Obama wows Congress but fine words fail to soothe markets

Wall Street slides 2 per cent as traders want more specifics

By Leonard Doyle
Thursday 26 February 2009 01:00

Barack Obama's maiden speech to Congress may have had even glowering Republicans on their feet applauding, but the presidential exhortations to seize "opportunity from ordeal" failed to soothe Wall Street, with US stocks sliding 2 per cent yesterday.

His Tuesday night prime-time speech saw a return to the audacity of hope message that helped propel him to the White House, as he tried to calm a nation worried about a return to the suffering of the Great Depression.

"While our economy may be weakened and our confidence shaken, though we are living through difficult and uncertain times, tonight I want every American to know this: we will rebuild, we will recover, and the United States of America will emerge stronger than before," the President said.

Speaking for almost an hour, at times sternly, he laid the blame for today's economic mess on the shoulders of his predecessor George W Bush. "My budget does not attempt to solve every problem or address every issue," he declared. "It reflects the stark reality of what we've inherited – a trillion-dollar budget deficit, a financial crisis and a costly recession. Given these realities, everyone in this chamber, Democrats and Republicans, will have to sacrifice some worthy priorities for which there are no dollars. And that includes me."

It was a command performance before a Congressional chamber that felt more like a theatre in the round, with Democrats and Republicans rising to their feet to applaud the new Commander-in-Chief.

However, Mr Obama's speech was less about persuading Republican opponents to back his plans but to speak directly to the millions of Americans watching on television. He wanted to inspire them to view the nation's deepening economic crisis as a reason to forge ahead with hugely-expensive plans to halt climate change and reform the education and health systems.

Commentators described his exhortation to Americans to double down and try harder as "Reaganesque" and it is praise indeed for a Democrat to be compared with the Republican stalwart whose sunny disposition in the depths of the Cold War and optimistic "morning in America" invocations during the severe 1981 depression, helped put a spring in the nation's step.

"We are not quitters," Mr Obama declared, laying out reforms to make the country more competitive and safeguard it from over-dependence on foreign oil. But Wall Street, which rebounded from 12-year lows on Tuesday, was unmoved, with the Dow Jones and Nasdaq slipping 2 per cent. "He gave a very good speech in terms of making the citizens feel better, but there is still a lot of work to be done," was the verdict of Tim Smalls, head of US stock trading at the Execution brokerage firm.

Tuesday night was a night for the Democrats to show they are on top of the issues. The President was flanked by Vice-President Joe Biden and a grinning Nancy Pelosi, the House Speaker. First Lady Michelle Obama sat in a sleeveless gown, surrounded by guests, including 14-year-old schoolgirl Ty'Sheoma Bethea and banker Leonard Abess, who would later be singled out as extraordinary ordinary Americans.

Making his way through the chamber, the President kissed and embraced Hillary Clinton and shook hands with political allies. Even his Republican opponents reached out to shake his hand.

The biggest failure of Mr Obama's first 30 days has been getting Republicans to support reforms. He touched lightly on the disagreements as he sought to project himself as a national leader in a time of great crisis. "As we stand at this crossroads of history," Mr Obama declared, "the eyes of all people in all nations are once again upon us, watching to see what we do with this moment, waiting for us to lead... the time to take charge of our future is here."

He sought to explain away every dollar being spent cleaning up the mess left by Mr Bush. "Those days are over," Mr Obama declared, "I promise you – I get it." But he also suggested that a populist approach of beating up on Wall Street was not the right course: "We cannot afford to govern out of anger or yield to the politics of the moment."

The Government bailouts, including the staggering $787bn stimulus package, was "not about helping banks, it's about helping people", he argued. Once credit, the lifeblood of the American economy returns, people will get the loans they need to buy cars and houses and pay for university courses. The alternative, the President warned, would be a decade of hard times, such as Japan has endured.

*Senator John Kerry took advantage of a stopover in London to hold private talks with the Foreign Secretary and Tony Blair, the international envoy for the Middle East, The Independent has learnt. The chairman of the Senate Foreign Relations Committee dined with the Foreign Secretary, David Miliband, on Sunday at the end of a Middle East tour that took him to Egypt, Jordan, Lebanon, Israel and Syria. He then briefed Mr Blair on Monday on his visit to the region, during which he became the most senior US politician to visit Gaza since Hamas took control in 2007.

Key words

* "We will rebuild, we will recover, and the United States of America will emerge stronger than before."

* "I promise you – I get it."

* "Dropping out of school is no longer an option. It's not just quitting on yourself, it's quitting on your country."

* "My budget does not attempt to solve every problem or address every issue. It reflects the stark reality of what we've inherited."

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