1-27-2010

Being There

The public‘s reaction to President Obama’s agenda has been more extreme than most could have imagined. The stock market’s reaction to major proposals from the administration has been consistently negative throughout his entire term. When a new set of proposals comes out, the market does poorly. Luckily, business cycle fundamentals have taken the market higher and higher since the March bottom. However, almost all of the minor setbacks have occurred concurrent with political proposals. The latest set of Robin Hood proposals- taking from the banks and giving to the middle class- have been greeted by bad stock market performance. 

1.         January 3, 2009- Obama outlines proposals for Energy, Healthcare and Education

2.        May 31, 2009- Waxman Markey Bill for clean air including Cap and Trade

3.        June 4, 2009- Obama delivers alliance with Muslims speech

4.        September, 2009- Obama Healthcare Speech

5.        December 24, 2009- Healthcare passes Senate

6.        January 20, 2010- Obama proposes limits on bank trading

The real question is not whether the market likes gridlock or not; it does!  The question is why the majority of the population is so disquieted by the administration’s proposals. James Carville made sure that during the Bush vs. Clinton election in 1992, everyone knew that the main issue was “it’s the economy, stupid.” Obama, however, came into office focusing on the economic problems he inherited, and therefore has not ignored the economy. People just don’t like what he’s decided to do about the economy. That’s also surprising, however, because as a Senator, Obama was judged to be conservative on 7% of his votes and liberal on over 90% of his votes. What did the people who elected Obama expect?

In 1979, the movie Being There was released. It was directed by Hal Ashby and starred Peter Sellers in the role of Chance the Gardener. Chance is a simple being who has tended to a rich man’s garden his whole life. When the rich man dies, Chance is cast out into the world and through a series of coincidences, he unintentionally assumes the identity of Chauncey Gardiner. Chauncey is perceived by those around him to be a quiet, thoughtful, well educated man of means. In reality, Chance is only quiet. He has learned anything he knows from television and tending his garden. People read into his remarks and moves from coincidence to coincidence along a path. At the end of the movie, it is clear that the power elite of the country will maneuver him into becoming the next President of the United States. 

Barack Obama is anything but uneducated. He received his education from the best universities in the country. However, much of his life has also been characterized by a series of coincidences. Barack Obama’s father divorced his mother when he was only three years old and his mother re-married and was forced to move the family from Hawaii to Indonesia.   He attended local schools in Indonesia during the reign of Suharto from the age of six to ten. When he was eleven, they moved back to Hawaii, and he had a very bad time during his teenage years, when he used and abused drugs. Miraculously, he was able to move to Los Angeles and attend Occidental College for two years before he transferred to Columbia. His first job after Columbia was for a company often thought to front for the CIA, The Business International Corporation. In June of 1985, he moved to Chicago to become a community organizer. Three years later, he went to Harvard and had an illustrious record there and then went on to his meteoric rise in politics. Most Americans don’t understand how much of President Obama’s belief system was influenced by his early years. 

Barack Obama is not Chauncey Gardiner. He was extremely well educated and had job experience relevant to politics. However, Barack Obama did benefit from “being there”. Few of the electorate knows the facts of his upbringing. The background that developed his way of thinking and moral compass and attitudes in his early life are not generally visible to the American people.  In many ways, they really didn’t know who they were electing, and in many ways Barack Obama massively benefited from just “being there”.

Another way of looking at this is that America was moving down the bumpy road of the last term of the Bush Presidency, beginning to understand what they didn’t like about their President. They didn’t like that he was inarticulate.  They didn’t like that he seemed old fashioned in a high tech world that was changing rapidly.  They didn’t like that the price of gasoline had exploded on the upside and they had a gnawing guttural instinct that the Bush family was in bed with the oil interests. They didn’t like the American military deaths that occurred in Iraq, and were not sure exactly what the fighting in Iraq had to do with the terrorist attack on September 11^th. They didn’t like that Bush was surrounded by an unlikeable advisor like Cheney and a Wizard of Oz character like Rove. They certainly didn’t like that he presided over a failure of the financial system, unmatched since the depression. 

The Democrats could smell blood and didn’t want to snatch defeat from the jaws of victory. The money men of the liberal wing needed the anti-Bush to run as President. Unfortunately for her, Hillary just didn’t fit the bill. She isn’t that articulate. She had been thought to be in cahoots with the rich and famous throughout her husband’s career. She isn’t particularly modern, although being a woman running for President helped. Her advisors were not that impressive, and she suffered from association with the most famous scurrilous husband of all time. 

Barack, on the other hand, was a Democratic fund raiser’s dream. He was handsome and articulate. He was so modern- the first black Presidential candidate. He was so in tune with the new tech world that he centered his campaign on leveraging the Internet.  His inner circle was largely unknown and therefore unassailable. He had no due bills to big companies.  He talked a lot about pulling out of Iraq and becoming energy independent.  Rich liberal people were coming to him to encourage his run for the Presidency.

This brings us back to Being There. Obama was shrewd enough to run a campaign sounding like a centrist. People knew little enough about him to take him at his words. Immediately after his election, he began to outline a tremendously liberal agenda. He really believes that what he proposed is best for the country and that he can deliver it.  The last scene of the movie Being There shows Chauncey Gardiner walking across a lake. There is no explanation of how he does this. This week’s New Yorker Magazine shows a four panel drawing of Barack Obama walking across a lake, and in the last panel, he falls in. 

Fred S. Fraenkel
Vice Chairman and
Chairman of Investment Policy
Beacon Trust Company

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