OBAMA STARTS LIKE A ROOKIE

President-Elect Obama got off to a false start last Friday at his much heralded first press conference. Unfortunately for the country generally and especially our struggling economy, Obama came across as inexperienced and unprofessional. It could have been so much different in a number of significant ways but Obama and his team instead proved that they are not yet ready for prime time. They have seventy and some odd days to get their act together. Hopefully (note that in the post-election period the entire nation has been forced to rely on hope since substance remains absent), they will achieve a steep learning curve before having to perform in prime time.

No offense to the President-Elect but he has been elected our 44th Chief Executive in American history. This is serious business that must be conducted in the harsh light of a cold and cruel world. When you run with the Big Dogs it is imperative that you are prepared for the race. In that regard, the opening Obama press conference was a study of an election winner not yet set to take on the role the office requires. Here's why:

1. Let's begin with the sign on the podium reading "The Office of the President Elect". Why? People with any working knowledge of American government know that there is no such office. Is there some need or justification for such a fantasy? The world knows he is the President-Elect and needs no reminding. He could have used his normal campaign "Change" sign. That works. He could have used a sign regarding his position in the US Senate. That would have been accurate. He could have simply had a sign with his name on it. But making up something that is pure fiction appears insecure. It looks like there is a need to boost his status or impress others. It does neither. In fact, it does just the opposite. The sign was not only unnecessary, it was strange.

2. When the Obama team made the dramatic announcement of a pending press conference to address our economic circumstances, it immediately built expectations of a substantive presentation followed by an important give and take with the assembled press that was to be of significance and importance. When the thing got underway, if you had to take a short phone call, you missed the entire event. A program to address the massive issues facing our economy most certainly should take more than a mere 16 minutes or so, some of which was spent discussing the new first dog, not one of the most substantive topics of our times. In retrospect, it is difficult to even begin to take this whole idea seriously. It leaves the appearance of an announcement made just for the purpose of attracting attention and giving the impression of engagement. It succeeded in getting Obama noticed but the it left observers wondering why they wasted any time paying attention as well as why the President-Elect called a press conference so that he could say absolutely nothing.

3. Following his victory speech on Tuesday, this Friday press conference was step two in what will most likely be a very long journey in attempting to dial down the expectations of the American people in an Obama presidency. We can anticipate hearing years, that's right years, of talk about how long it will take to get our economy turned around and how much it was all the fault of George Bush. The greatest challenge the pending Obama administration faces is the soaring, almost savior like levels of high expectations. Knowing that the higher you build those expectations, the farther you have to fall, the effort to dial back the peaks attained during the campaign has begun and will continue. When one of the major themes of a press conference is to lower expectations, they picked the wrong venue to achieve such an end, especially immediately following a resounding election victory. This was billed as a press conference about solutions and the path forward, not about 'woe is us' and 'the outlook is bleak'. The nation does not need an announcement to understand our fiscal condition when we can see it all day, every day at home, at work and in our communities. Such an effort came across as no more than a CYA exercise and denigrated the inspiring image of Obama carefully crafted during the campaign.

4. Then there was the cheap shot about former First Lady Nancy Reagan. Let's see: she is in her 90's, recovering from a recent broken hip and most certainly still suffering from a broken heart. So, if you are the President-Elect, why not belittle her and laugh about it. Does that seem like behavior appropriate to the office about to be assumed or leave a very professional impression with thoughtful, responsible people around the country? Worse yet, if you listen to the audio it is apparent this comment was made in an off the cuff effort to cover for what was a rather dumb misstatement about meeting with all the former presidents. Oops, live ones that is, not some sort of Nancy Reagan seance. How crass and immature. Such is the sort of juvenile behavior one anticipates from those lacking in good judgment. Or from people on the far left.

5. The all hat, no cowboy nature of the announcement about the economy made by Obama just might be the largest failing of this brief gathering. While the markets hung on the edge of their seats, awaiting some sort of signal as to what direction an Obama administration would take, no substantive information was forthcoming. Only generalities, platitudes and promises to be more specific come January 20th (where have we seen that sort of thing before). It does not take a genius to know that markets do not react well to a lack of clarity. Had Obama taken the occasion to be specific, positive and definitive, he could have done a lot to restore market confidence. He did not, and the markets remain unstable, without a sense of direction and plenty worried about the future given a new, unknown, unclear and untested administration. The failure to act in accordance with the opportunity available last Friday simply lacked wisdom. It was a major missed opportunity, one that a leader with more experience would have seized upon and utilized for the good of the country.

