On Tuesday night the new President will address a joint session of Congress. The stakes are high.
Even though he has recorded a major legislative success within weeks of his Inauguration, there is a daily Dow Jones vote on every speech given by him or members of his team.
The market had unrealistic expectations for the Inaugural address. Pundits, most of whom are complete rookies on politics, expected to see specifics about economic plans.
The pundits have a fixation about criticizing each Presidential appearance. They should learn the following:
When the President speaks to union leaders, he will talk about unions, and probably say something that is labor-friendly.
When the President speaks to Governors, he will talk about the problems of the states, and say something about how he will help.
When the President speaks to Mayors, he will talk about cities……..
You get the idea. It is not always about the market, even though CNBC has decided to cover and criticize every speech.
The Challenge for Obama
On Tuesday night, President Obama will speak to a joint session of Congress. It is not an official State of the Union Address, but it is similar.
His challenge will be to communicate to everyone how we are all in this together. When assistance is offered to one industry or group, it is not done as a "bailout." It is done because there is a test of our social fabric and economic well being.
One year ago we had an article on TheStreet.com suggesting the speech that President Bush should have given for his State of the Union Address. It evoked The Great Communicator, Ronald Reagan. He had the knack for personalizing problems, and showing the significance of the individual.
Here is a segment of that article, my fictional Bush speech. Obama would do well if he could show the relationships as clearly as this.
Some short-sighted critics will call this a bailout. Some economists
dwelling on theory will say that it creates a problem. They have a
fancy term — moral hazard — for this. They scoff at the steps that
are needed — and needed right now — to keep our country strong,
preserve housing values and avoid a recession. This attitude is wrong,
and threatens our economic strength and security.
Those who have made mistakes have already
been punished — some of them severely. Top executives have been fired.
Stocks of leading companies have declined. Investors have lost heavily,
and some Americans have lost their homes. Enough is enough. The lesson
has been learned.
The effects have now moved far beyond those who made the
mistakes. With us tonight in the gallery are several people who can
testify to this.
Hank (President gestures to the gallery) is a small businessman, a
contractor. He has built his business over 30 years and employs 25
people. He works for construction firms building homes. Some of them
now owe Hank a lot of money — over $30,000 — and they are unable to
pay him. Hank did nothing wrong. He just worked for the same people he
has for many years. Now his employees face layoffs and his business is
threatened. He is an innocent victim, and so are his workers.
Juanita (President Bush points again, and she stands) is a middle school student. Her school depends upon
property taxes from a community that was, until recent months, rapidly
growing. Now the school is cutting back on everything — the athletic
program, field trips, textbooks and teachers. Her family is current on
their mortgage payments and taxes, but that is not true for their
neighbors. Her parents both work (her dad works two jobs), but they are
victims of their neighborhood, where houses are now vacant and taxes
Jack (President Bush points, once again) is an urban professional. He recently got a nice new job
requiring a transfer to another California city. He has two problems.
He cannot sell his home, even though he has a qualified buyer. The
buyer cannot get a "jumbo loan," which is really just an average house
in his city. Jack is having a similar problem getting a loan at his new
location. The Rutledge family did nothing wrong, but they are victims.
Harvey (President Bush points, and Harvey rises to applause) is a deputy sheriff in a prosperous Illinois county.
The county property tax revenues are declining and the budget faces
cutbacks. Even though security needs are high, the public safety budget
is being cut. Mr. Collins is a victim of the credit crisis, and so are
the citizens of his county. They now face a higher risk of crime.
These people and their families are only a
few examples of those affected. Those watching this at home are also
victims, since their own home values are threatened.
The point should be clear to any thinking
American. We need to act, and act together. Not as people of different
parties. Not as candidates for public office. We need to act as
Americans, pulling together for everyone's benefit.
The entire article was one of our best pieces, and we hope that people will take a look, keeping in mind that it was written more than a year ago.
The key element for investors is confidence. The new administration has a tough job in satisfying market expectations for speed, detail, and message.
The economic policies already adopted will have a major impact. The recovery will take longer if everyone is cautious and skeptical.
That is why the leadership is so important.