If Barack Obama were a stock, would you be buying or selling? On the Rasmussen Approval Index History exchange, Obama Inc. (stock symbol “BHO”) is already down from its January 21 price of 27 pct to 11 pct.
The usual disclaimer on investment vehicles, “past performance is no guarantee of future performance,” doesn’t apply in this case: there is no past performance, other than management’s campaign to get you to invest.
Obama, Inc. has just taken over a long-established firm with two lines of products: foreign policy and domestic policy. Foreign policy has little upside; domestic policy, tremendous risk.
Foreign policy, in the age of Islamic terrorism, is primarily about the hard product line: safety and military success. While there is growth potential in the soft product line — what the Europeans think of us — that won’t support the stock price in difficult times. And the two product lines cannibalize each other. Promoting military strength will make the Europeans unhappy, as, in the domestic line, will the Buy American provision in the “stimulus” bill.
The lead hard product is Iraq. Unfortunately for Obama, Inc. there is little room for growth in that line. The war in Iraq has been won — won by the discredited former CEO, and won despite the specific advice of the current CEO. Iraq is now, or seems to stockholders, secure and democratic.
What can go wrong? Just about everything. It’s the Middle East, after all. The problem for Obama, Inc. is that it has widely advertised that it intends to change the business strategy, so any failure will be attributed to the new CEO. And if the new CEO reverts to an approach more like his predecessor’s, he will risk alienating his preferred stockholders, as well as the Europeans.
Obama, Inc. has a similar problem with Iran. The CEO has stated that it must not be allowed to develop nuclear weapons. But how is he going to stop it? By bombing Iran? Please. Through negotiations? Perhaps, and only perhaps, with a different president, but Iran’s current president, Mahmoud Ahmadinejad, is eligible to run again when his term ends in August 2009, and who can say he won’t be reelected? Successful negotiations have to be regarded as iffy at best — not a promising growth story.
Obama, Inc. also has a problem in Afghanistan, which presents all the difficulties of Iraq in an even less tractable country. Honoring his sales campaign pitch, the CEO has announced he will send more troops to Afghanistan, but one of his most prominent stockholders has advised him not to “try to put Afghanistan aright using the U.S. military.” What are the chances BHO can sanitize Afghanistan (the Soviets couldn’t, and the Secretary of Defense has said the effort will be a “long slog”) while keeping his stockholders happy? Slim to none.
The domestic policy line faces a different problem. The product is doing terribly. Business, and confidence, are down. Unemployment, and fear, are up. Fortunately for Obama, Inc., the problems originated on the previous CEO’s watch. But now the pressure is on to produce change — and not change the stockholders have to believe in, but change they can actually see.
Will Obama, Inc. be successful? Contrarians doubt it. The business strategy is to spend massive sums of money, but there are historical precedents suggesting that course will almost certainly fail. Any money pumped into the economy has to come from somewhere. There are only two sources, taxes and bonds, but they are really the same: the productive sector. The government can take money from today’s productive sector, or it can borrow from tomorrow’s productive sector.
An earlier CEO of this enterprise — his name if I recall correctly was Ronald Reagan — reminded us that when you tax something you get less of it, and when you subsidize something you get more of it. Taxing the productive sector in order to subsidize the unproductive sector, like a split-strike conversion strategy, may be good politics, but it’s not likely to fix the economy. The economy may fix itself, but then again it may not, or may not for a number of years. Stockholders may not be patient.
Could Obama, Inc., long on rhetorical smooth talk and media hype, get lucky? Of course. But savvy investors don’t bet on luck and hype.
That’s why the smart money is selling Obama short.
Notice to Readers: The American Spectator and Spectator World are marks used by independent publishing companies that are not affiliated in any way. If you are looking for The Spectator World please click on the following link: https://spectatorworld.com/.
That’s right, the Grinch (Joe Biden) is coming for your pocketbooks this Christmas season with record inflation. Just to recap, here is a list of items that have gone up during his reign.
What hasn’t increased? The cost to subscribe to The American Spectator! For a limited time, we are offering our popular yearly subscription for only $49.99. Lock in the lowest price of the year by subscribing today