Tuesday, January 20, 2009
Obama takes office: while Washington parties, Blodget suggests total seizure of banks; $2.5 trillion more in losses soon; US banks insolvent?
Barack Obama (he did use his middle name) stumbled slightly at the oath of office (or it was Chief Justice John Roberts who stumbled, as the Oath was given a few minutes late, and after playing a musical chamber piece by British composer John Williams) and gave an eighteen minute address today. The text on CNN is available here and also is there as a video. CNN has a video of the oath here sponsored by ExxonMobil, the only company in my own portfolio that has done well during the current mayhem. (It’s the main reason I stay afloat.) (Hint, folks, energy – renewable -- and utilities ought to do well.)
A central quote was:
“The success of our economy has always depended not just on the size of our gross domestic product, but on the reach of our prosperity; on our ability to extend opportunity to every willing heart -- not out of charity, but because it is the surest route to our common good.”
Later he referred to 1 Corinthians 13:11:
"We remain a young nation, but in the words of Scripture, the time has come to set aside childish things."
Even so, with “the cat away” and the country partying under high security in Washington, the financial markets are open and sinking today, with very malignant news for overseas banks, including a matter in Britain with the Royal Bank of Scotland, all of which the new president probably will have to tend to immediately (even this afternoon) on this side of the Atlantic.
And, forget the idea of a “bad bank.” Henry Blodget has a striking piece (“Why are we so afraid to fix the banks the right way?) suggesting that Obama can seize many of the banks and “fix them the right way” without deficits. The only problem is that shareholders get wiped out – but they’re almost wiped out anyway. Here's the link.
Today Nouriel Roubini (next to Yahoo!'s tech ticker) called the U.S. banking system “insolvent” and predicted at least $2.5 trillion in losses almost immediately, in another bombastic piece on Yahoo! here.
The worrywarts and sharks in the financial industry (and, for that matter, mobile "gossip boy" bloggers) will not let the president alone even long enough for his catered lunch at the Capitol and his public transfer-of-power signing (left-handed – you know, like a pitcher (hopefully not Chuck Stobbs) inviting Mickey Mantle to bat right handed). Barack Obama has his work cut out for him on the first afternoon on the job.
Today's performance on the Dow was the worst ever for Inauguration Day. Banks sink not only on mortgages but credit cards and people losing their jobs -- in short, deflationary depression.
Note on Internet search business:
Efficient Frontier, a major leader in SEM technology, issued a press release today "Despite Recession, Search Advertising Held Value, ROI was Steady and Retail Sector Saw 9% Spend Increase Annually", link here. The report, when read closely, seems mixed.
One other true thing: Barack Obama (the first "geek president") should not only keep his Blackberry; he should have his own computer in the Oval Office or the adjacent study (in the West Wing). It probably ought to be a MacIntosh. Yes, he could surf our blogs every morning himself.
ABC News reported that Barack Obama took the Oath of Office a second time Jan. 21 in the Map Room because Chief Justice John Roberts got one word out of sequence on Jan. 20. Story by John Tapper: "Political Punch: Obama Took Oath of Office Again Tonight", link here.