Obama Unworried By Market Fluctuations
MELISSA BLOCK, host:
It was a relatively calm day on Wall Street. The Dow industrials lost only a small fraction of what disappeared yesterday in the wake of the latest AIG news. You may be trying to forget that the market's main indexes, the Dow and S&P 500 are at 12-year lows. Put another way, that's more than 50 percent below their peaks from just a-year-and-a-half ago and the worst bear market decline since 1929.
But, today, at least one voice tried to find a silver lining in all that bad news, suggesting there might be some bargains out there. The tipster's name -Barack Obama.
Here's NPR's John Ydstie.
JOHN YDSTIE: President Obama provided his stock advice during his short photo-op press conference, following a meeting with British Prime Minister Gordon Brown at the White House. The president suggested that what's been going on in the markets is understandable, given that investors are finally absorbing the full extent of the problems in the banking system and the ramifications for the international economy. But then he added this.
President BARACK OBAMA: What you're now seeing is profit and earning ratios are starting to get to the point where buying stocks is a potentially good deal if you've got a long-term perspective on it.
YDSTIE: But despite his recommendations, stocks ended down for the day. Nevertheless, the president said he is confident the policies he's putting in place will work and help the U.S. economy and the world economy regain their footing. And though he touted stocks for the long haul, the president suggested he wouldn't look at the day-to-day gyrations of the market to judge his success.
Pres. OBAMA: You know, the stock market is sort of like a tracking poll in politics. It bobs up and down day-to-day and if you spend all your time worrying about that, then you're probably going to get the long-term strategy wrong.
YDSTIE: Sitting next to the president, Prime Minister Brown echoed the president's words about weak banks undermining the global economy and the need for countries to cooperate to put in place new regulations to avoid future meltdowns.
Prime Minister GORDON BROWN (United Kingdom): And that's why we're looking ahead to the G-20 in London in April because a bad bank anywhere can affect good banks everywhere. So we've got to root out the problems that exist in other parts of world, as well. Set principles for the banking system for the future and make sure that the banks subscribe to lending agreements where they actually increase the lending that is available to citizens in every country.
YDSTIE: Brown went on to say that there is the possibility in the next few months for what he calls a global New Deal that will involve all of the countries of the world in sorting out the banking system's problems. Testifying on Capitol Hill today, Federal Reserve Chairman Ben Bernanke said he did not foresee a global regulator, but rather countries producing compatible regulatory frameworks. In separate testimony today, Treasury Secretary Timothy Geithner offered a few more hints about how the government intends to address the toxic asset problem that's at the heart of the banking crisis.
He said the administration has a plan that would encourage private investors to buy assets with some backing from the government. Full details on the plan are yet to come and are eagerly awaited by investors and the banking community.
John Ydstie, NPR News, Washington.