Obama’s Lost Term

Sometimes vindication is bittersweet. The good news: As recent economic and political circumstances unfold, we now find the economy in almost the exact state we’ve expected for some time. The bad news: The economy has slowed, and it doesn’t appear ready to jump-start anytime soon.

Months ago we wrote that, in our opinion, the economic recovery had gone about as far as it could go, given the absence of new jobs that would support further expansion. We wrote then that the policies coming out of Washington simply were not business-friendly, and that if they failed to change, we would like see progress slow.

As these policies have not changed, the stagnation we now see in the economy – which is being reflected in the world’s financial markets – is to be expected.

Since our prognostications, there have been no new tax policies that would encourage businesses to repatriate money held offshore, much less deploy cash in new expansion projects (which would, consequently, help get people back to work). There have also been no new business-friendly policies – deregulation – coming out of Washington.

In fact, not only is the job market failing to grow; it’s actually shrinking. Presently the US economy is shedding somewhere in the neighborhood for 400,000 jobs every week. That kind of growth in unemployment means consumer spending and discretionary spending aren’t able to grow to spur economic growth, but are actually shrinking. This makes it very hard to be optimistic, and obviously explains a lot of the worry on Wall Street.

Admittedly, Obama may have been able to shed a significant portion of the blame for a poor economy during his first 12 months in office, because of what he inherited from Bush. That option is now out the window. Obama was elected on the premise of hope and change; and after 3 years in office, what positive change has he effected – particularly on the economy?

And this is just the beginning of his troubles. If unaddressed, many of the problems we’re seeing with the economy – those causing this stagnation – may very well fester and develop into a second dip. But let’s not get ahead of ourselves just yet.

More importantly than the question of what may develop if issues aren’t addressed, is where are the people who are supposed to be addressing them? Where is Obama’s administration? Where are his economic advisors? Members of the Obama White House have resigned; why have they not been replaced? Why was the Tuesday signing of the debt ceiling bill conducted in private?

Regarding the bill specifically, it’s easy to see that Obama knew it was not his bill. He couldn’t possibly spin the story to take credit for this “disaster averted.” Also, it’s possible that no one would’ve attended the signing; at least no one from his own party.

As evident with Obama’s shrinking payroll of advisors and sudden lack of confidants, it’s obvious that the Democrat Party is abandoning Obama like rats from a sinking ship.

In 2007 and 2008 Obama was the Democrats’ golden boy. He was known for his charm and charisma; he could do no wrong. Now, just three years into his first term, the gold has rubbed off. Gone are the days of Obama’s infallibility. Instead of doing no wrong, it now seems Obama can do no right. Behind every door, a booby-trap.

Much of this serves as further proof that many of the theories espoused by liberals simply do not work in the real life. As we wrote in Obama: The Flat Earth Society, much of what Obama knew – or thought he knew – about business, the economy, and the financial markets has been proven wrong. The question is whether he owns up to his shortcomings.

In February 2009 Obama was quoted in an interview with Matt Lauer as saying, on his fixing of the economy, “I will be held accountable…If I don’t have this done in three years, then there’s going to be a one-term proposition.” Whoops.

Now, three years later, Congress just emerging from debt ceiling negotiations and the economy in a stall, with no apparent solution, Obama has once again resorted to his infantile blame-game. First it was Republicans and the evil John Boehner; then it was a “lack of bipartisan effort” (whatever that means). Meanwhile, at last tally nearly half the United States have sued the federal government over Obama’s “landmark” (read: road-kill) healthcare reform bill, an effort even garnering support from some Democrats.

To be clear, we’re not in the business of giving Democrats – or Republicans for that matter – advice, but that doesn’t stop us from trying. It’s important to note that we don’t lump all Democrats in with Obama; we understand that the majority of Democrats of honest, good-working citizens who don’t belong with the crazy left-wing group that has seized their party.

Those same Democrats were just as upset with Jimmy Carter at the end of his first term as most Republicans, and it was those middle-of-the-road Democrats who helped elect Ronald Reagan. After Carter this country didn’t elect another Democratic president for 16 years; after Obama, who knows how long it will take.

 

Dock David Treece is a discretionary money manager with Treece Investment Advisory Corp (www.TreeceInvestments.com) and is licensed with FINRA through Treece Financial Services Corp. He has appeared on CNBC and numerous radio programs, and also serves as editor of financial news site Green Faucet (www.GreenFaucet.com). The above information is the express opinion of Dock David Treece and should not be construed as investment advice or used without outside verification.