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Obama faulted as indifferent on stocks
Some Wall Street economists think President Obama could have voiced some sympathy about the plight of frightened shareholders when he compared the stock market’s plunge to an election tracking poll that “bobs up and down, day to day.”
They worry that the president is underestimating the important role the stock market plays in the economy’s performance, and that the markets’ precipitous slide is actually a vote of no confidence in the administration’s handling of the economy. There’s also a suspicion that Mr. Obama and his advisers think only wealthy people own stocks.
“There is some of that feeling that rich people are the ones who have stocks. He does have somewhat of that feeling. But you’ve got to remember that most people who own stocks aren’t rich,” said David Wyss, chief economist at Standard & Poor’s, the influential Wall Street financial research and forecasting firm.
With the stock market in a practical free fall since he was sworn in to office Jan. 20, Mr. Obama seemed to dismiss the plunge in equities Tuesday in an Oval Office conference with British Prime Minister Gordon Brown, suggesting that he was unconcerned about Wall Street’s daily fluctuations.
“What I’m looking at is not the day-to-day gyrations in the stock market, but the long-term ability for the United States and the entire world economy to regain its footing,” he said.
“The stock market is sort of like a tracking poll in politics, it bobs up and down, day to day. And if you spend all of your time worrying about that, then you’re probably going to get the long-term strategy wrong,” he told reporters.
But Mr. Wyss and some of his colleagues on Wall Street - where investors have lost trillions of dollars in savings and the market is not so much bobbing as dropping straight down - think Mr. Obama could have shown more concern for the markets, which represent the economy and signal its future direction.
“I suspect he didn’t dismiss campaign tracking polls when he was running for president. Even though it may have the same day-to-day bounces, I’m sure he was watching the tracking polls when he was running,” Mr. Wyss said in a telephone interview with The Washington Times.
“I agree with him that you can’t obsess about it day to day, but you cannot ignore it, because it’s telling you something,” he said.
Harm Bandholz, an economist at UniCredit Research in New York, called this attitude toward the stock market, “one of the big problems with the administration, that they underestimate the role of the stock market in the current recession, because without the stabilization or recovery of the stock market, the U.S. economy won’t be able to get out of this recession.”
“This is the crucial point: We have the impression that the government is not doing anything to stop the plunge in the stock market and that he said he is not worried about it. But this is not day-to-day fluctuations. This is a significant downward plunge,” Mr. Bandholz said.
In his comments Tuesday, Mr. Obama talked up buying stocks as “a potentially good deal,” though with the caveat “if you’ve got a long-term perspective on it.”
The Dow Jones Industrial Average responded by continuing to drop, losing 436 points for the week, bringing its losses to 1,600 points since the Obama inauguration and 3,000 points since his election. Thursday’s closing of 6,594.44, though there was a 30-point gain Friday, put the Dow at levels not seen since 1997 and just half the index’s 2007 highs.
White House press secretary Robert Gibbs on Tuesday rejected the idea that Wall Street should affect White House decision-making, tying such an idea to the George W. Bush administration and referring, though somewhat favorably, to “the investor class.”
“For many years, as the president has said often, we had a mind-set that, if it was good for Wall Street, it was good for Main Street. Now we know that’s not the case,” Mr. Gibbs said, though he added later that “obviously, there is concern for the investor class, because the investor class … is a great percentage of the American public.”
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By Brahma Chellaney
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