Missed Connections

A few thoughts on the State of the Union address. Not on what Obama said, but on what he didn't say and perhaps should have mentioned:

1) "The dollar is much stronger now then it was before I became recognized as a viable candidate for president... in fact, almost to the day of my speech at the Brandenburg Gate."

(Not that this is necessarily a good thing, or necessarily indicative of a casual relationship... though I personally believe that in the midst of the Freddie and Fannie nationalization of July 2008, Obama's appearance on the world stage marshaled confidence in the Dollar, which immediately began to pull forward against all other currencies. This was in no small part a consequence of the stamp of imprimatur bestowed by Paul Volcker's early presence on Obama's economics team... Conveyed correctly, the above statement could have been the most positive populist thing he could have said to the "American people" as they, a bit bullheadedly, really favor a strong dollar. It's simply patriotic chauvinism.)

[Incidentally, the so called "Palin effect" in the first three weeks of her candidacy on John McCain's rising poll numbers was I believe due instead to Obama's initial effect on the dollar. Dollar strength knocked the wind out of commodity prices and gasoline prices came rapidly down. This caused the widespread elation for a moment, as it seemed (to the uninitiated) that the "economy" was getting better. Of course, in short order the tail began to wag the dog as falling demand began a collapse in commodity prices which amplified the dollars surge. And then Lehman... and McCain/Palin was history. Flight to safety, indeed.]

2) "This trillion dollars I have spent since taking office is largely in line (proportionally) with the total amount spent by Europe to combat the panic and as such we are no worse off fiscally on a relative basis."

(Also a brief explanation of what an overnight shift in household savings from -2% of GDP to +6% of GDP does to an economy, along with an explanation of why only government spending can make up for the shock of such a sudden chasm in consumption... Yeah, that would have been helpful.)