The Obama Stock Market

By Howard Kurtz
Washington Post Staff Writer
Monday, March 16, 2009 9:39 AM

As the Dow embarked on a long slide after Inauguration Day -- a nearly 2,000-point slide, to be precise -- the drumbeat seemed to grow louder.

"There's no confidence in Obama's plan," said Fox's Sean Hannity. "The markets respond to data. They have no confidence."

"The stock market is also demonstrating a lack of confidence in the president's big government agenda," said CNN's Lou Dobbs.

And it's not just those on the right. CNBC's Jim Cramer -- an unabashed Democrat -- complained that President Obama's "radical agenda" was causing the "greatest wealth destruction I've seen by a president."

But is it fair to hurl such charges at a president who's been in office for less than eight weeks? Isn't Obama trying to dig out from the huge economic mess left by his predecessor?

The chatter reflects a fast-forward culture that demands snap judgments. The cable news channels, not content to wait for the traditional 100-day benchmark -- itself an artificial media construct -- were grading Obama last week on his 50-day performance.

"Fixing the economy is not a television-friendly story," says Fortune Managing Editor Andy Serwer. "A plane crash in the Hudson where everyone survives is a television-friendly story. This is a slog."

The debate is also a barometer of the pain that millions of Americans are feeling as their nest eggs and retirement funds shrink dramatically. The Dow opened at 9625 on the day Obama was elected, at 7949 on the day he took office, and closed at 6547 last Monday.

Of course, Obama's detractors didn't credit his policies when the index rebounded to 7224 by Friday. Republicans on yesterday's talk shows shifted their attack to the overall economy, with House GOP Whip Eric Cantor saying on "Meet the Press" that there is a "lack of confidence" in the administration. Christina Romer, chairman of Obama's Council of Economic Advisers, said that "of course the fundamentals are sound," prompting host David Gregory to observe that she and the president now seem to be echoing what John McCain said during the campaign.

Former Business Week editor Steve Shepard dismisses the notion of attributing sharp declines in the Dow to a new president.

"To pin the blame on him is just fundamentally unfair and wrong," says Shepard, now dean of the City University of New York's journalism school. "It's the party line of the Wall Street Journal editorial page." While there is "a germ of truth" in the criticism -- Shepard says that Treasury Secretary Tim Geithner unveiled a "half-baked" bank bailout plan -- "the decline of the market since Obama took office is largely related to the deepening of the economic disaster."

The Dow's swoon began in the last 18 months of the Bush administration, after the index peaked at 14,164. Serwer says the crisis was "a generation in the making" and furthered by the Bush administration's "malignant neglect."

"Any president is going to be held responsible for the economy, but it's patently unfair to do it in such a short time frame." Still, he says, "in the 24-hour news cycle, you've got to have something to talk about."

The president, for his part, has likened the market swoon to the gyrations of political polls, saying that "buying stocks is a potentially good deal if you've got a long-term perspective on it."

The White House hasn't been shy about firing back at the critics. After Cramer, a former hedge fund manager, ripped Obama's policies, spokesman Robert Gibbs said: "I think you can go back and look at any number of statements that he's made in the past about the economy and wonder where some of the backup for those are, too." (Jon Stewart seized on those statements in his "Daily Show" assault on Cramer, particularly Cramer's repeated endorsements of the now-defunct Bear Stearns.)

And after CNBC correspondent Rick Santelli, a former options trader, attacked the president's mortgage plan -- amid cheering at the Chicago Board of Trade -- Gibbs said: "It's tremendously important . . . for people who rant on cable television to be responsible and understand what it is they're talking about. I feel assured that Mr. Santelli doesn't know what he's talking about."

The public, for now, isn't siding with the critics. In an NBC/Wall Street Journal poll two weeks ago, 84 percent of those surveyed said Obama inherited the nation's economic conditions, while 8 percent said his policies are mostly responsible for today's economic woes.

At some undefined point, the battered economy will be seen as Obama's problem. The conventional wisdom when he took office was that he had a year to show some progress. But that was before cable commentators started handing out 50-day report cards and presidents were expected to solve problems before the next round of Sunday talk shows.

Trapped in the Bubble?

The debate echoes louder as the economy keeps sinking: Did business journalists let us down?

"By and large," says the Project for Excellence in Journalism's annual report, released yesterday, "the press as an institution failed to function as an early warning system for what is now being called the biggest economic disaster since the Great Depression."

