President-elect Barack Obama ran on a message of change. And voters responded to that message this week by electing him to the Commander in Chief and removing more Republicans from Congress.
However, Obama is not yet the president. And he spoke to that in his first press conference as president-elect Friday afternoon:
"The United States has only one government and one President, and until January 20th of next year, that government is the current administration. I have spoken to President Bush, and I appreciate his commitment to ensuring that his economic policy team keeps us fully informed as developments unfold."
The market will have to accept the fact that Obama cannot yet take action in terms of policy reform. He requested that President Bush help work with the Congress on an economic stimulus plan, saying "it should come sooner, rather than later."
Obama, who met with his team of economic advisors today, made clear his focus once he comes into office. "Immediately after I become President, I will confront this economic crisis head-on by taking all necessary steps to ease the credit crisis, help hardworking families and restore growth and prosperity."Turning to the immediate issues in the economy, Obama suggested some sympathy for the auto industry. He said:
"The auto industry is the backbone of American manufacturing and a critical part of our attempt to reduce our dependence on foreign oil. I would like to see the Administration do everything they can to accelerate the retooling assistance that Congress has already enacted."Both GM (GM - Get Report) and Ford (F - Get Report) announced earnings Friday. In particular, GM has experienced significant problems with cash flow and may not be able to continue without help beyond next spring. The stock market sold off as Obama spoke. The SPDR Trust (SPY) traded at $93.20 as he started his speech and traded down to $91.60. It has slowly recovered since. The market may have reacted to two notions. First of all, Obama is not the current president and thus cannot effect immediate change. President Bush remains in charge. Bush has offered minimal leadership during this financial crisis. His administration slowly responded to the unfolding crisis -- starting with ineffective voluntary programs last winter -- and then reluctantly issued tax rebates as a stimulus. The stimulus had little effect on consumer behavior. The economy continued to weaken and eventually the financial crisis forced his hand.