Sunday, March 8, 2009

Presidential Vocabulary Doesn't Inspire Confidence

At his news conference with the British Prime Minister, President Obama responded to a question about the plummeting stock market by saying, "What I am looking for is not the day-to-day gyrations of the stock market... but the long-term.''

As a gifted writer and speaker, Mr. President, you should know that a gyration is a rotation around a central point. Since Americans elected you for hope and change, the market has been on a steady downward trend that has wiped out over 30% of the retirement savings plans of millions of Americans and the pension funds of unions and churches, and the endowments of colleges and universities and charitable foundations.

We suppose that a steady downward spiral could be a form of gyration, but it’s one that is worth a president’s attention. Yes, this trend is recorded on the Wall Street that the President has criticized, but it's a trend that reflects the entire economy. Paying attention is part of staying in touch with the people.

Mr. President, we know you do not have an MBA like the former president, so it is unfair for the press or critics to laugh at you for saying, "On the other hand, what you're now seeing is profit and earnings ratios are starting to get to the point where buying stocks is potentially a good deal, if you have a long-term perspective on it.''

We appreciate the confident investment advice, Mr. President, and while we understand you studied International Relations and law, but it's important to know that a ratio is not X ‘and’ Y but X ‘to’ Y, and the correct term is not “profit to earnings” but “price to earnings ratio.” Price means the price of the stock, something very very different than profit.

As millions of homeowners and pensioners know, all the profit in a price can disappear very quickly. Profit and price, of course, both begin with a P and the tongue does slip occasionally as you probably noticed when the press guffawed about your predecessor’s slips.

It’s forgivable in the heat of a campaign to slip up and say, “I’ve now been in 57 states,” or that they speak Arabic in Afghanistan, or to declare 10,000 dead in a tornado that killed only 12, or to speak of “the bomb” that fell on Pearl Harbor (even if you are a native Hawaiian).

However, a president who understands that confidence moves markets and the economy needs to convince citizens that he knows the difference between a gyration and a trend, between a profit and a price. In politics ignorance and confusion can come with a very high price and no profit.

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