It Looks Like It is All Unraveling

Morris Segall      Barack Obama, elections, foreign policy, Jimmy Carter

Today looks like one of those watershed events which could mark a defining moment in the Presidency of Barack Obama. First, the President is forced to fire his hand picked general leading the war in Afghanistan for at the least conduct unbecoming and at the worst insubordination. Second, the Federal Reserve Board at its monthly meeting described the economic recovery as “proceeding”, i.e. stalled and weakening. Today’s Fed statement confirms for us the change in our economic and capital market outlooks we have been expressing in our prior blog articles beginning last month. We have believed the situation in Europe is serious and will get worse and it is having a depressing effect on the capital markets and in turn our economy.

In our website article, “The Election”, November 17, 2008, we commented that Barack Obama and the Democrats in Congress had a “short window to pacify a desperate electorate” and risked enacting programs that had “short term palliatives at the risk of eroding longer term U.S. financial strength and flexibility”. It would appear that window of opportunity to turn the economy around and fulfill the mandate of 2008 is about closed. The angry electorate of 2008 is absolutely livid in 2010. Voters are angry with the “bailouts” of Wall St. and corporate America while “Main Street” still struggles with unemployment, stagnant income and surging health care costs. The lack of success in the wars in Iraq and Afghanistan add to voter discontent. The object of voter ire is President Obama and his party that look disconnected and ineffectual. The President’s style of eloquent speeches but lack of decisive follow through is wearing thin on the American electorate.

Nowhere does the President look more ineffectual than in the arena of foreign policy. We commented in our website article on “The Obama Foreign Policy…”, January 7, 2010, the President was in danger of committing serious mistakes in Afghanistan by forcing a short timetable for military victory on the U.S. military. The President’s Afghanistan policy was clearly not supported by military leadership in the field who felt they were given an impossible task predestined for failure. No military officer accepts that. The shock in General McChrystal’s dismissal is the fact that he and his aides were so publicly contemptuous of the President and his administration. You have to go back to Vietnam for this kind of military “mutiny” to the President’s war policies. On the heels of foreign policy setbacks in the Middle East, soured relations with Turkey and Brazil and now a disconnect on economic policy with Europe, the Obama foreign policy is notably devoid of success and apparently now losing respect.

The loss of confidence in the President and his party to successfully deliver results domestically and overseas is in our opinion,  making the Obama presidency resemble that of Jimmy Carter and we believe will have similar electoral results in this year’s congressional elections and the presidential election of 2012.

Morris R. Segall