It’s no coincidence that Barack Obama has made the decision to forge an all out effort at directing attention to paint our financial institutions as “the source of all that is evil” in the United States. Obama has lost healthcare by losing Massachusetts and it is becoming increasingly obvious that his administration desperately needs something else to make them pertinent .. and they need it quick. So attacking the “evil doers” is ideal. This is all about getting the people back on his side and since most Americans aren’t particularly fond of banks or credit card companies, they seem an appropriate, if not ideal, scape goat. “Banks are easy targets for a demagogue.”
This assault on the world of high finance, coupled with China’s tightened lending, (the google thing is not to be forgotten) has left Wall Street in a state of uncertainty. Is this an appropriate method to create jobs? No! Then why go this route? Why obviously its the want for power and attention….thats what comes to my mind. What comes to yours?
Obama’s proposals for the US banking industry seems prepared to limit
risk, but is it? Or is he taking on risk that he has no clue of the impact on our economic system at a time when it doesn’t deserve it. Or does it? A lot depends on your view. He already has repeatedly complained about bonuses paid
calling them “obscene”. Now he’s taking the next step. Does he really want to go down this road? Or is this the act of a desperate man?
Is Obama ready to die on this? He foolishly (in my opinion) now has Democrats scrambling for a new issue and focus and this one should serve to provide Democrats a position to make them look like the good guys, (you know fighting for the little man). At the same time it forces the foolish Republicans to take the opposite side and try to defend Wall Street. Combine this with The recent Supreme Court ruling regarding political “Free Speech” and the role of corporate money and ….well, it sets the tone for another round of “wealth envy,” and likely the true motive to play in the coming November elections. But is it worth the fight? What things bad could happen?
What concerns me is that many of these financial institutions use the
commodity markets and take on enormous risk. Friday the commodity markets looked quite nervous. They looked nervous as hell. Is this a
signal that traders are reluctant to take on fresh positions? Does it portend that we may see positions removed? If that’s the case, we could see increased price violence and increased
volatility. In many cases
option prices already reflect this. Remember options get expensive for a reason, uncertainty.
I am amazed but not surprised that Fannie Mae and Freddie Mac have been left out of all this, but maybe that’s the plan; let the Republicans use those two for an issue and obscure the battle lines further. Whoever has Obama choosing to focus attention and create an issue on this is simply seeking to retain power. Its all about power in Washington. And the battle is not in favor of the American people, or of the free markets. No wonder market participants are nervous. What are your thoughts?
jurgensb@gmail.com
