For investors, markets are tough to navigate even in good times. But these are not good or normal times. Our economy is arguably in the worst shape it has been in 80 years. The financial system still borders on collapse with no apparent remedies to financial system insolvency. The Federal government is hopelessly insolvent, destined to default on its debts and social commitments. Ditto for many state and local governments. The international currency system is unsustainable, and it is difficult to foresee a resolution of this problem that does not disrupt world economies. On top of these negatives, markets appear to be grossly overvalued when viewed in terms of any fundamental metrics. These factors alone are reason to head for the hills or retreat to your figurative investment bunker (cash, gold and foodstuffs).
But it gets worse, possibly much worse. Like the economy, geopolitical problems might also be akin to the 1930′s. Iran openly defies the United States and the world community by continuing its pursuit of nuclear weapons. Its leader appears half-crazed, driven by an apocalyptic vision. Israel believes its very existence is threatened and probably will act if no one else does. Russia is reasserting itself. North Korea is still a disoriented nuclear power that behaves like a child demanding attention. Chavez is creating problems in South America. And the US appears to be in another Vietnam-type quagmire with Afghanistan.
If this weren’t enough, we may be witnessing another rather astonishing collapse of a President, a condition anathema to financial markets.
From the standpoint of policy analysis, one would expect Obama’s (arguably incorrect) programs to fail. Yet failed programs, while necessary for a failed Presidency, are not sufficient. At this point, it is premature to even make the claim that his programs have failed. Yet, as time passes, the evidence tilts the scales in this direction. But a Presidency cannot fail unless public opinion turns negative. Trends in recent polls suggest that is happening, but polls can be fickle. Probably a better indicator is the reaction of supporters. Some of President Obama’s strongest supporters were in the media, so many in fact that the opposition claimed media bias. These complaints have continued into his Presidency, accompanied by charges that the press has treated his administration with kid gloves, slanting or not even reporting negative news. Political assessments from media supporters appear to be recently turning. One of many examples is the article below from Rich Moran, citing well-known liberal columnist Richard Cohen of the NY Times. Whether this marks the beginning of the end for the Obama Presidency is moot, at least at this point in time.
These are truly dangerous times for both markets and the country. There is no historical precedent for markets performing well under these conditions. Be very cautious and expect to see things that you have never seen before or even imagined could happen.
Richard Cohen waiting for Obama to realize he’s president
Page Printed from: http://www.americanthinker.com/blog/2009/09/roger_cohen_waiting_for_obama.html at September 29, 2009 – 04:58:28 PM EDT
Richard Cohen, writing in the Washington Post, has finally noticed the same thing we here at AT have noted many times previously; Barack Obama is not leading as chief executive but is still stuck in campaign mode – as if he is still running for the office:
The trouble with Obama is that he gets into the moment and means what he says for that moment only. He meant what he said when he called Afghanistan a “war of necessity” — and now is not necessarily so sure. He meant what he said about the public option in his health-care plan — and then again maybe not. He would not prosecute CIA agents for getting rough with detainees — and then again maybe he would.
Most tellingly, he gave Congress an August deadline for passage of health-care legislation — “Now, if there are no deadlines, nothing gets done in this town . . . ” — and then let it pass. It seemed not to occur to Obama that a deadline comes with a consequence — meet it or else.
Obama lost credibility with his deadline-that-never-was, and now he threatens to lose some more with his posturing toward Iran. He has gotten into a demeaning dialogue with Ahmadinejad, an accomplished liar. (The next day, the Iranian used a news conference to counter Obama and, days later, Iran tested some intermediate-range missiles.) Obama is our version of a Supreme Leader, not given to making idle threats, setting idle deadlines, reversing course on momentous issues, creating a TV crisis where none existed or, unbelievably, pitching Chicago for the 2016 Olympics. Obama’s the president. Time he understood that.
It is gratifying that Cohen finally noticed this. Cohen might have added this is what we get when America elects someone with zero experience doing anything except running for higher office. If all someone has done of note is run a campaign, you are likely to get a president who sees the job as nothing more than an extension of his previous efforts to get elected.
I think it should be obvious that the fallacy “Presidents always grow into the job” should be debunked once and for all. Presidents bring to the job the skill set, the moral compass, the abilities they have shown previously in their lives. They don’t suddenly learn to become a “leader.” If they have not demonstrated that capability by the time they are Obama’s age, they never will.
Now if we can only get the American people to understand that, we will never make the mistake of electing someone who’s only qualification for the job was that he could raise a lot of money and make pretty sounding speeches.