The Washington Power Vacuum
Right now there is a difficult vacuum of power period in Washington with the long wait between the November election and President Barack Obama actually being able to do something about the economy with a lame duck President Bush largely reduced down to a figure that shakes hands with a few world leaders such as President Hu Jintao of China before the new president can really take power in late January. More than ever in American history, this is a serious issue. The economy requires immediate steps to prevent further deterioration and disaster, where some segments such as the American auto industry may not be able to survive until January without some immediate help.
Strangely, right now it is only some weaknesses in the economy such as the huge deflation in oil prices that are almost acting on their own as a slight economic stimulus package on their own more than some new bold leadership from Washington that almost seem like the most engaged of economic actions. And the home foreclosure epidemic may be spurring some buying by opportunistic investors. It is indeed pathetic that some of the worst of economic signals are spurring a few economic bright spots compared to any true Washington leadership between the election and the inauguration.
And unfortunately, many of the actions of President Bush on the economy right before the election looked largely symbolic in nature intended more to help bolster John McCain and the Republican election hopes, and largely were simply media-circus press conferences to point out that the White House noticed that Wall Street took a huge loss of hundreds of points that day. But now after the election, those missing press conferences send a strong signal of more disengagement from the issues at hand and an early retirement for Mr. Bush.
Also unfortunate was a statement from Press Secretary Dana Perino critical of congress to put off the hard decision of how to best help Detroit, while the White House itself has proven little interest in any bailout plans for Detroit either, and would probably even veto such plans if congress even approved them, only leaving this critical mess up to President Obama to address. It is this continued time wasting, foot dragging, and goofy signals like this that are so maddening to many investors and those in the financial community while some segments of the American economy may be slipping far beyond hope. It is almost whether there is a debate whether to send a rope to a man hanging onto a cliff by his fingertips or not. It is simply an appalling display of preinauguration disengagement at the White House where any real actions on important issues stopped on election day, if not well before that date.
President-elect Barack Obama did send some very encouraging signals to Wall Street on Friday when plans to nominate New York Federal Reserve Chairman Tim Geithner to be the next Treasury Secretary were leaked to the press sending Wall Street up well over 400 points after two days that witnesses nearly a 900 point market drop. And Obama's Saturday morning address sent more encouraging signs that Obama will do whatever it takes to improve the American economy. Some of the ideas included creating 2.5 million new jobs through a rebuilding of schools, roads, etc, that seemed very similar to a modernized version of the Roosevelt-era WPA and NRA projects and plans. The only problem is that Barack Obama is just the President-Elect at this point, and not really able to act until after his late January inauguration.
All of this only illustrates some of the shortcomings of the American political system. There is at least a year long campaign for president where the serious problems facing the country are debated over and over again while the current White House does little to act on the problems and remove them as an issue for their party to have to defend against, capped by a big election loss because of the Republican inaction, only followed by a long wait for the new president to take office after the election while the economy demands some immediate steps and actions that are still in very short supply indeed from the current lame duck presidency largely more concerned about leaving these problems up to the new guy, and their own retirement plans to hunt or fish than anything else at this point.
It is little wonder that during the Bush years there was a real problem teaching democracy to nations such as Iraq. The student needed a better teacher.