Sunday, February 15, 2009

Blogosphere Seeing It Our Way On Obama?

A number of leading financial blogs are turning against Barack Obama. For example, Yves Smith at Naked Capitalism commented a few days ago that she had voted for Mr. Obama (though without great enthusiasm) and had begun to wonder why. Today she comments in Obama to Neuter Bank Pay Restrictions that:

Team Obama seems cowed by Wall Street psychopaths, so aptly described by The Epicurean Dealmaker. And if the Obama crowd lacks the nerve to take on the banks on issues that are largely window-dressing, it's obvious they won't even attempt to tangle with them on matters of substance.


" . . . the (financial) industry has completely bamboozled Team Obama."

One of these days, if past is prologue, I suspect that her posts will name the President rather than the euphemism "Team Obama".

At Mish's Global Economic Trend Analysis, the harshness with which Bush-Paulson (and Bernanke) policies were skewered continues under Mr. Obama. For example, here is one from Feb. 12, No Transparency in "Stress Test", which begins:

The New York times is discussing a "stress test" for banks in Bank Test May Expand U.S. Regulators’ Role. Three things stand out.

1. A massive audit of the 18 largest banks is underway.
2. There is no transparency in the audit.
3. There are no details on the alleged "stress test". Moreover, an audit can hardly be construed to be a stress test.

There is no transparency and there are no details. Is this supposed to inspire confidence?

At Jesse's Cafe Americain, the proprietor, Arthur Cutter, continues to rail against the system. Today he says:

Now is the time to break up the big money center banks. Now is the time to reinstate Glass-Steagall. We must demand the reforms for which we elected the Obama Administration.


And be prepared to act on a larger scale in a peaceful way to get the point across that we value our liberty and we will stand for justice. We are not optimistic that the government will do the right thing without more prodding and significant support from the public.

At The Big Picture, Barry Ritholtz is perhaps keeping the faith, as per his post Media Misreads Bailout Plan Reaction (Feb 11):

Both the NYT and the WSJ seemed to focus on the lack of details as the cause for the selloff. But that conclusion is belied by the “sell the news” reaction immediately as Geithner began speaking. No one could have digested anything in that milli-second.

I have a decidely different take. Wall street was hoping for another multi-billion, no strings attached, taxpayer funded giveaway. Instead, they got something much tougher than they expected.

Hence, the selloff/tantrum.

They wanted their candy and didn’t get it…

Mr. Ritholtz was a prominent "Obamacan", i.e. a Republican for Obama. Whether he is privately losing faith in the economic/financial course that Mr. Obama is setting is not clear yet.

Overall, the sense here is that a number of bloggers and many who comment in their chat rooms are unhappy and perhaps surprised that Mr. Obama's administration is one of continuity with George Bush's regarding the large financial institutions. That observation has been the theme here from day one of this blog in December 2008.

Readers should be aware that the bloggers who this blogger reads are either known to be people of substance or have been predictively right over the past year or two.

Without a change in course, the news looks to continue to be disastrous on many fronts on a day-to-day basis. The view here is that the stock market continues to ignore the obvious risks and therefore should not be owned. Gold and Treasury securities are the polar opposites in a kind of dialectical opposition and both could be owned, though predicting the prices of such assets is more than ever impossible. Halfway measures such as corporate bonds look to have a better risk-reward better than stocks, but the risk of Great D II or even a worsening Great Recession scares this blogger away for now.

Copyright (C) Long Lake LLC 2009

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