Obama Misses an Opportunity

According to the Economist, Barack Obama has missed a golden opportunity to help turn America's economy and the financial markets around. As the magazine's stinging editorial describes, Obama's failure is twofold, and rather large on both accounts.

First, the Economist on Obama's handeling of the massive exercise in useless spending more commonly know as the economic stimulus package:

"Mr Obama ceded control of the stimulus to the fractious congressional Democrats, allowing a plan that should have had broad support from both parties to become a divisive partisan battle...

"The fiscal stimulus plan has some obvious flaws. Too much of the boost to demand is backloaded to 2010 and beyond. The compromise bill is larded with spending determined more by Democrat lawmakers’ pet projects than by the efficiency with which the economy will be boosted. And it contains “Buy American” clauses that, even in their watered-down version, send the wrong signal to trading partners."

Now the Economist goes on to say that while imperfect, this near-trillion dollar "fiscal boost is vital for America's economy." I take serious issue with that, but nevertheless, the article does a fantastic job pointing out just how flawed the stimulus legislation is, especially if you actually believe in the effectiveness of Keynesian management of aggregate demand. But enough on stimulus. The Economist piled its greatest praise on Obama's bank rescue plan recently announced by Treasury secretary Tim Geithner:

"More serious still was Mr Geithner’s financial-rescue blueprint which, though touted as a bold departure from the incrementalism and uncertainty that had plagued the Bush administration’s Wall Street fixes, in fact looked depressingly like his predecessors’ efforts: timid, incomplete and short on detail. Despite talk of trillion-dollar sums, stockmarkets tumbled. Far from boosting confidence, Mr Obama seems at sea...

"But his [Time Geithner's] deeds did not live up to his words. His to-do list was dispiritingly inadequate on some of the thorniest problems, such as nationalising insolvent banks, dealing with toxic assets and failing mortgages."

Awesome plan, guys. Glad to know our nation's economy is in the hands such able communicators as Tim Geithner.