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 not paid.
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.
Conclusion
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.
