Poor investment plan

The Oklahoman has a good column today by a local financial advisor, John Pribyl.

Poor investment plan
POINT OF VIEW Obama’s strategy punishes Wall Street
BY JOHN PRIBYL
Published: February 18, 2009

Like many, I was impressed with our new president in the early weeks after his election. His ability to inspire hope and communicate effectively impressed even his detractors. However, his actions, words and behavior in recent weeks have given me reason to reconsider his message of "hope."

President Obama has relied upon fear to pressure Americans and their elected representatives to support a plan that presumes catastrophe and doom. As part of this push for passage and acceptance of his partisan spending package, Obama and his administration have continuously blamed Wall Street for the financial and economic crisis we are now experiencing. Certainly, Wall Street (not the place, but the acronym for the financial community as a whole) deserved, and accepted, much of the blame. However, our new president has failed to admonish or even acknowledge Congress for its role in this crisis.

Marginal loans that lenders were required to make were the genesis of our current economic malaise. Now, his solution is to give control of our assets to the same entity that created much of the problem and whose oversight failed us badly.

Policies set forth by the new administration are designed to punish and penalize Wall Street. They propose mortgage debt "cram-down,” onerous new regulations, dilution of current stock ownership that impedes the ability to raise new capital, and congressional hearings designed to embarrass and grandstand. In its zeal to reform, the current administration is crippling our ability to rebound.

I would argue that President Obama’s apparent disdain for capitalism is the compelling reason for skepticism surrounding his unprecedented financial plan. Companies won’t be able to raise capital when stock prices are declining. Without the ability to raise capital, companies will be limited in their ability to buy, build and hire. The success of businesses, large and small, and the employment of the masses requires a functioning Wall Street.

Unfortunately, the rhetoric and action being employed by the current administration is creating class conflict that should not exist. Even those who have no investment in the stock market benefit from Wall Street’s success. When Obama learns, and acknowledges, that Main Street benefits from a healthy and thriving Wall Street, then he will begin to prove that he understands the difference between capitalism and socialism.

I have long held the belief that the financial markets are bigger than the policies of any administration or government. However, when those policies disregard the fundamentals of capitalism, I must begin to question that belief.

"Hope” is not a good investment strategy. Our new president helped launch his meteoric climb with a book titled "The Audacity of Hope.” If it is audacious to hope that we could elect an African-American as our president, why should it be considered audacious to believe that Wall Street can help us to recover from this economic crisis?

Wall Street has functioned well for more than two centuries. Given the chance, Wall Street will lead us, again, to prosperity.

Pribyl of Oklahoma City is senior portfolio manager for Leonard Investment Advisors, Inc.

The online comments - except for mine - are disgusting.