Feature

Obama: Has he lost Wall Street’s confidence?

The Dow has plunged more than 15 percent since Inauguration Day in spite of the stimulus bill and the bailouts to the banking and mortgage industries. 

The public may still have confidence in Barack Obama, said George Bittlingmayer and Thomas Hazlett in the Chicago Tribune, but investors and Wall Street clearly do not. Since taking office, Obama has rammed through a $787 billion stimulus bill, and bailed out banks to the tune of $1.2 trillion and the mortgage industry with $275 billion. Yet this huge “pump-priming effort” has yielded only more bad news. Yes, markets briefly rallied this week on news that Citigroup would make a profit. But the Dow has still plunged more than 15 percent since Inauguration Day, from 8,280 to about 6,900. Some $1.5 trillion in wealth has been lost, and “investors are losing patience with federal fixes.” Obama may have inherited a mess, said E. Thomas McClanahan in The Kansas City Star, but it’s no accident that “virtually every time an Obama administration official speaks, the market drops again.” Not content with trying to rescue the auto industry, housing, and credit markets, the White House is taking on health care, education reform, and other major initiatives—all at the same time. “I think everyone is afraid of Obama,’’ said Todd Leone, a veteran stock trader at Cowen & Co. in New York. “They’re afraid he’s a socialist.” 

Are you people serious? asked Robert Reich in Salon.com. This economic meltdown occurred “under George W. Bush’s watch,” when the housing and financial bubbles he’d ignored finally broke, triggering a recession that began 17 months ago. “The argument that Obama is somehow responsible for the collapse of Wall Street is absurd.” Less than two months ago, Obama walked into the worst economic decline since 1929, said Jay Bookman in The Atlanta Journal-Constitution. So let’s give him a fair chance—a couple of years at least—before pronouncing him a failure.

If the president doesn’t succeed, said Paul Krugman in The New York Times, it will be because he wasn’t bold enough. About 4.4 million jobs have already been lost, and 600,000 more are disappearing each month. Yet even the administration admits that its stimulus plan, at best, will create 3.5 million jobs. Obama and his treasury secretary, Tim Geithner, also have been too timid, taking only half-measures to restructure debt-laden banks—and Wall Street knows it. Here’s my worst-case scenario: By September, unemployment has passed 9 percent, and the market is still headed south. Obama goes back to Congress for more stimulus spending—but is rejected, “because approval for his economic policies has plummeted.” And then we’re all aboard a sinking ship without a captain. To restore confidence, Obama has to be more specific—and more persuasive—about his overall game plan, said E.J. Dionne in The Washington Post. Markets are nervous because it’s not clear “how the administration’s actions will lead to a recovery.” It’s time for Obama to take a page from FDR’s book, and start explaining “to a petrified nation and world” exactly how and why his plans will work. May I raise a disturbing possibility? said Robert Samuelson in Newsweek. Perhaps Obama and those bright eggheads he’s gathered around him really can’t explain how their grandiose plans will work. His initiatives are full of contradictions and double-talk—“responsibility” and monster deficits, “bipartisanship” and an ambitious and expensive restructuring of society along liberal lines. Though the public supports the cocky new president, it’s beginning to wonder if he can pull it all off. “Like many smart people, Obama believes he can talk his way around any problem.” But what if he can’t walk the walk?

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