The media, says the report, were "sporadic" in their attention and "late to connect the dots": "Journalists were slow to pick up on the broader implications of what emerged as a housing markets crunch in late 2007. Even though coverage intensified somewhat in early 2008, the press again drifted away from the economic story in the days just before the big September collapse. But after Lehman Brothers failed, coverage exploded, filling about a quarter of the newshole (26%) during the last three months of the year."

Considerable media energy was diverted to the presidential campaign, the report notes, and most government officials and economists also failed to anticipate the magnitude of the crisis. But for too many months, "journalists may have failed to have their ears close enough to the ground, relying instead on official pronouncements about the state of the economy rather than on the economic realities facing the storeowner, the homeowner and the breadwinner."

In fairness, some journalists unearthed key chunks of the story, from subprime loan risks to the rise of such exotic instruments as credit default swaps. But such stories rarely made the front page or network newscasts.

Footnote: Iraq coverage, meanwhile, has fallen "off a cliff," to use Warren Buffett's phrase about the economy. Last year, the report says, the war drew about a quarter of the coverage it received in 2007, dropping from 16 percent of the news hole to just 4 percent. Newspapers were above average, devoting 6 percent of their front-page stories to Iraq.

Aiming Right

The Washington Times, long viewed as a conservative newspaper, is launching a conservative Web site.

Executive Editor John Solomon sees no "blurring of the lines" with the paper's news coverage, saying that only Times editorials and columns will be included. "Obviously our opinion pages are center-right, so this will be a center-right site packaged for people who enjoy that type of opinion," he says. Solomon says TheConservatives.com (slogan: Reinventing the Right) will include video and a daily blog by Amanda Carpenter, formerly of Townhall.com, once it is fully developed this spring.

Solomon is also targeting military bases around the world with a site that will invite soldiers and their families to post their opinions.

The Obamanomics debate continues online. In the New Republic, Jonathan Chait examines that question about whether we have an Obama stock market:

"Obama, in case you forgot, was considered a lock before Election Day. (On election eve, Intrade had given Obama a 92 percent chance of winning.) Likewise, the vote that made the stimulus bill a fait accompli took place several days before the bill's signing. The real market-driving news came even earlier, when Obama unveiled his plan. Contemporaneous reports on the market reaction-The New York Times, December 9: 'WALL STREET SURGES ON STIMULUS HOPES'-dug up little evidence of fears about socialism.

"You may not believe me that pundits are citing the market's drop on January 20 as an indictment of Obama. It's true! 'The Dow fell 332.13 points on inauguration day,' noted Barnes, holding this up as evidence that 'The market's view is that an Obamanomics-driven economy looks grim.' I'm trying to figure out the operating theory here. One possibility is that, before January 20, investors thought Obama would get cold feet, or that maybe President Bush would surround the White House with tanks and stay forever. Alternatively, the markets did know Obama would assume the presidency that day, but got really depressed when it actually happened. Neither of these possibilities speak well of the stock market as a rational gauge of the country's economic future."

And the NYT identifies a new problem for the president:

"The Obama administration is increasingly concerned about a populist backlash against banks and Wall Street, worried that anger at financial institutions could also end up being directed at Congress and the White House and could complicate President Obama's agenda.

"The administration's sharp rebuke of the American International Group on Sunday for handing out $165 million in executive bonuses -- Lawrence H. Summers, director of the president's National Economic Council, described it as 'outrageous' on 'This Week' on ABC -- marks the latest effort by the White House to distance itself from abuses that could feed potentially disruptive public anger."

I definitely feel sorry for anyone who lost money with that reprehensible swindler, Bernie Madoff. How could you not? But Joe Nocera is one of the only journalists I've seen who has questioned the responsibility of those who gave Madoff their cash:

"I suppose you could argue that most of Mr. Madoff's direct investors lacked the ability or the financial sophistication of someone like Mr. Hedges. But it shouldn't have mattered. Isn't the first lesson of personal finance that you should never put all your money with one person or one fund? Even if you think your money manager is 'God'? Diversification has many virtues; one of them is that you won't lose everything if one of your money managers turns out to be a crook . . .

"People did abdicate responsibility -- and now, rather than face that fact, many of them are blaming the government for not, in effect, saving them from themselves."

The Chicago Tribune notes that some Obama aides sounded rather McCain-like on the Sunday shows: "One of President Barack Obama's economic advisers said Sunday that the economy is fundamentally sound, a striking reversal from the Democrat's campaign rhetoric as his administration now guides the nation's financial health amid dire conditions."

