Obama Adminstration officials announced this morning that they would do whatever is necessary to keep banks capitalized, which means of course that more money will flow to the big financial institutions. This makes perfect sense and continues the policies begun in the fall under President Bush, and are exactly the sort of guarantees that need to be made again and again until the panic recedes and the recovery begins.
The Administration could also highlight its steps to assure that banks are loaning money at reasonable rates to businesses and to individual borrowers. This too has been happening but the president’s political agenda –stressing dire circumstances in order to power the porkulus forward– obscured all that has been happening to unfreeze the credit markets.
The president will address Congress tomorrow night, and the D.C. Examiner reports he will focus on restoring confidence. A little late on that, but a welcome change in tone still. There’s a lot of buyers’ remorse accumulating and a lot of wobbly confidence in the president’s ability to run all these trains and especially to control the left wing of his party. The need for optimism in the Oval Office is a constant, and if the new president has figured that out, that will be a big plus. If tomorrow night is another furrowed brow session, another decline in his approval numbers will follow. The “hope and change” crowd didn’t sign up for President Eeyore.
It doesn’t take much effort to find dozens of reasons to be very optimistic about the economic future of the country. Here is one report in the New York Times underscoring that “the United States ranked No. 1 in the world for technology use and skills by consumers,” which telegraphs an extraordinary efficiency which in turn will power productivity and the continued rise of very efficient manufacturers competing for the dollars of very savvy customers. There’s a reason that Amazon’s profits soared 9% in the fourth quarter –it is very good at what it does and American consumers are rewarding it. This is the sort of thing that the president needs to emphasize when he talks about the economy –not only the manifest trials facing millions, but also the successes and opportunities. Over and over again financial experts point out that the panicked selling has led to a “once-in-a-generation” opportunity to buys stocks or real estate at discounted prices, but the news is not being widely believed because the MSM in concert with the new Administration is still invested with the “woe is us, look what we inherited” narrative.
It may be that the public opinion polling is telling President Obama that such arguments don’t work for long and may have already stopped working. It is his economy now, and his policies that are responsible for rebuilding the consumer confidence on which renewed economic growth depends. Getting started today and tomorrow is a welcome, though overdue, change.