that was going on yesterday
on Wall Street, on the first anniversary of the collapse of Lehman Brothers, might not have been what it seemed.
The president delivered
what the Times
called a stern message about the need for reform, at the same time the Times
was also noting that the time for reform—and the imperative to
reform—was also passing with a rising stock market.
So maybe we should cut to the chase: The president needs the Dow to get to 11,000 over the next year to keep from being routed in the mid-term election.
This is the most basic Clinton-era message: The only poll number that truly mattered was the Dow Jones Industrial Average. As the Dow rose so rose his popularity. Dollars to donuts, Barack Obama gets this, too.
The time for meaningful and even draconian reform of the financial services industry was when the government was bailing out Wall Street. That was the opportunity to impose new regulation and, in so doing, help mute the criticism over the massive giveaway. The populist sentiment that was everywhere a year ago would have carried the day.
But populism doesn’t make the Dow go up.
The economic professionals in the Obama administration all grew up on Wall Street during the boom years. Their careers are boom careers. They know how money is made. If there are risks in markets, those risks, intelligently managed, are what produce record-smashing gains. The Obama guys believe in the business; they admire the business. If they are frightened of its downside, they are as mindful of the power of the upside. If you kill the risk, you kill the reward.
“We will not go back to the days of reckless behavior and unchecked excess,” said the president. But he might as well also have said: “No one wants a lazy, unmotivated, gentleman’s C, ungreedy culture on Wall Street—like for instance, during the 1970s.”
The president will continue to call for reform-minded legislation, because he believes in at least its sentiments, and because he has cranky lefties and angry populists to mollify. But he’s also stuck knowing that reform—substantial, grinding, risk-cutting, regulation—will stall the market’s rise.
And he could really use those 1,500 points by next November.
More of Newser founder Michael Wolff's articles and commentary can be found at VanityFair.com, where he writes a regular column. He can be emailed at email@example.com. You can also follow him on Twitter: www.twitter.com/NewserColumns.