For those of you still keeping score — that is, those of you still able to bear the news in the market and not believe that the Apocalypse is upon us — Thursday, March 5, had to be a singularly inauspicious day. Then, the shares of Citigroup traded briefly below $1, meaning that it had become a penny stock — and cheaper than an ATM fee — while General Electric closed at $6.66, the mark of the Devil.
Is there an end in sight? U.S. unemployment has topped 8 percent, the recession is in its 15th month (the longest economic decline since the 1981–’82 downturn), and the Dow Jones industrial average has shed more than 20 percent of its value since Inauguration Day to trade at levels not seen since 1997. If only we could take the 12 years off our ages as quickly; we might have time left to rebuild our nest eggs.
Who should we blame for this state of affairs? President Obama inherited a mess, but investors appear to have grown skeptical of his policies on at least two counts: the forthcoming explosion in the deficit and the uncertainties that surround plans to revitalize the financial system.
As for the banks, the administration is beginning stress tests (hopefully, it will first check to see if any of them have a pulse). These should be completed next month; meantime, depositors and investors alike are left to wonder what futures are in store for once-venerable institutions like Citi and Bank of America.
Notwithstanding administration demurrals, the whiff of potential nationalization that plays about these institutions hovers also over the Obama budget, which, along with stimulus spending, aims to revamp health care, education and energy use. These policy proposals, outlined in his acceptance speech at the Democratic convention in August, predate the worst of the current crisis. Sticking to them — a gamble on the resourcefulness and creativity of the American people — implies that the causes of our problems are more profound than incompetently managed banks and rogue bankers and can be found in issues of economic injustice, such as the oft-cited widening gap in incomes between rich and poor. If the Bush administration fought for months to prevent what it called a systemic crisis, the Obama administration at times appears to believe that the system itself is the crisis.
That’s a sweeping, straight-from-the-’60s, “up-the-Establishment” view whose import may not have crystallized for many Americans until the president’s recent address to Congress and the presentation of his agenda. After all, we are used to dismissing campaign promises as empty slogans.
It may also be a view that isn’t as popular with the American people, and least of all investors, as Obama’s haul of 53 percent of November’s presidential vote might otherwise indicate. If President Obama wins congressional support for all the details of his plans, and if his big gamble fails, voters will know who to blame — themselves.