6. Finally, it leaves a bad impression to run an announced and well promoted press conference by starting almost one half hour late and taking very few questions from the press, particularly those perceived as unfriendly. Was Obama intimidated by the topic or by the press? Is a late start an indicator of his ability to organize and prepare? Was the entire event simply an attempt to look presidential (did you notice the table and the meeting room where he met with his economic advisers) and thus simply done for appearances only, kept short by design and purposefully conducted without opportunities for the press to raise questions about the major economic issues of our time? It looked that way and that is not a good thing for Obama, whether intentional or not.

Trying hard leaves the implication of desperation. There is no need for Obama to try so hard to look presidential. The man is President-Elect. He does not need to spend time playing the part. He has been hired to take the job. Play acting tends not to engender much confidence about our future.

What is obvious is that he needs to spend his time getting ready. After all, show time is just around the corner.


Waiting for Obama
The President-elect dodges a question about tax increases.

Barack Obama held his first press conference as President-elect yesterday, projecting an aura of authority and reassurance on the economy but without giving a clear sense of policy direction. Financial markets are likely to remain volatile and frightened until we see how and if the recession is tempering Mr. Obama's campaign agenda.

All the more so after Friday's miserable report on October jobs. These reports don't get much worse than a loss of 240,000 jobs in a single month, with downward revisions for August and September combined of minus 179,000 more. The unemployment rate rose to 6.5% from 6.1%, and the rate has now climbed by 1.5 percentage points in the last six months. That's the fastest climb over a comparable period since the recession of 1982, when the jobless rate hit 10.8%.

The losses reflect the wall that the economy slammed into when the financial panic accelerated in mid-September. The credit seizure essentially knocked the economy out. Banks across the country have tightened credit standards, when they are lending at all, and capital is sitting on the sidelines waiting for a sense that the worst is over.

The global nature of the panic is also clear in the jobless figures, as manufacturing payrolls fell 90,000. For much of this year exports had been a bright spot, including for manufactured goods, but now Europe, Japan and much of the rest of the world are also heading into recession. So much for those economists -- at the Federal Reserve and at Harvard -- who thought that by debasing the dollar the U.S. could steal demand from the rest of the world.

The stock market selloff that greeted Mr. Obama's election this week is another sign of these gloomy realities. On Wednesday and Thursday combined, the Dow fell 9.7% before rallying some on Friday. Hedge funds are still deleveraging, as investors seek redemptions in order to return to cash, forcing the funds to sell stocks to meet those redemptions. Cash is king when no one can see the bottom.

Which brings us to Mr. Obama's comments, which didn't reveal all that much after he had met with his economic advisory team. The lineup of advisers behind the President-elect also required a little Kremlinology to read. On the reassuring side was Paul Volcker, the former Fed Chairman, and Richard Parsons, former CEO and now chairman of Time Warner.

On the not so reassuring: Michigan Governor Jennifer Granholm, whose tax and spend policies have only worsened her state's economic plight; David Bonior, the former Congressman who helped turn John Edwards into a class warrior; and William Donaldson, whose tenure as SEC Chairman under President Bush is a case study in heavier but feckless regulation. Let's hope they were on hand for political show.

Mr. Obama himself stayed on familiar campaign territory, calling for an early "stimulus" but without saying what such a bill should include beyond more federal spending for jobless benefits, for states and cities, and for the auto industry. He wasn't asked about House Speaker Nancy Pelosi's intriguing suggestion this week that any stimulus early next year should include a "permanent" tax cut. This is intellectual progress, after the failure of this year's bipartisan temporary tax rebates, though the nature of any tax cut will count for a great deal.

The President-elect dodged a question about whether he might abandon his plans to raise taxes on upper-incomes. The bad news is that he replied that he thinks his campaign agenda (which includes a huge tax increase on "the rich") is still the best policy blueprint. The good news is he didn't expressly say he'd insist on tax increases, leaving himself some running room.

Mr. Obama will take office with an enormous amount of goodwill, but good feeling alone won't bring lending and risk-taking back to the economy. Americans are waiting to see if their President-elect is going to be the class warrior he sometimes was in the campaign, or push a pro-growth agenda that can get cash off the sidelines and moderate the recession.

Copyright 2008 Dow Jones & Company, Inc. All Rights Reserved

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