Stocks Hit by Obama Oration – WSJ.com
August 10 | Posted by mrossol | Debt, Liberal Press, Obama, The LeftThe Left cannot see it…
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By JAMES FREEMAN
Ever since Watergate, Washingtonians have responded to every political scandal by saying that “It’s not the crime; it’s the cover-up.” Perhaps they should develop a corollary for budget disasters: “It’s not the downgrade; it’s the White House reaction.”
Stock-market historians may soon be debating which did more to drive yesterday’s sell-off: the Friday decision of Standard & Poor’s to downgrade the U.S. credit-rating from AAA to AA+, or the Obama decision to attack S&P for acknowledging the simple truth that America is accumulating too much debt.
Over the weekend the world was treated to the spectacle of Treasury Secretary Timothy Geithner, whose signature appears on our currency, engaging in a public spat with analysts at a bond-rating firm. S&P has of course been spectacularly wrong about the risks of mortgage-backed securities, among other investments, and on Sunday, Mr. Geithner said that S&P had “shown a stunning lack of knowledge about basic U.S. fiscal budget math.” [Hello?]
Then came Monday morning’s announcement that Mr. Obama would speak at 1 p.m. As stocks were plunging, investors hoped that the president’s words might calm an anxious market. The appointed hour arrived, but where was the president? Word came that he would be speaking shortly. Then the speech was moved to 1:30. Then it was announced that he would speak at 1:45. As jittery traders around Wall Street stared at television screens showing an empty White House podium, stocks continued to fall.
“That image perfectly captures the lack of leadership,” said the head of a large equities desk. Did the White House not realize that this message of uncertainty from Washington was the last thing that investors needed to receive on Monday? And what could have caused the delay given that the downgrade had been announced days earlier and telegraphed for months before that?
The president missed the 1:45 deadline as well. When he finally began to speak a few minutes later, it was clear that he had no news to offer. And while he didn’t engage in a direct attack on S&P, as Mr. Geithner had done, he did quote Berkshire Hathaway CEO Warren Buffett in suggesting that S&P had made a poor decision. Did no one at the White House or Treasury realize that Berkshire is a major investor in Moody’s, the main competitor to S&P? As Mr. Obama spoke, stock indexes hit fresh lows for the day. His declarations that there’s not much discretionary spending left to cut [ that is ALL that is left to cut…] and that “tax reform” to him still means raising taxes on rich people did nothing to slow the rout.
Mr. Obama concluded by remarking on the deaths last week of brave American soldiers in Afghanistan. Did this tragic news not warrant its own statement?
Stocks continued skidding after Mr. Obama left the podium, with the Dow shedding more than 634 points on the day. Media pundits who have proclaimed that Barack Obama is one of history’s great communicators might want to reconsider that assessment.Stocks Hit by Obama Oration – WSJ.com.
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