At a recent meeting with House Democrats, President Obama shot down the members’ hopes that he might step up his rhetoric against the Republicans. He’s concerned how the markets would react to his statements. From Huffington Post:
Obama also told the assembled Democrats not to count on more fiery rhetoric from the Oval Office.
“He said, ‘There’s a difference between me and a member of Congress,’” another lawmaker said, paraphrasing the president as saying: “When I say something the markets react, all of society reacts, other countries react. I’ve got to be careful with what I say. I can’t just say it for brinkmanship. I’ve got to say it in a way so that I get what I want said, but I don’t upset markets and so on.”
While in isolation, concern about the weight the President’s words carry isn’t unusual; but looked at in the context of all the actions of the last two years, it is more evidence that a major problem with the Obama administration has been far too much emphasis on short term stock market improvements.
For example, the administration brought banks back to healthy stock prices, but has done too little (or in the case of HAMP, more harm than good) to address the massive ongoing mortgage problems that were at the heart of the collapse. I also suspect that months ago, the administration put too much faith in the “green shots” of improving stock prices as proof of an economy starting to recover and assumed they could safely pivot to the issue of the long term deficit. But with a double dip in home prices and a terrible May jobs report, that pivot was disastrously too early.