Monthly Archives: March 2009

…if you had said to us a year ago that– the least of my problems would be Iraq, which is still a pretty serious problem– I don’t think anybody would have believed it.

(President Barack Obama, Sunday, March 29, 2009, on 60 Minutes)

Is this whiplash, or is this love?

With the economy fixed, and the Obama rally well underway in the equity markets, the President turns his attention full time to “Pahk-eh-stan” and Afghanistan.

This is either political stagecraft of unprecedented genius, or a portent of just how screwed we really are by the sheer volume and diversity of the economic, political and social challenges we face.

Or both.

Maybe “clear and hold” isn’t just the latest strategy in the conflict I assume is now being rebranded the Committed War on Al Qaeda (CWAQ, pronounced “Quack”) from the perpetually ineuphonious GWOT, or Global War on Terror. Clear and hold appears to also be an effective strategy against the permanent Republican insurgency.

Having successfully left the likes of Cornyn, Boehner, Jindhal and Cantor sputtering and slack-jawed, reduced to nattering nabobs of Lafferism — left standing surely outside the mainstream as the Kurds will be left standing outside the new walls of Baghdad — the precincts of the economic bailout, TARP, budget, federal reserve and re-regulation, can be left safely in the hands of Leuitenant Geithner. The President has other fish to fry.

Various theories compete to tell us how long a new President can effectively maintain the political capital necessary to help move difficult or innovative legislation. A hundred days? The first term? Through the second year of a second term? One thing is certain: for every commentator who expresses the clear truth that this administration just took office (mumble it to the man, Mos Def! starting around 4:20), there is a cable news talking head with a countdown clock, telling Americans their heads are going to explode if the President doesn’t deliver world peace by the time their taxes are due.

So put me in the camp that gives the President the benefit of the doubt for this sudden, head-spinning turn to foreign policy matters. If the number of adults who are now taking Ritalin is any indication, the American attention span isn’t getting any longer. Movement on multiple fronts is required, and action, even action for the sake of action, is always a tonic to the American mind.

Still, wow, what IS that sudden pain in my neck?

On this morning’s Morning Joe, Jim Cramer eats crow again: “I’ve got to admit, [Treasury Secretary Timothy] Geithner is more sophisticated than I first gave him credit for.”

Stablemate Erin Burnett concurs: “There’s no question, Geithner is a guy of real substance.”

Inasmuch as these two can be said to sum up the common wisdom of the equity markets, the equity markets and their gatekeepers, the financial advisors and institutional money managers of the world, are finally warming up to the Obama administration.

This shouldn’t come as too much of a surprise, although it can be beyond frustrating that it takes so long.

Market history is only a fair indicator of market futures. But a quick look at the history of the Dow in the transition years between the Hoover and Roosevelt administrations, the Nixon and Carter administrations, and the Reagan and Clinton administrations, reveals a remarkably similar pattern.

The performance of the Dow in the first weeks and months of each of these transitions to Democratic administrations was consistently abysmal, continuing broad, severe bear markets that began during the last year or years of the preceding Republican administration. But in each of these cases, somewhere between month 3 and month 6 of the new administration, a bull market emerged, creating broad and sustained rallies. A sustained Obama rally could now be emerging; time will tell.

There are two broad implications if this pattern holds true once again. 1) counter to the common wisdom, long-term Republican stewardship of the federal government is bad for equity markets (each one of the multi-term Hoover, Nixon and Reagan administrations ended with horrible bear markets); and 2) there is a knee-jerk bearish reaction to any Democratic presidential victory, which is historically unwarranted, and time after time unwinds into a sustained rally several months into the new administration.

Pass me my rose colored glasses. I’m beginning to think springtime is coming.