“He Lost Them At Hello”
For those of us brave (or foolish) enough to participate in the equities market, these have been incredibly trying times. What began as a crisis of confidence among financials rapidly metastasized across the economy, turning the global stock market into an ever-shifting landscape of sinkholes and precipices.
We have retreated so completely that someone who invested one-thousand dollars into the Dow Jones Industrial Average on this day in February of 1997 - having risen to the giddy heights of $2,008 in wealth during October 2007 - has just three dollars of returns on that thousand to show for their troubles today. In June of 2007, the global stock market was worth $51-trillion. Now, it can all be yours for just $32-trillion.
Meanwhile, Americans are aghast at the furious degradation of their personal balance sheets. Asset value declines (both housing and stock equity) have decimated the average Americans’ sense of security and confidence, which prevailed through much of the last fifteen years. Lacking a unified comprehension of the interconnectedness of the financial market and the American household, we are subject to cliché and despair. The endless news of redundancies and credit turmoil across the spectrum of American business, only serves to add data points to what we already know as the dire state of the global economy.
In just two hundred words, I have perhaps betrayed a sense of complete resignation. My concern for the economy is great, and I could not begin to even describe a complete solution, given the totality of the problem. Yet optimism is what is required, and the state of our psyche is such that this will only come about when the leadership in Washington, DC, itself clearly understands the scale of the problem and has a proposal to resolve it.
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Nashua-on-Potomac
Having loudly proclaimed his intention to transform Washington, D.C. through a conflation of open-mindedness, inclusiveness, and yes, “change”, President Obama had barely settled into his new residences when the all-round spirit of bipartisanship began to abate somewhat. Not merely a symptom of procedural inertia, the reversion to “business as usual” which appears to be threatening the Beltway is as much a result of the urgency of the economic situation as it is of the identity struggles within both parties; most particularly, the GOP. Having endured an electoral thumping in the fall, the Republicans have struggled to define themselves in the eyes of the electorate, finding themselves torn between striving to augment the coalition which had contributed to the party’s preeminence in the prior decade-and-a-half, or a reaffirmation of the policies which thrilled that particular base, but less-so the young and ethnically diverse.
As my colleague wrote in the immediate aftermath of the Election, this “identity crisis” was indeed manifest at the top of the ticket.
The dichotomy embodied within the McCain/Palin ticket demonstrates a clear identity crisis for the party. On one hand the nation was presented with a moderate reformer who stressed his military service and legislative accomplishments; on the other, an inexperienced governor with a penchant towards inopportune remarks and appeals to the rural class. Unable to capture a majority, this duo vacillated between conservatism and protestations of maverick impulses. Towards the end of the campaign, their main selling point revolved around their opponents dubious association with William Ayers and McCain’s failed attempt to stave off the credit crisis. Not surprisingly, they lost.
Contrarily, House Democrats have looked at the same election results and the listlessness of their Republican colleagues as carte blanche. They have also – dangerously - asserted themselves at the other end of the Hill, exhibiting abject horror at the President’s willingness to invite Republicans into his cabinet, as well as his decision to lade the stimulus bill one-third with tax cuts.
While many of his cabinet appointments easily passed muster, Timothy Geithner’s nomination to the Treasury drew some interest after it became clear that Mister Geithner (and his TurboTax subscription) failed to notice that he had not paid social security and Medicare taxes while in the employ of the IMF. This came just weeks after Governor Bill Richardson (D-N.M.) withdrew his name from consideration for Commerce Secretary after a troubling story exploded into a grand jury investigation into the Governor’s involvement in a ‘pay-to-play’ scandal. With Geithner now appointed, and with Obama still apparently in a mood to prove his bipartisan bona fides, much of the speculation as to who will fill the final post has now settled around Republican Senator Judd Gregg of New Hampshire. If the innuendo proves correct, this will be a pick for which the political guile is exceeded only by its pragmatic sensibility.
