinary that a popular new president, confronting a once-in-80-years’ economic crisis, has let Congress shape the outcome.
The banking programme seems to be yet another child of the failed interventions of the past one and a half years: optimistic and indecisive. If this “progeny of the troubled asset relief programme” fails, Mr Obama’s credibility will be ruined. Now is the time for action that seems close to certain to resolve the problem; this, however, does not seem to be it.