Is Obama trying to panic Wall Street?

Rick Moran
It is rare, indeed, that a president bad mouths his own economy to Wall Street - no matter what Congress is doing.

In fact, I have a hard time coming up with any precedent for it. But here was the president yesterday, urging Wall Street to be "concerned" (panic) because of the shutdown.

CNBC:

Wall Street needs to be genuinely worried about what is going on in Washington, President Barack Obama told CNBC in a White House interview Wednesday.

While gridlock in D.C. is nothing new, "this time I think Wall Street should be concerned," Obama said.

"When you have a situation in which a faction is willing to default on U.S. obligations, then we are in trouble," Obama said.

U.S. stock-index futures pointed to a lower open on Wall Street Thursday. Click here to get the latest futures action.


Late Wednesday, Obama met with Republican and Democratic leaders in Congress, including House Speaker John Boehner, House Minority Leader Nancy Pelosi, Senate Majority Leader Harry Reid and Senate Minority Leader Mitch McConnell.

McConnell told CNBC's "The Kudlow Report" that Washington is still far from resolving its differences over the fight to reopen the government.

Boehner said Obama reiterated in the meeting with congressional leaders that he would not negotiate. The speaker said he hoped Obama and Democrats in the Senate would have a serious discussion about resolving their differences very soon.

Pelosi said Obama will not use the 14th Amendment to the Constitution to raise the debt ceiling on his own, without congressional approval. A section of the amendment says the public debt of the U.S. "shall not be questioned."

In the CNBC interview, Obama expressed his exasperation with the tea party faction of the Republican party, saying that their reflexive hostility to "civil" negotiation threatens not only the functioning of government, but the wider health of the economy.

"I am exasperated with the idea that unless I say that 20 million people, 'you can't have health insurance, they will not reopen the government.' That is irresponsible," he said.

"If we get into the habit where one party is allowed to extort, ... then any president who comes after me we be unable to govern effectively," Obama said.

Some investors wondered if the president was trying to goose Wall Street into a sell-off:

Obama's remarks indicated to some observers that he is trying to push investors out of the relative complacency they have shown so far. Futures were broadly lower Thursday, indicating markets may be taking heed.

"They feel that a severe market selloff would be helpful to break the logjam," said Greg Valliere, chief political strategist at Potomac Research Group in Washington. "It would be helpful in making the Republicans sue for peace. Obama and [Senate minority leader] Harry Reid believe that."

[...]

While Valliere said the Democratic president and his chief Senate lieutenant are playing a dangerous game, the political advantage so far has been Obama's.

"All of the players in this game are playing with fire," he said. "This is hardball at its most brutal. They're not inclined to compromise. They want to make the markets squirm."

Nice little market you have there. Be a shame if something happened to it.

One almost wishes that Wall Street would make the president's dream come true and go into a tailspin. But considering the weakness of Obama's economy, a downturn might exacerbate the current recession were in - or jobless recovery if you prefer. That might result in millions of Americans losing their jobs - too big a price to pay for Obama's irresponsible political gamesmanship.


It is rare, indeed, that a president bad mouths his own economy to Wall Street - no matter what Congress is doing.

In fact, I have a hard time coming up with any precedent for it. But here was the president yesterday, urging Wall Street to be "concerned" (panic) because of the shutdown.

CNBC:

Wall Street needs to be genuinely worried about what is going on in Washington, President Barack Obama told CNBC in a White House interview Wednesday.

While gridlock in D.C. is nothing new, "this time I think Wall Street should be concerned," Obama said.

"When you have a situation in which a faction is willing to default on U.S. obligations, then we are in trouble," Obama said.

U.S. stock-index futures pointed to a lower open on Wall Street Thursday. Click here to get the latest futures action.


Late Wednesday, Obama met with Republican and Democratic leaders in Congress, including House Speaker John Boehner, House Minority Leader Nancy Pelosi, Senate Majority Leader Harry Reid and Senate Minority Leader Mitch McConnell.

McConnell told CNBC's "The Kudlow Report" that Washington is still far from resolving its differences over the fight to reopen the government.

Boehner said Obama reiterated in the meeting with congressional leaders that he would not negotiate. The speaker said he hoped Obama and Democrats in the Senate would have a serious discussion about resolving their differences very soon.

Pelosi said Obama will not use the 14th Amendment to the Constitution to raise the debt ceiling on his own, without congressional approval. A section of the amendment says the public debt of the U.S. "shall not be questioned."

In the CNBC interview, Obama expressed his exasperation with the tea party faction of the Republican party, saying that their reflexive hostility to "civil" negotiation threatens not only the functioning of government, but the wider health of the economy.

"I am exasperated with the idea that unless I say that 20 million people, 'you can't have health insurance, they will not reopen the government.' That is irresponsible," he said.

"If we get into the habit where one party is allowed to extort, ... then any president who comes after me we be unable to govern effectively," Obama said.

Some investors wondered if the president was trying to goose Wall Street into a sell-off:

Obama's remarks indicated to some observers that he is trying to push investors out of the relative complacency they have shown so far. Futures were broadly lower Thursday, indicating markets may be taking heed.

"They feel that a severe market selloff would be helpful to break the logjam," said Greg Valliere, chief political strategist at Potomac Research Group in Washington. "It would be helpful in making the Republicans sue for peace. Obama and [Senate minority leader] Harry Reid believe that."

[...]

While Valliere said the Democratic president and his chief Senate lieutenant are playing a dangerous game, the political advantage so far has been Obama's.

"All of the players in this game are playing with fire," he said. "This is hardball at its most brutal. They're not inclined to compromise. They want to make the markets squirm."

Nice little market you have there. Be a shame if something happened to it.

One almost wishes that Wall Street would make the president's dream come true and go into a tailspin. But considering the weakness of Obama's economy, a downturn might exacerbate the current recession were in - or jobless recovery if you prefer. That might result in millions of Americans losing their jobs - too big a price to pay for Obama's irresponsible political gamesmanship.