Obama's brain (dis)trust

From time to time I attend a stock discussion group at the public library. This morning was one of those times. The atmosphere was funereal.

I don't trust stock tips and advice, although they can be a useful starting point for further research. But I've gradually come to respect this group that gathers weekly. Most of them strike me as very sophisticated and smart investors drawn from an urban area that has more than its share of high-IQ people.

As far as I can tell, they are pragmatists, not ideologues. The gentleman who tries to see that the discussion follows a minimally orderly procedure is an Obama supporter, albeit not an idolatrous one.

The last couple of meetings I've been at had a simple theme: Does anything work now as an investment? For that matter, is your money safe in any investment? Today half an hour was spent talking about utilities for their supposed stability and yield. Nobody thought they were likely to make a shareholder much money. No one even thought they were necessarily safe.

"I can't believe we've come to this," said one fellow. "Here we are debating whether utilities, the classic widow-and-orphan stocks, are too dangerous to hold."

On the way out I found myself heading to the parking garage with one of the participants who had said emphatically that he thought the economy was so catastrophic that he couldn't bring himself to buy, period. He was firmly on the sidelines to watch the coming collapse. (Not everyone in the group had been that bearish, but there were no bulls.) I asked him why he was at a stock discussion group in that case.

Just habit, he said. He'd been reasonably confident until recently that he could game the market. He'd voted for Obama and was favorably impressed at first by the president's choices for his economic team. That was then -- four months ago, a geological age in the investment world. "They've blown it," he said.

An article in the New York Post -- no friend of Obama, so take it for what you think it's worth -- offered a view about why an apparently respectable batch of economic advisors that originally garnered Wall Street approval is now about as popular in the financial world as Hugo Chavez.

Treasury Secretary Tim Geithner, the former New York Fed chief, was supposed to have the experience needed to handle the banking crisis. Larry Summers, the head of the president's National Economic Council, was part of the brains behind the Clinton-era recovery. And Paul Volcker, chairman of Obama's Economic Recovery Advisory Board, helped save the free world back in the late 1970s and early '80s as chairman of the Federal Reserve when he squeezed inflation out of the economy and (along with President Ronald Reagan) helped return us to prosperity.

The disappointment on Geithner starts with the fact that, since taking the job at Treasury, he's failed to articulate a way to bail out the imploding banking system -- even though knowledge of the banking system's ills was supposed to be his strong suit. Worse, the word is that Geithner is still having trouble putting together a senior staff so he can come up with a bailout plan.

Thanks to all the class warfare produced by his boss, I'm told, Geithner can't find qualified people from Wall Street (the folks who know markets better than anyone else) to help solve the crisis. Instead, one saddened Obama supporter from Wall Street told me, "He's looking at a combination of bureaucrats and academics for these jobs."

Larry Summers? Everyone knows he's smart, but the word from Wall Streeters who are trying to pass him ideas for solving the banking crisis is that his ego's as large as his intellect. That is, they're finding him impossible to deal with.

Perhaps the biggest disappointment is Volcker, a true American hero who as Fed chairman tamed the stagflation of the '70s -- but seems to be muzzled at a time when the country needs him most.

I suspect that there is gladiatorial infighting behind the scenes because Obama doesn't want to hear what his crew is telling him. Geithner, Summers, Volcker -- and you can probably add Bernanke -- may or may not be the cream of financial gurus, and doubtless don't agree among themselves about everything, but they are pragmatists who honestly want to restore the system to health.

But does The Miracle Worker? Or is Obama such a Marxoid that he wants to see the American capitalist economy spool down until there's nothing left but for an all-powerful State to haul us into a central planning Valhalla?

That's, admittedly, speculation. Under most circumstances, I agree with the saying that you should not attribute to conspiracy what can be explained by ordinary incompetence. Perhaps the worst that can be said of Obama is what I have believed for months, viz., that he is a callow poseur with a lot of personal problems who has been elevated above his pay grade by a consortium of hard-left Democratic party grandees and criminals playing by Chicago Rules. It's not impossible he means well.

But the lack of a coherent rescue strategy, the switchbacks, the oracular messages from Obama's team (Geithner especially) sound like what organizations do when the people at the top are not all pointing true north. They try cover the policy fissures with empty rhetoric. Not everyone is as good at empty rhetoric as Obama, though. And investors, including battle-hardened professionals, won't -- can't -- settle for that. Not now, when their financial lives are hanging by a thread.

In a posting at Belmont Club on "The Obama Economy," a commenter who calls himself The Old Guy says:

It would be nice if some adults from the Democratic party showed up at the White House and told Obama to stop, its over. ... There are some nasty, vicious, self-serving pols ... who at some point may be willing to throw Obama under the bus in last-ditch self-defense.

Politics being what it is, and politicians what they are, it should surprise no one if soon Obama's enablers will suddenly not be at home to him.