Tuesday, February 24, 2009

The Decision: Obama prevails on split judges' cards: for a political leader, a strong speech; for investors such as myself, it was not nearly enough

President Barack Obama gave quite a strong political speech for a chief executive delivering his first State of the Union Address.

He outlined an impressive agenda on health care reform, which is most needed.

His energy agenda was impressive and far-reaching. His education initiative was long on spending and short on real reform. Providing more incentives for teachers to do a good job is in sharp contrast to what is demanded as a basic from all workers in the private sector. If they don't do a good job, they're fired.

But as far as convincing the people with money in this nation to re-invest in the financial markets and job-creating enterprises, the speech was far from enough.

Obama's mathematics on cutting the deficit -- partly based on a peace dividend from Iraq -- does not account for the increased cost for the escalation of the war in Afghanistan and increased U.S. intervention in Pakistan. At best, this equation is a wash, not a sum benefit to the nation's fiscal balance sheet.

Taxing households making more than $250,000 is fine, but there are far fewer of those households after the round of layoffs from the Great Recession.

Obama admitted that even more money than the $700 billion already committed to the nation's financial system will have to be spent. And no one knows the final price tag of that disastrous intervention, because the Treasury Department has yet to release details on what will be considered a bad asset.

The president continuously said that the nation could ill afford to do nothing. I disagree. Making too costly policy decisions that will not make a meaningful difference threaten to turn this recession even nastier and make it longer. His commitment tonight to the U.S. auto industry's restructuring was disturbing. That will mean even more spending for bad behavior.

Ultimately, this generational theft of the futures of our children and grandchildren is inexcusable. Bad decisions are being made now from which this economy will never recover from. And today's taxpayers are being greviously abused.

The president's contention that the economy will emerge stronger than before is not rational. History, which he cited often in his speech, dictates certainties. Great Britain could not avoid its ultimate downsizing as the world's ultimate power after World War I. America faces the same fate this century.

The new debt of this nation beyond what Obama inherited will only trigger fierce inflation, making living harder in this nation after 2010.

The president delivered a strong address, showing himself convinced of the direction he has set for the nation.

But for investors such as myself, whose decisions and spending will be needed to turn around the economy, Obama did nothing to convince us to bring our money off the sidelines and back into the marketplace.

And as taxpayers, he left us fearful of his next spending plan.

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