The Dow had a rough day yesterday, down almost 290 points on fears that the banks' positive earnings reports dissembled sickly balance sheets. Fortunately for readers uninterested in understanding cause and effect, the WSJ op-ed page was there to explain, predictably, why it's all Obama's fault.
The WSJers are miffed that the Obama administration might ask banks to convert its preferred shares into common equity. What does that do? Not a whole lot - the authors likened it to re-arranging desk chairs - besides add the illusion of bank capital. But like so many Obama decisions seen through the back pages of the WSJ, the premier effect is, cruelly, to decimate the stock market, as they note cheekily:
The stock market promptly tumbled by more than 3.5% yesterday, with J.P. Morgan falling 10% and financial stocks as a group off 9%, as measured by the NYSE Financials index. Note to White House: Sneaky nationalizations aren't any more popular with investors than the straightforward kind.
I can think of three things to say about this.
1) This particular episode of Obama-blaming is particularly disingenuous. The WSJ MarketBeat blog yesterday morning predicted the downturn based on weak lending and hidden bank losses in a post called "Markets Set to Slide":
The market looks like it's fall back, at least in the morning, as investors react to various earnings releases and ongoing worries about the U.S. financial system, after finishing out last week with the sixth consecutive week of gains for the Standard & Poor's 500 stock index.
[Bank of America] posted worsening ratios in terms of charge-offs, credit-card losses, and nonperforming assets. Shares are down 10% headed into the opening bell. Meanwhile, the Wall Street Journal reported that many banks have actually been lending less in the last few months, and not more, as earlier statistical reports have suggested.
In short, the markets didn't need Obama's push -- they were doing not-so-fine on their own.