Are We There Yet?

Is the economy coming back? Is the worst over? Can we pull our money out from our mattresses and any other places we may have stuffed it?

Well, the good news is...maybe.

The bad news is...if you pulled your money out of the market already and have it sitting on the sidelines, you may have missed the only upward climb of the year.

I think all the money that has been injected into the system and Obama's ability to sound (generally) calm and that he has a plan has at least calmed enough people who realized there might be some bargains to be had. However, I think they have been had. So there may not be any more easy money to make in this market. We are now about 20% above the low points of the Dow, Nasdaq & S&P and the Nasdaq is actually (barely - 0.63%) positive for the year, and although that generally signals a bull market, I think we just recovered from over selling.

From this point forward, we will need positive results from the bailout / stimulus and that might take a while. We could also have the dropping of the other shoe (resetting of Adjustable Rate Mortgages, Iran, etc.) which would cause another flurry of selling, but I think we will be sticking about where we are. However, that doesn't mean the volatility has subsided, just that we will keep returning to about the place we are now.

Because the voting public looks for signs, the markets rising in the same timeframe as the release of the President's budget and Geithner's plan for a public/private investment in the toxic loans probably makes a lot of people feel calmer about the potential for those plans. No doubt that the Obama Administration has bitten off a lot, but there was a lot on their plate.

Stay tuned.

You Can't Handle the Truth

Could we handle being told not only how bad things are, but how bad they could get? Really, do you think so? I don't.

As a nation, we complain that things aren't better yet. That too much has already been spent. That the President was talking too negatively about the future of the economy. We were not feeling good. Guess what, we shouldn't. We, the people of the United States, have been borrowing too much to be able to spend too much. Plain and simple, that is why we are where we are.

The Chris Matthews Show asked and attempted to answer several very important questions this weekend.

- What is wrong?
- Was the Stimulus Package large enough or will we need more
- When will the Economy turn around

Erin Burnett gave the spot on answer on what is wrong. We, (the royal we) borrowed too much money. We bought more that we could handle and now we have to pay it back. It will get worse and we are not prepared to hear that, so it isn't being said because in this case the truth would not set us free, it would have us running for the exits.

As I posted a while back there is very likely to to be another stimulus bill. However, it may not be called that. They are going to see how things transpire before they decide, if, what and how much.

Fed Chair Ben Bernanke said this week that the economy would start rebounding before the end of 2009 and be in full recovery in 2010. That is slightly optimistic, but it appears we will be able to point to one or more signs of a recovery before we wish each other a Happy New Year. The timing of when people 'FEEL' that we are in a recovery will determine the outcome of the 2010 elections. When James Carville selected the phrase, "it's the economy stupid" as the Clinton campaign rallying cry in 1992, it wasn't just for that moment in time.

Erin Burnett further shared that a Chinese CEO she spoke with said the world loves the American entrepreneurial spirit and "We need you to pull your socks up because the rest of the world is looking to you." Reports earlier this week that the Chinese were cautious about future investments in the US are almost certainly not predictive of future action. They really need us to succeed and will hang in for a long time because they don't have many great second options.

Also demonstrating that they can't handle the truth are members of the former Bush Administration, in particular, Dick Cheney. Although during the Obama Inaugural, he appeared to be doing his "Old Man Potter" impersonation, Dick Cheney is really an old-style Tuna fisherman. He strongly believes that all actions are justified to accomplish the goals of the mission. If some dolphins get caught in the nets while enroute to achieving their goals, so be it. That is the cost of business, just as long as the price isn't paid at home. This weekend on CNN's State of the Union, Cheney castigated Obama for ordering CIA investigators to abide by the U.S. Army Field Manual's regulations for treatment of detainees and for denouncing waterboarding, saying that he thought e thought Obama has made Americans less safe with those actions. Dick Cheney has been speaking his mind on several news outlets recently trying to spin luster onto the Bush Administration's legacy by tarnishing the activities of the Obama administration. I have visions of Ed McMahon and Doc Severson going on the Letterman Show and trashing Jay Leno shortly after he took over the Tonight Show.

The Obama Budget - Too Much, Too Little or Just Right?

You can read all about Obama's proposal for the 2010 budget online, but at 142 pages, it is quite a lot to swallow.

I am amused by the commentary about it and I think we can learn a lot by stepping back and looking at the range of what is being said.

There are claims that too much is being spent and the deficit will rise. There are comments that not enough is being spent. Some think that Obama's attempts to also plan to shrink the deficit are in error.

I find that when comments come in from all sides (too big, too small, too many tax cuts, too many tax raises, etc.) the plan is probably in the right space.

About the only thing that most people agree upon, even Democrats (begrudgingly) is that Obama is trying to take on too many things at once. That it is an overwhelming number of activities that will pull the president in too many directions. I believe they are correct...for most presidents. Obama is smart and seemingly able to surround himself with a lot of capable people who are there for more than their loyalty. Almost everything in his budget is an echo of a campaign promise. It also appears that he is aware that the most effective time for a president to enact legislation is in his first year in office. By putting a lot of his ideas directly into the budget rather than launch them as separate legislative issues is actually quite brilliant. The Budget is a non-binding document and therefore can not be subject to a filibuster.
What the Congressional and Senate Budget and Appropriations Committees wind up putting forth and agreeing on remains to be seen. As time moves, on we also will see if Barack Obama's desire to take on everything at once is viewed as the second coming of FDR or leaves everyone with heartburn.


