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In January of 2009 I wrote the following:

“I haven’t seen expectations like this since the mighty U.S. military rolled into lowly Iraq with the expectation to conquer a nation in a month.  The public is infatuated with Obama.  Lovefest might be an understatement.  At this point, you have to wonder if expectations are getting a little blown out of proportion.  Obama is facing the most problematic economic crisis in over 70 years.

On the bright side, he’s entering office when things are downright awful, which likely means we’re closer to the bottom than the top.  But you still have to wonder, with such an enormous global economic mess, are expectations too high for President Obama?  Let’s just say, if I could short approval numbers, I’d be calling an Obama top….”

The attached chart (Via Real Clear Politics) shows just how far we’ve come since the euphoric lovefest of 2008 – and to think that this collapse has occurred during a simply staggering rally in the equity markets!  A pairs trade on the Obama approval rating would have made for a pretty nice trade.  Where was my Goldman Sachs banker when I needed him to put that deal together and find some buyers and sellers?  Oh right, he was convincing Congress to bail them out….

We’re now at an even more interesting juncture, however.  In my opinion, President Obama is in a tough spot.  I said it long before anyone was elected and I’ll stick to my guns – the person who was to be elected in 2008 was a sitting duck in 2012 because no matter who you put in office the odds of them being able to overcome this severe balance sheet recession were mighty low.  The numbers look increasingly grim for the President.

At the end of the day if the populace doesn’t have jobs and can’t feed their families the buck is going to stop with the President. I have a hard time imagining a scenario in which the unemployment rate drops below 8% by 2012 (others are far more pessimistic).  According to recent data from the CBO and BLS the United States will have to create 225,000 jobs per month just to get the unemployment rate down to 8% by summer of 2012.  That’s a fairly optimistic figure considering the current predicament.   When President Obama entered office the unemployment rate was 7.7%.  If I am a Republican strategist I am licking my chops waiting to run ad campaigns showing jobless Americans with these figures in the background.   Sure, it might not be his fault, but at the end of the day it will be difficult to overcome the fact that the unemployment rate rose throughout your 4 years in office.

It’s unfortunate because I think Mr. Obama is a fine man.  I really think he means well and he wants the best for the country.  And let’s not forget who our alternative was – not exactly an expert on Wall Street (not my words).  You may not agree with President Obama’s politics (I’ve certainly disagreed with much of it), but I think it’s unfair to say that he doesn’t mean well or want the best for the country.  Unfortunately, he doesn’t know a lick about economics and the team he put in place to run the economy didn’t know much more than he did.  As we slowly see the Obama economic team fall on their swords it’s certain that they’ll leave a lasting mark.

Thus far President Obama has spoken loudly and wielded a mighty small stick.  He’d do himself and his re-election hopes a great service by using that small stick to beat Mr. Geithner out of Treasury and start with a new slate in 2011.  The numbers are grim and the odds look unfavorable, but that doesn’t mean it’s too late to do the right thing and install an economic team that isn’t bought out by Wall Street’s best lobbyists and genuinely wants to help this country and its citizenry in the long-run.  I’d love to be a buyer of President Obama’s stock.  Unfortunately, I can’t think of a good reason to do so at this time.

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