The p.r. game that protects banks from popular outrage gets stranger and stranger. President Obama makes speeches that sound just tough enough on Wall Street to make a good public impression, and he even upsets Wall Streeters with these statements while he delivers taxpayer money to the Street by the trillions. We wonder if Wall Streeters like Jim Cramer understand all this, and speak as they do to play a conscious role in our political Kabuki theater. Posts like the one Cramer published today on his website (h/t reader Ceebee) — or any number of WSJ articles depicting Obama as “anti-business” may also fool non-bankers into thinking Obama fights for them, but for us the charade is wearing thin.
Cramer titled his post, “President Obama may have stalled out the rally.” According to Cramer, Obama presumably tanked the Dow Jones Industrials by 130 or so points today from the intraday high (the Dow closed down 17.61 for the day) and maybe even forestalled a breakout, by mouthing “bash Wall Street rhetoric,” such as Obama’s following reference to the bailouts of GM and Chrysler:
“In particular, a group of investment firms and hedge funds decided to hold out for an unjustified taxpayer bailout. They were hoping that everyone else would have to make sacrifices and they would have to make none.”
In our previous post, we expressed chagrin that the banks which received government assistance, were holding up the Chrysler deal and that they shouldn’t have been allowed even to think of doing so since these banks all continue to exist by the grace of taxpayer funded support. So Obama made a great deal of sense to us, as far he went, even if he failed to say that the taxpayers are subsidizing all sides of this arrangement.
We also think Obama has coddled the banks at almost every turn so as to promote their interests over those of taxpayers. Investors benefited in the short run with this rally off the March lows, but in the long run they may pay for the way the Fed and the Treasury have tried to paper the banking crisis over and fix it on the cheap.
Then again, if you believe Cramer, this rally is for real, and the stock market is anticipating a rebound in the economy. And if that is true, statements like Obama’s will have little long run impact on share prices, which should continue to rise under those conditions. On the other hand, if the economy continues to contract through year-end, all we have is a bear market rally. In which case, Cramer rightly fears for the market’s fragility. But if the economy — and corporate earnings — continue to decline, does anyone really think that Wall Street friendly Presidential rhetoric could sustain a new bull market?