Jon vs. Jim

I offered my take on the Stewart/Cramer dustup on Saturday, and as someone who's interviewed both of them on television, I could have written twice as much. (Print newspapers, regrettably, have space limitations.) Here are some other views.

Variety: "That might have been the most foolish appearance by someone whose name sounded like 'Cramer' since 'Seinfeld' went off the air."

Ouch.

"Stewart again displayed journalistic instincts that put many conventional TV news organizations -- including CNBC -- to shame."

Matea Gold, L.A. Times: "The host of 'The Daily Show' provided one of those memorable television moments that distill the public mood -- in this case, angst about the economy's swift decline. Stewart also displayed the tough interviewing skills that belie his insistence that he's merely an entertainer."

Alessandra Stanley, NYT: "Felt like a subcommittee hearing. Mr. Stewart treated his guest like a C.E.O. subpoenaed to testify before Congress: his point was not to hear Mr. Cramer out, but to act out a cathartic ritual of indignation and castigation."

HuffPost's Cenk Uygur:

"Everybody knows what Cramer does -- he yells and screams about his stock predictions. That's his job. You'd have to be crazy to think Cramer knows everything and that you should invest all of your money purely based on what he says. And I think he would be the first to admit that.

"That's not the problem with CNBC. The real problem is their reporting -- or lack thereof. The CNBC reporters and anchors make the Bush press corps look like draconian inquisitors. They are obsessed with access. This is a problem with all of the media, and something Jon Stewart points out all the time. But it is particularly acute at CNBC (and all other business news channels).

"I have a close friend who works at a business news station -- and here is the worst kept secret in show business -- it's all about the access. If you [tick] off the CEOs or the companies, you're going to get a call from your boss. You have jeopardized our relationship with them!"

Salon's Alex Koppelman:

"At points . . . during the interview -- and there were many of them -- you almost had to feel sorry for Cramer. It was clear he'd come to the interview prepared to make nice, even desperate to. His voice was plaintive and cracking, his eyes were watery, he seemed willing and eager to agree with any and all of Stewart's criticisms in a futile effort to make the pain stop . . .

"It's hard to knock Stewart for this kind of thing, as he's absolutely right about what financial journalists should have been doing and about their failure to report a realistic picture of the big banks rather than the rosy one painted by their executives. But he did come across a little naïve, especially for someone who works in television. CNBC's audience is absolutely the traders -- they're the lifeblood of the network. Lay people don't watch business news 24 hours a day, but people in the field do, and so CNBC and plenty of other financial journalism is made by them and for them. Doing the kind of hard-hitting reporting Stewart is calling for would screw up the business model."

Clarence Page: "Stewart's beef is an important one: How did the major financial media, particularly cable television's premier financial network, miss the warning signs of recession and global financial collapse before it sunk all of our 401(k) retirement plans? . . .

"I was only troubled by the way the half-hour battering of Cramer made him look almost like a fall guy for the global recession and financial collapse. He's more of a symptom of an underlying pathology of the media. The problem here is not individuals but attitudes, including a media culture that causes some people, particularly in the entertainment-driven medium of television, to blur the lines among entertainment, good journalism and sound analysis."

HuffPost's James Moore:

"Jon Stewart has brought back context to journalism by making people in our drive-by culture responsible for their words and even actions. Stewart has helped Jim Cramer of CNBC make that awkward transition from silly and self-involved to just pathetic. Cramer, who famously recommended purchasing Bear-Stearns stock prior to the firm's total collapse, is reading Mein Karl and using the strategy of attacking the messenger when the message is so devastating. On the Today Show, he tried to dismiss Stewart as an 'entertainer' who runs a 'variety show.'

"Jon Stewart, of course, is both of those things but he is also a cultural icon. His program is free to deploy approaches that mainstream journalists cannot because he labors in the vineyards of comedy. If a writer for the Wall Street Journal or even the Boston Globe had put together a piece deconstructing the fallibilities of Jim Cramer's advice they would have had great problems with publication. Lawyers would have been engaged and editors would have furrowed their brows and worried about being counter-attacked or whether CNBC's advertisers would have stayed away from the paper. Sadly, no editor or reporter would have even thought up the idea of doing an analysis of Cramer's nonsensical babblings. Stewart has no such constraints. Everything must serve the laugh. Stewart has become a kind of Murrow for the new millennium."

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