And it is pragmatism that is perhaps Senator Gregg’s strongest trait. A former two-time Governor, Gregg is now upon his third term in the Senate – the Granite States’ first since the 1960’s, - and has seniority on the Senate Budget Committee, which he chaired from 2005 until the Democratic accession in 2007. A protestant, his voting record is soundly pro-life, although he has voted in recent years in favour of Federal funding of stem-cell research and against a ban on same-sex marriage. However it is economic issues that have dominated his legislative interests. In the most recently concluded session of Congress, Gregg worked assiduously to oppose wasteful spending. His (defeated) attempt to attach an amendment to the ethics bill which would grant the President a line-item veto over earmarks was just one of many attempts to challenge legislative spending. Mitch McConnell (R-Ken.) invited Gregg to sit on GOP leadership meetings. Harry Reid (D-Nev.) took to calling him the “designated ‘let’s-see-if-we-can-mess-up-the-legislation’ guy this year”. To which Gregg replied, “I don’t think I came here to be a potted plant”.
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Hillary’s Dilemma
The last two weeks have been busy for Barack Obama. Rather than resting on his laurels, he has vowed to “hit the ground running” and has toiled around the clock to fill positions within his nascent cabinet. Even the desultory markets took notice of Obama’s frenetic pace — the “Geithner rally” that ensued upon Obama’s selection of his Treasury Secretary led to the greatest two day gain on the Dow since 1987.
Amidst all of the news surrounding Obama’s economic dream team, it is perhaps easy to forget that one prominent name has been conspicuously absent over the past week. Obama’s stated preference to have Hillary Clinton serve as his Secretary of State was initially viewed as a surprise due to the bitter tone of the primary campaign and his clear decision to avoid vetting Hillary for the Vice Presidency. After the initial shock had worn off, the choice was greeted warmly by Republicans and Democrats alike. Recently, however, the prospect has faded from the news, largely due to Hillary’s lack of an immediate response. Read more…
The Lost Party
The last decade has witnessed elections teetering on a knife’s edge between two increasingly acrimonious parties. On November 4th, this razor thin margin shattered. En route to a dominant electoral victory, Obama received a margin of over 8 million electoral votes, flipped 9 red states to blue, and garnished the spread with a dominant majority in both chambers. To put it mildly, November was a disaster for the Republican party.
In some sense, this defeat was understandable. The GOP was saddled with a sagging economy, a rising budget deficit, and an incumbent with the lowest popularity ratings in modern polling history. But while all of these factors played a role in November’s resounding defeat, the problems with the Republican party can best be reflected by a glance at the top of the ticket. The dichotomy embodied within the McCain/Palin ticket demonstrates a clear identity crisis for the party. On one hand the nation was presented with a moderate reformer who stressed his military service and legislative accomplishments; on the other, an inexperienced governor with a penchant towards inopportune remarks and appeals to the rural class. Unable to capture a majority, this duo vacillated between conservatism and protestations of maverick impulses. Towards the end of the campaign, their main selling point revolved around their opponents dubious association with William Ayers and McCain’s failed attempt to stave off the credit crisis. Not surprisingly, they lost. Read more…
First Day Orders
By the time Obama appeared in front of a crowd of some quarter million supporters in Chicago’s Grant Park on November 4, planning for the Office of the President-Elect had been underway for six months. Clearly, much ground work had been completed by the fall, allowing Obama to establish a strong and clear-headed Office and since that night, a number of appointments of White House staffers have been announced (including the Chief of Staff, the Communications Office, and the White House Counsel). We have also become privy to founded rumours for a number of cabinet posts. President-Elect Obama has clearly signaled his intention to honor a pledge to advance healthcare reform by leaking the appointment of Senator Tom Daschle (D-S.D.) as Secretary of Health & Human Services. News outlets have also been reporting that New Mexico Governor Janet Napolitano is being considered for the Department of Homeland Security, while Hillary Clinton is of course likely to be named Secretary of State.
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