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What isn’t going wrong for our narcissist-in-chief? The economy, Afghanistan, the Middle East, the United Nations (ignore Iran’s deceptive gesture on inspections today).  As Howard Fineman offered in a now-celebrated Newsweek essay,

Unless Obama learns to rely less on charm, rhetoric, and good intentions and more on picking his spots and winning in political combat, he’s not going to be reelected, let alone enshrined in South Dakota.

The president’s problem isn’t that he is too visible; it’s the lack of content in what he says when he keeps showing up on the tube. Obama can seem a mite too impressed with his own aura, as if his presence on the stage is the Answer. There is, at times, a self-referential (even self-reverential) tone in his big speeches. They are heavily salted with the words “I” and “my.” (He used the former 11 times in the first few paragraphs of his address to the U.N. last week.) Obama is a historic figure, but that is the beginning, not the end, of the story.

The economy is what ought to destroy the Obama presidency.

Today’s unemployment data confirm my curmudgeonly view of the American economy. My old Bear, Stearns colleague David Malpass made an important point on CNBC: the establishment survey reported this morning was grim enough, but it fails to take into account the fact that small business (which doesn’t get counted in the establishment survey) is doing far, far worse than big business. The contraction of bank credit especially to small firms continues. Unlike previous recoveries (in fact all of them since Reagan came in) where the job growth came disproportionately from small business, this time around small business contributes disproportionately to job losses.

Over at my “Inner Workings” blog at Asia Times, I’ve argued that the stock market rally is pure fluff — a yard sale of the American economy driven by the devalued dollar. American assets go up in nominal (dollar) price as the dollar declines against a basket of other currencies.

The chart below shows the stock market against the trade-weighted dollar index during the year to date:

For what it’s worth, the standard test of information precedence (Granger “causality”) tells us that changes in the currency precede changes in the stock market.

This has its limits; the dollar can’t cheap forever (because the yen and Euro can’t go up forever). Investors now believe that the recovery is coming undone.

Obama’s vulnerable. The electorate is starting to have buyer’s remorse just eight months into his term of office.



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