Buy Sell Jump: Steven M. Cohen's Blog
13 April 2009

It is King Abdullah that owed Mr. Obama the big bow, perhaps even a warm hug. Maybe next time.

 
 When the president greeted Queen Elizabeth, Mr. Obama managed to grasp her
 hand while offering only a slight nod of the head, back perfectly erect

No doubt it was jarring to see the President of the United States offering that stiff bow to Saudi Arabia's King Abdullah, and unfortunately, indeed inescapably, the word "obsequious" comes to mind.

That's odd, really; presumably the Queen doesn't owe her continuing reign to the protective efforts of the United States (unless one harkens all the way back to World War II, in which case some might argue she does). In contrast, King Abdullah and his royal family cohorts cling to power with the direct support of the U.S. and its physical presence in the Kingdom. Without such protection, it is unlikely the King and other Saudi royalty would be whisking around in their snow-white robes at major international diplomatic get-togethers.

Instead, if they were really lucky, they might just barely escape the wrath of their countrymen by fleeing abroad to reunite with the vast wealth they have siphoned away to foreign banks for the rainy day on which their fairy-tale existence is cut short. Thus, it is King Abdullah that owed Mr. Obama the big bow, perhaps even a warm hug. Maybe next time. . .

The Abdullah-bow was just one of the president's gestures during the week designed to smooth out strained relationships. Thus, in Turkey he seemed to suggest to Muslins around the globe that conflicts between the West, specifically America, and the Muslim world were largely the result of a lack of understanding on our part. While the message was merely implied, it was unambiguous.

In pledging that we will "listen carefully, we will bridge misunderstandings, and we will seek common ground," the president left the clear impression that the genesis of these problems was our failure to be sufficiently solicitous of Muslim sensitivities in the past. When he pledged that we will be "respectful, even when we do not agree," and that we will "convey our deep appreciation for the Islamic faith," it implied that our historical lack of respect and appreciation was the root cause of the cultural and religious rift.

The president seemed to suggest, however, that this understanding and respect deficiency flows only one way. The Muslim world, he implied, does not contribute to the continuing conflict but is merely a victim of Western insensitivity. With that lopsided analysis he seemed too eager to please.

The president supplemented his reaching-out efforts with a call for a reduction in nuclear weapons with the ultimate goal of eliminating them altogether. While an admirable objective, the timing of his pacifist appeal created a curious juxtaposition with the launch by North Korea of its long-range rocket as part of an effort to develop a means of delivering warheads thousands of miles away, which eventually could include parts of the U.S. (even though Alaska is no longer considered one of the 50 states but instead is a different planet, according to the mainstream press coverage of Sarah Palin).

This launch nearly coincided with the first public appearance in many months of decidedly unkindly old Kim Jong Il, who had been absent either recovering from a stroke or taking a mental-health year. Kim showed up in the North Korean parliament, where he was supposedly "voting" on some important matter. And, guess what, he was reappointed supreme leader after his long absence, believe it or not, with no opposition—imagine that!

Mr. Obama's disarmament plea also coincided with an interesting holiday in Iran that commemorates the country's initial involvement with nuclear power. This year's celebration featured the opening of a new nuclear reactor. President Obama has already tried his hand at reaching out to Iran.

Yet despite his can't-we-all-just-get-along tilt, Mr. Obama managed to back some policies that run somewhat counter to his hyper-liberal base. The president made an unannounced stop in Iraq and, despite his long opposition to the war, and, sounding suspiciously like a more conventional Commander in Chief, praised U.S. troops serving there for their "extraordinary work" that has resulted in "significant political progress." Mr. Obama cited "a greater willingness on the part of all the factions in Iraq to resolve their issues politically and through non-violent means." That's nothing short of breathtaking, coming from a former candidate who throughout the campaign derided the war effort as nothing but a misadventure in nation-building.

(Never one to underestimate his own importance, the president noted that the upcoming elections in Iraq bring into focus the many thorny issues that remain and that "it's very important for us to use all of our influence to encourage parties to resolve these issues in ways that are equitable and fair. And I think that my presence here can help do that.")

Even more surprising is the dilemma in which the president now finds himself over his request to Congress for $75 billion to continue to fund the war effort. Based on some of the commentary coming from usually fawning Democrats, it suggests there is trouble in the love-fest paradise the party has reveled in since the November election.

Various Democratic members of the House and Senate have voiced strong objections not only to the funding but to the timeline the president envisions for withdrawal of all U.S. troops from Iraq. Mr. Obama's plans to prosecute the war in Afghanistan face similar objections, with the Vietnam-era specter of "quagmire" raised more than once.

One of the president's most strident supporters managed to instantly evolve into one of his fiercest critics, delivering an amazingly condescending analysis of the president's war judgment that even Republicans would never have dared. Rep. John Conyers proclaimed Mr. Obama's war program "embarrassingly naïve."

Effortlessly flip-flopping from flatterer to detractor, Conyers called the president "the smartest man in American politics today," but evidently not smart enough to avoid the "bad advice" he's been getting. As a result of that bad advice, according to Conyers, Mr. Obama "makes mistakes." The president is probably thinking that with friends like these, who needs Republicans?

Other Democrats are criticizing the president for precisely the opposite reason: They think he has not asked for enough money and they want to tack billions more onto the bill. Thus the president faces opposition across the broad spectrum of his own party, creating the irony that he will have to rely on Republicans to carry the day.

While the president may have lost the support of some in his party on a few of his positions, the stock market continues to pick up support from investors who appear to be coming off the sidelines. The market is now up about 25% over the last month, and modestly improving economic indicators contributed to investor confidence, along with some positive comments from economic adviser Larry Summers and a couple of Fed presidents.

The big boost came at the end of the holiday-shortened week, when the DJIA spurted 246 points, or 3%. Part of the surge was attributed to Wells Fargo, which rocketed 32% in price when it indicated it would announce record net income of $3 billion for the first quarter. Other bank stocks surged accordingly with Bank of America even exceeding Wells Fargo's percentage increase. Bear in mind, though, that it is less challenging for banks to earn handsome profits when their cost of money from the government is zero and they can still find a few borrowers around.

Perhaps another factor helping the market also had to do with Mr. Obama's presence, but in this case the lack thereof. With the president traveling to London for G-20, then on to Iraq, Turkey, and various other outposts, he could not be here to propose yet more massive programs costing hundreds of billions of dollars the government will have to squeeze out of taxpayers. (And once the taxpayers run dry, the government will simply create more, albeit cheapened, dollars.) A brief respite from his frenetic reinvent the wheel agenda, aided and abetted by his congressional adherents who still support the social-engineering aspects of his agenda, was just the tonic the market needed.

With its performance this week, the market should take a bow, in this case a well-deserved one.