It’s all Obama’s fault.
Once the RWMPPs (Republican White Male Political Primaries—sorry Dr. Carson and Ms Fiorina; you are irrelevant tokens) mercifully come to an excruciatingly painful end, and the nominee has to make a U-turn on Crazy Street to try and mitigate the damage done among the general population (to which the media will be typically mute), expect to hear this A LOT—“It’s Obama’s Fault”.
Now I’ll admit up front that I’m not particularly happy with a lot of what Obama didn’t do, and some of what he did do. Call it the nature of politics, the nature of presidencies in general, what have you.
The GOP candidate will blame everything imaginable that has taken place, real or made up, (except the lower unemployment, the lower deficit, lower gas prices, well, you get the idea) on the president whose party they have wanted to exorcise from the White House from day one.
Recent turmoil in the stock market, for instance, is Obama’s fault, according to Republicans Donald Trump, Scott Walker, Chris Christie and others. Trump, for instance, said of China, “they’ll bring us down. We have nobody that has a clue.” Then he said President Obama should cancel the upcoming state dinner with Chinese president Xi Jinping and give him a double Big Mac instead. Walker argued that “We need to see some backbone from President Obama on U.S.-China relations.” And Christie said the stock-market sell-off resulted from “a history of failed policies by this president.”
Obama certainly has some policy liabilities (exhibit A might be his vow to take decisive action in Syria, which never happened), but if you blame Obama for the 9% drop in stocks during the last week, then you’re basically saying Obama is responsible for what happens in the stock market. And if you’re saying that, then you have to give him credit for the huge gains in stock values that have occurred during his presidency.
By that standard, Obama has been a genius and his China policy has worked wonders. Since the day Obama took office, for instance, the S&P 500 stock index has risen by about 125%, or roughly 20% per year. The smartest hedge fund managers don’t get returns that high. The only thing Obama didn’t do is open a trading account for every American and give them a complimentary $10,000 starter fund.
Now don’t get me wrong, I have been railing until my fingers bleed all over my laptop’s keyboard that this dumbass Trans Pacific Partnership is the worst thing since, well NAFTA, for average Americans.
But the simple truth is that the president—any president, of any party—has little influence over the stock market, or even over the broad direction of the economy. Sure, presidents can talk up the economy and try to convince consumers and investors everything is great. They can also enact laws and policies that trigger growth, if they can get Congress to go along (which, of course, Obama pretty hasn’t been able to because the Republican Party of the Misogyny and Racially Bigoted Americans has had, as it’s publicly stated purpose, to block anything and everything President Obama suggests).
The Federal Reserve, (you know, the evil institution that the RWMPP (Republican White Male Political Party) says can “print money” —which of course it can’t; it can only fill requests from Federally-guaranteed Investment or Commercial Banks requests—has much more influence over the direction of markets than the president does, and even the Fed can short-circuit reality only so long. Sooner or later, financial markets always reach equilibrium levels that will be as satisfying or ugly as the underlying fundamentals, regardless of presidential policies.
This is a lesson China seems to be learning as government efforts to prop up the rigged stock markets of Shanghai and Shenzen fail repeatedly. China’s communist government created “incentives” (jail time and traitor status) for Chinese investors to buy stocks, which now looks a bit like a Ponzi scheme as buyers bail and the government tries to keep them from selling.
This isn’t U.S. policy, it’s Chinese policy, and one America couldn’t talk them out of under any circumstances. China is prideful and stubborn, and it can behave in ways that make no sense to free marketers longer than anybody would like…including that bloviating blowhole Donny Trump.
China is the current catalyst for the turmoil in financial markets, but this is only be because markets were fragile—and U.S. stocks possibly overbought—with something likely to crack the eggshell, like say the Fed raising interest rate from 0% to .25%.
It just turned out to be China. Investors are now resetting their expectations and factoring in slower growth in China than assumed until recently: 4% or 5% annually, say, down from 7% or so. OMG, How could Obama have let this happen?
When the manic behavior ends, investors will realize that China’s economy is much more dependent on the United States than the other way around. We’re their biggest customer, buying much of what they make. China is a big global consumer of raw materials, but they don’t buy much of what we make here in the U.S. But their economic health is measured by and dependent upon the things they can EXPORT—and is a primary factor in their constant fiddling with their currency value—while the U.S. depends upon it’s own citizens supplying the demand for U.S. products (yes, there are still some) or services for growth.
But the health of the Chinese economy matters here, and everywhere, but it would take a real rout in Asia to cause lasting harm here. The wobbles we’re feeling now are there because the whole world is interconnected and money flows like water. And the fact that many investors don’t understand that Wall Street is like the “House” (casino jargon) and “The House” always wins….I mean it IS rigged that way; you have to know that. In any event, the president can’t change that.
Republican candidates may not care about the details (or facts) because they’re trying to get the attention of base voters who don’t like Obama anyway. Luckily for them, there’s more than one villain to pin the blame on when markets stumble. The Federal Reserve is about to raise interest rates, and that, too, is beginning to unnerve investors, even though the Fed has done more to stimulate the current fragile recovery we’re in than any other body —despite there being only so much monetary policy can do when a Republican Congress and Presidents who ignore their Economic Advisors (unless they have graduated from the University of Goldman Sachs) set surefire, proven-to-fail fiscal policies.
Yep, Obama and the Fed: They’re the ones who caused this problem together. Not AIG, who guaranteed Investment Bank mortgage bundles but had only $1 in reserve cash for every $35 they “guaranteed”, or the Investment Bankers who knew this but didn’t care if the taxpayer was just going to bail them out when the house of cards blew apart. By-the-way, that under-reserve totaled just shy of $1Trillion…and no banker or financial advisor went to jail over this blatant fraud.
So, you dear reader, you tell me, who worse;
- The people who are in on the fraud but do nothing and don’t go to jail after defrauding millions of Americans, or
- The politicians who constantly complain about those nasty regulations that would’ve uncovered and stopped the event from happening?
Oh, silly me. I forgot…this is Obama’s fault too.