It is not certain if this will work, if this is the right mix, or how it could be improved upon. One thing we know is that Barack Obama will not go down in history confused with Herbert Hoover.

Bobby Jindal Response

OK, a lot has been said about Bobby Jindal's response to President Obama's first talk to the Joint Session of Congress. But here is the image I can't get out of my mind:



In what may have been the quickest sinking of a candidacy this early in the quadrennial process, Bobby Jindal had problems before he even spoke. Here is how Chris Matthews of MSNBC reacted on a hot mike as Jindal walked out:


But the actual response from Rachel Maddow and Chris Matthews was priceless.

Obama's Presidential Address to Congress

Perhaps more anticipated than most other President's 1st talks to a joint session of Congress, on Tuesday, President Barack Obama laid down his game plan for the country. It covered every area that he will be focusing on during his first term.

First let me make sure to mention that President Obama had a nice shout-out welcome to the first lady which was a nice touch and once again showed that Barack is not your father's president.

The talk was strong, firm and light on details, all of which were important. Complaints from the right said that there weren't many details, but really, we don't want to get into it. The talk was an hour without a lot of details. That is what the release of the budget outline on Thursday was all about.

Some important statements:

"We will rebuild, we will recover, we will be stronger than before."
- confidence is the life blood of the retail economy and it is in the tank right now. Knowing the President believes things will get better will begin to raise public confidence.

"Banks need to provide credit or our recovery will be choked off"
- tough to find anyone who will disagree with this, the problem is how to we get this to happen.

"We can't govern out of anger."
- Yeah, some companies and people who were irresponsible will wind up getting bailed out, but since we are climbing a mountain together and are all tied together, if anyone falls, we can't ignore the fact that it will also pull us down.

"We will do whatever is required to be successful. This recovery will require more than we have even set aside."
- Nobel Laureate Paul Krugman has been saying that the government needs to spend 4% of GDP to have a successful stimulus and the first bill represents about 2.5% (and some of that money really isn't stimulus spending). Many of us have been thinking that there would probably need to be more spending and this was the first sign that the Obama Administration agrees.

"Health Care reform will not wait another year."
- The gauntlet has been thrown down.

"Every American needs more than a high school education. And dropping out of high school is no longer an option. It's not just quitting on yourself it is quitting on your country."
- This was pretty powerful. Also said that education begins at home and is not a Democratic or Republican issue, it is American. Nice.

"We are going to go line by line to remove expenditures that do not make sense"
- I felt like I was watching the movie Dave

"We are not quitters."
- Entire premise of the talk summarized in 4 words.

I don't know if they will get this right, but thinking back on previous administrations, I am happy that this one is in place right now.

The Stimulus Bill Draws the Lines for the 2010 Elections

We are now 1 month into President Obama's term and the lines have already been very clearly drawn for the 2010 (and perhaps 2012) election. Every House Republican voted against the Stimulus Bill. All but the moderate 3 Republicans (Spector, Snowe, Collins) in the Senate voted against the Stimulus. President Obama has gone on record and said that this is his bill and his political future rests on its success.

It is almost like being early in a poker game and the players going "All In"!

It is easy to imagine the 2010 elections resulting either in the Republicans drawing close to even or even moving into the majority if the economy is still bad or gets worse (God help us all) or the Democrats having even more overwhelming majorities in both the House and Senate and a free-for-all trying to determine in the Republican party should even stay together or be replaced by a new party. This sounds far-fetched, but if the Republicans get down to 30 seats in the Senate (not impossible with the seats up for grabs in 2010 if the economy is back on track), they will be in trouble.

The reality will probably fall somewhere in the middle, but there doesn't seem to be anyone other than Arlen Spector hedging his bets these days.

To show how far this Republican 'Stand' is going, some Republican governors have been publicly stating that either they might not accept the money headed to their state from the Stimulus Bill or they will be looking at each item to see whether or not they want to take it. For the first time in my recollection, Meet the Press had on 2 Republicans to show both sides of an issue. Louisiana governor Bobby Jindal, who is being paraded by the RNC as a new face of the party (and potential 2012 nominee) tried really hard to defend his stance to review each and every hand-out being offered to his state even in the presence of a $2Billion State Budget deficit. He made some points, but it was obvious he was posturing. He opposition was Florida's Republican Governor, Charlie Crist, who is happy to take all the money the Federal government gives him and was willing to stand with President Obama on the Stimulus Bill. This did not earn him any points with fellow Republicans.

But he wasn't alone. On "This Week with George Stephanopoulos" on ABC, California Republican Governor, Arnold Schwarzenagger commented on South Carolina Governor Mark Sanford's statement that the Stimulus bill is creating too big a liability:

Well, Governor Sanford says that he does not want to take the money, the federal stimulus package money. And I want to say to him: I’ll take it. I’m more than happy to take his money or any other governor in this country that doesn’t want to take this money, I take it, because we in California can need it.

Republicans trying to stick with their party are getting squeezed between their party's history and the current reality. Those who are more realistic are probably going to be the beneficiaries regardless of how the economy fares.