BUD BREWER
One Man's Opinion
PLEASE, MR. PRESIDENT, STOP TALKING
March 6, 2009: This morning the stock market had an abundance of buyers thinking that stocks of America’s largest and most successful companies had been hammered down to a point where even after taking into account we are in a recession and earnings are under pressure, the price had been reduced to a point where real value was more than enough to make it a good buy. The Dow Jones Index moved sharply higher as investors accumulated shares in the hope that the market had found a “bottom”. Then the President, in another of his traveling speeches promoting the public support of his trillion dollar budget, began to talk in front of the graduating class of the Police Acadamy in Columbus, Ohio and with each remark he made about how bad the economy is going to get and how he will generate government programs to create 4 million jobs, make the U.S energy independent, reduce taxes for 90% of the American people, rebuild our roads and highways, solve the home foreclosure problem, and protect the country from the greed of Wall Street, stock prices and the market turning sharply lower.
Since the inauguration of the President in January, the stock market has declined by 20%. Every time the President makes speech, and he is making one almost daily, the markets fall as shareholders increasingly fear he is going to destroy our economy with his huge spending programs that while supposedly intended to stimulate the economy are in large part nothing more than so called “Pork” spending to satisfy some Liberal purpose. In the President’s speeches he makes a continued reference to the greed of Wall Street and how he is going to protect the people from such outrageous and reprehensible behavior. Of course the Media coincidently runs continuous stories showing Bernie Nadoff and R. Allan Stanford, who in fact are two of our less admirable members of the “Street”, who allegedly did steal billions of dollars over long periods of time operating sort of an investment management ponzi scheme. While these gentlemen’s behavior was atrocious, they are not representative of the thousands of hard working people in the investment business who work diligently and intently for the benefit of their clients. One could say that the senior executives of several Wall Street firms failed to carry out their fiduciary responsibility as they encouraged or as one might say, they failed in the required oversight of their firm’s participation in the securitization of sub-prime mortgages and other derivatives. These firms were responding to the incredible demand for a product that was fundamentally flawed and yet since they are in the business of making money out of underwriting and distributing investment vehicles, they concluded “so what was different about these types of securities”. Well the difference was that they were difficult if not impossible to price in the after market and as such when they were purchased by corporations or other investment companies, if the contractual provisions were not met or threatened not to be met, selling them was virtually impossible. We are now living the consequences of that failed oversight with an economic recession and the impact that it is having upon every American. As the markets fall in a seemingly unending experience, and the new President has introduced new wildly high spending programs designed to restart the economy, investors, already hesitant because of the huge amount of debt the President is proposing, are very sensitive to the potential effects in the form of inflation and increased tax rates. Nevertheless just as stock prices reach levels lower than those experienced in several decades, it is natural that investors might begin to nibble at buying them. So what happens? Our President makes another speech decrying how bad the economy is and that it is going to get a lot worse so Congress should pass his programs and his supporters should make their voices known by writing their Congressman urging him or her to do so. Each time the President opens his mouth about how we need more government solutions to the problems of the country, the market swoons. People are scared and believe that Mr. Obama is promoting socialization of many of our institutions. The President’s speeches are not helping. He should slink back to his office in the White House and stop making speeches to promote government spending of amounts in the Trillions. Please, Mr. President, Stop talking!
One Man’s Opinion—Bud Brewer
Pop,
I love your comments on Stop Talking and is the basis for my passion to really think through how the traditional tenets of business play out with a President who clearly intends to destroy a free market economy. If it moves tax it and that will be the undoing of the US economy and our investments as this type of policy does not reward, it punishes business and investment.
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