On Tuesday, the world paused for a few hours to celebrate the inauguration of Barack Obama. Regardless of one's political leanings, it was a momentous event and an unrivaled spectacle.
For weeks, some had been saying "the market will take off during the inauguration". I was one who suspected that the hype surrounding the event might be self-fulfilling, driving the market up (at least temporarily), but even the historic event did not help the market this week. The reality of the economy and its effects on company earnings weighed on stock prices all week long.
The market was closed in observation of Martin Luther King, Jr.'s birthday on Monday, and trading was pretty slow during the hours leading up to the inauguration. We speculated that many had put trading on the back burner in order to watch the events in Washington, at least on TV (or internet feed, as the case may be). But almost as soon as Obama's speech was finished, the market came unglued, with the Dow falling over 4% for the day by the time the market closed.
I can only imagine what's been running through his head as he completes his first week as President. He inherited an economic mess, and one that took many years, several political administrations, and a lot of fiscal mismanagement at all levels from government to individual to get to the state it's in. Can he fix it? No. No one man can fix what's wrong with the system. The only thing he can do is put forth good ideas for Congress to deliberate, and wield the veto pen against bad ideas that Congress sends to his desk.
So how do we fix it? I believe the first step is to recognize the excesses of the recent (and not so recent) past. Spending at all levels of government is out of hand. But the blame cannot be pinned on the government alone, nor can the government alone be responsible for the recovery. In general, Americans spend far more than they earn at a personal level. That is not sustainable, and the results of exhuberant consumerism have come home to roost. We need to learn to live within our means. As we do this, we have to recognize that we all helped get the system into the mess it's in, and we're all going to have to play a part in getting it back out.
