Feb. 25, 2009 — -- President Obama spoke twice in the last 24 hours about the country's economy, and a jittery Wall Street responded both times with sharp downturns.
The morning after Obama's prime-time economic pep talk on Tuesday night, the markets opened low and lost 194 points before rallying.
Stocks edged into the black late in the afternoon, but plunged back into the red as Obama appeared to discuss his plans for tougher regulations of financial institutions. The Dow closed down 80 points today.
"Strong financial markets require clear rules of the road, not to hinder financial institutions, but to protect consumers and investors," Obama said in urging Congress to write new regulations with teeth.
The president said that the country's regulatory apparatus needed "modernizing and streamlining," because too often it failed to protect investors.
Obama said that Wall Street "needed strict accounting, starting at the top," to ensure that financial corporations were able to withstand economic stress and that the language of the marketplace was clearly understood.
The markets were battered early by the National Association of Realtors' report that sales of existing homes fell 5.3 percent to an annual rate of 4.49 million last month -- the worst showing since July 1997. Wall Street had expected reports of increased sales.
In addition, the Obama administration began its "stress tests" today for the country's largest banks, amid fears that certain faltering banks could be nationalized.
Also cited for the drop was a lack of details in the president's Tuesday night speech when the president sternly told the nation that the country has come to a "day of reckoning" on the economy but would emerge stronger than ever.
Doreen Mugavero of Mugavero Lee & Co. called the president's speech "optimistic spin."
"It was a very good feeling for Americans and did a lot for confidence," Mugavero said. "However, the economic data continues to erode and things are not going to happen no matter how optimistic he is."
The president's speech was a factor in the market's downward movement today, she said.
"There was no new news in his speech... There were no real results he could show us yet, and that was disappointing," Mugavero said.
David Wyss, managing director and chief economist at Standard & Poor's, agreed. Wyss said Tuesday's rally was due in part to Federal Chairman Benjamin Bernanke's optimistic projections as well as anticipation of Obama's upcoming speech. He believes traders were disappointed in the speech.
"He didn't offer any quick fixes, not that I think there are any available out there," he said. "People are still in the mood to be gloomy."
Nevertheless, Obama got some good reviews on his speech.
"Number one, he had to show the country that he gets it, that he understands what they're going through in this very, very tough economy and that he has a plan to fix it," ABC News' chief Washington correspondent George Stephanopoulos told "Good Morning America" today. "And then he had to move to buy some time and build support for that plan."
"He made a good start last night," Stephanopoulos said.
"Nobdy Messes With Joe"
Stephanopoulos said the best line of the president's speech was when he acknowledged public anger at helping big banks that triggered the fiscal meltdown by saying, "I promise you I get it. ... This is not about helping banks. It's about helping people."
"That is the single most important challenge the president faced last night, to try to build suppport for this plan to bail out the banks, to ease the credit crisis," Stephanopoulos told "GMA."
"The administration is going to have to drive home that message again and again and again to try to ease the anger over this bank plan," he said.
The president also was praised for being optimistic, despite the grim message.
"He came right out of the box and said, 'Make no mistake about it. We are going to recover. ..". He began on hope. He ended on hope," Stephanopoulos said.
Democrats and Republicans fanned out across the airwaves this morning to put their spin on the night's speech.
Vice President Joe Biden, who was named by Obama to head an oversight panel on the $1 trillion worth of stimulus spending because as Obama explained, "Nobody messes with Joe," appeared on three network morning news shows today.
Biden told "GMA" he intends to "make sure this is done by the numbers, man. ... This cannot be squandered."
States that fail to use the federal allocation for pork instead of job creation, he said, would face the prospect of having the money withdrawn or a media campaign to "embarrass them for not doing what they are supposed to do."
The vice president also defended Obama's intentions to launch ambitious plans on health care, education and energy policy while also spending unprecedented amounts of money to rescue the economy.
"The fact of the matter is that the very things that people are saying are most ambitious are not only needing to be solved, but they're part of the solution," Biden said.
"You cannot gain control of our budget deficits without gaining control of health care spending. You cannot gain control over our economy without gaining control of energy policy. And you cannot grow this country without an education policy," he said.
The Republicans, who cheered, some apparently sarcastically, when Obama spoke Tuesday night about fiscal discipline, kept up their attack on Obama's stimulus plan.
House Minority Whip Eric Cantor told "GMA," "The first thing we need to do is to stop spending money we don't have. And to make sure that we're not heading into a situation where we're taxing businesses and families with taxes they can't afford to pay."
Next Up for Obama: Iraq Withdrawal
Having crossed off his to-do list "explain to country my economic plan," Obama will now tackle the country's other nagging problem: When and how to pull out of Iraq.
Final touches for a major speech on Iraq are being completed for delivery in the next few days and will be Obama's second big moment this week after Tuesday's address to a joint session of Congress that was dominated by the economy.
During his Tuesday night speech, Obama said he would "soon announce a way forward in Iraq that leaves Iraq to its people and responsibly ends this war."
ABC News has reported that the president is "trending" toward a timetable of 19 months to remove combat troops from Iraq, a slightly slower rate than the 16 months he promised as a candidate.