2/9/11…an open letter to Obama

Aha you say! TB was wrong….stocks rallied yet again…even transports although by only about half as much (high was right on the 50 day m/a, but 16 below the 40 day! Dow Theory is old stuff…doesn’t apply here. Ok, you win…for now. But it is the condition of the economy that appalls TB: corporate profits and cash soaring but where are the jobs?…especially those to be created in the U.S. of A.?

Volume yesterday was  887M shares, second lowest of 2011 (including after the close trades), following the lowest volume of the year which was ‘upped’ to 807M shares following the close. So far this month the average has been 952M shares…let’s see how this compares:

1.05B – ytd 2011
1.12B – 1st half 2010
1.27B – 2nd half 2010
1.12B  – for all of 2010
1.37B – 2009!!!

Prior to that 1.4-1.5B was average…yet we are producing a lasting rally on volume that doesn’t even pay the light bills on the NYSE…and proclaiming that there are REAL buyers out there!

True, advance/declines and breadth were about 1.5x positive (could that be an absence of sellers? …waiting? Never short a thin market, right?), and we had the usual 300-400 new 52 week highs, but…remember that for all of last year and so far to date the sell offs have been on ABOVE average volume…get it???

…President Obama, I voted for you…as you were the best choice for change which we desperately needed. McCain did not have the support of the GOP to change one iota and his fatal error choice of ‘gunslinger’ Sarah Palin, whose knowledge of politics or history was appalling was scary, especially when you consider his age and health. (your choice(?) of Joe Biden as running mate was also questionable but at least he understands the system…perhaps too well).

I believed you when you said you would not let Wall Street run the country, and not at the expense of Main Street, yet what we have seen in your two years office is more of the same. You chose Larry Summers as  Director of the National Economic Council, he who was second only to Robert Rubin in repealing Glass-Steagall and creating the financial crisis. You chose Tim Geithner as Treasury Secretary, who ‘misreported’ his taxes, and as President of the New York Fed was tied in with the perpetrators of the crisis. This while ignoring the sage advice of the most respected Fed official in the U.S., Paul Volcker, for more than one year.

But your biggest error was in not doing as Bill Clinton did and putting the radical wing of the Democratic Party in it’s place…instead you let them hijack your jobs mandate into a bitter argument on healthcare which continues today, all the while the government continues to lay off 10,000 employees each month (mostly postal workers), not that healthcare isn’t important but when people are starving it is JOBS that they want and sorely need.

You were correct in proposing taxes on those making more than $250,000 a year…yet you failed to point out that you were raising the MARGINAL rates on incomes ABOVE $250,000…why? You doomed your own proposal by either a lack of understanding the tax code or poor advice from  your trusted advisors.
What is the problem here? I sincerely believe that you want…no need…to be liked by everyone. That is a fatal flaw. No one can achieve goals that the powerful object to by bargaining from a position of weakness. Yet whether it was your speech at West Point where you announced you were sending more troops to Afghanistan, something the military wanted, or your ‘team’ approach to the U.S. Chamber of Commerce, that has openly opposed virtually every proposal you have made, you received a tepid (at best) response. They see you as weak…asking for their support by giving more than you ask for…pleading actually. Admit it: they don’t like you!

But presidents do not get what they want by being liked by their adversaries. Contrast Johnson and Carter. You want your opponents to respect your power, not like you. Does Mubarak want the people to like him? No, merely to have been able to amass a wealth of $70 billion on their backs.

With the GOP clearly in control in the House and barely in the Senate, you have a perfect opportunity to get what you want…yet you are negotiating while they throw every barrier in your path: bills on abortion, repealing the health care plan instead of improving it, cutting spending without raising taxes on the wealthiest Americans…many of whom mock our system and even created the last financial crisis and are working on the next one.

You  did not create ‘too big to fail’ that began with Ronald Reagan in his bailout of Continental Illinois, Clinton’s ill-advised repudiation of Glass-Steagall, then was followed by the Bush administration’s bailout of the big banks which would not have been necessary had Glass-Steagall remained in place. But it is on your watch, that the banks are once again working against the spirit of the law and creating ‘too big to save’ which is what will happen in the next financial crisis, which if you are elected to a second term could happen on your watch!

Why did you let Bill O’Reilly interview you on Super Bowl Sunday…did you think he would suddenly change his opinion of you? Who will be next? Hannity? Rush? Again, you are trying to make them like you, and it isn‘t going to happen…ever! These people don’t want change they want to preserve the status quo…and sadly there are millions of Americans who believe what they say…that will not change.

It may be too late for you to have a legacy…at least the kind you would like…but it is not too late to effect change…but you have to do it and you have to do it now.

Mr. President, let them not like you, but make them respect you.

. . . – – – . . .

This is the third, and hopefully last segment…a trilogy if you will (although it was unplanned) on the problems we are facing and how the top 1% who controls 95% of the wealth in this country continues to hold sway. Yesterday we learned of the huge numbers of cash purchases of homes in this country which was proclaimed as seeing value. But the prices plunged from the prior month and while TB believes it was largely buying of foreclosed properties, by syndicates of wealthy people…which will raise their ownership to what? 98%??? In what is the biggest transfer of wealth in the history of this nation, but NAR says that the bulk are by second time home buyers. Wait a second…TB and others who have sold homes recently know there is not a plethora of cash buyers. BUT NAR says so…and that the money is coming from people DOWNSIZING. You had better think about the implications of that. In Nevada for a third straight month more than 50% of sales were for cash!…but most are then being rented out! does this say? If jobs are not forthcoming and people aren’t making more money, where can the  continuation of this trend come from? The GOP also wants to cut the mortgage subsidy…which it should have decades ago but both parties saw it in their interests to keep it…but now, when people need it most, they are talking about cutting it? Could downsizing also be a result of people selling to get that $500k per couple exemption on gains? Before they eliminate that too? You betcha, and if not eliminate it income test it…is this a great country or what?

Have another great day!

TB

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