Obama feeling bullish amidst recession

March 3, 2009 7:19:46 PM PST
It would not be surprising to hear someone like Warren Buffett say, "Buy stocks now." But, it is a subject the President usually steers clear of.

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Since Mr. Obama took office, however, the Dow has fallen 20 percent. And, although no one knows when the bottom will hit, an injection of confidence may be just what the country needs.

It is unusual for any president to suggest investing in the stock market. It is not what presidents do. For President Obama to say it in the midst of the biggest stock slide since the Great Depression is an indication of how much he wants to boost confidence in the economy.

During an Oval Office visit with British Prime Minister Gordon Brown the President first told reporters he does not pay too much attention to the stock market.

"You know the stock market is sort of like a tracking poll in politics, it bobs up and down day-to-day and if you spend all your time worrying about that, then you're probably going to get the long term strategy wrong," Obama said Tuesday.

The President said it is not surprising that losses from the mortgage crisis, falling real estate prices and what he called the 'huge risks' taken by financial institutions, have taken their toll on the market. But, he is confident in the steps his administration is taking.

"On the other hand, what you're seeing now is profit and earning ratios are starting to get to the point where buying stocks is a potentially good deal if you've got a long-term perspective on it," Obama said.

The president streesed the long-term component of the recovery, saying, "it's going to be full of fits and starts in terms of getting the mess cleaned up, but it's going to get cleaned up."

On Capitol Hill, Federal Reserve Chairman Ben Bernanke was warning the Senate Finance Committee.

"Historical experience strongly suggests that without a reasonable degree of financial stability a sustainable recovery will not occur," he said.

Bernanke was making his pitch for billions more of taxpayer dollars to help AIG, the worlds' largest insurance company that lost $60 billion in the past three months.

"I think if there's a single episode in this entire 18 months that has made me more angry, I can't think of one other than AIG," he told the committee.

The Fed Chair said the insurance giant exploited a huge hole in the regulatory system, describing them as an insurance company that acted like a hedge fund.

Bernanke could not tell the committee how much more than the $180 billion already committed it would take to rescue AIG. And, it was the news that pushed the market to its 12-year low.

"What really bothers traders is there seems to be no real plan, all we're doing is spending money, traders hate this indecision," said trader Alan Valdes.

Obama's press secretary told reporters the president was not cheerleading the stock market. Robert Gibbs said the president was just reassuring Americans that the economy would recover.

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