An understated president tries to calm anxious American as stocks continue to fall
With the country’s credit rating downgraded for the first time history and the markets in freefall, President Obama took to the bully pulpit on Monday morning to try to reassure anxious Americans.
His nearly 10-minute speech, less a pep rally than a sober acknowledgement that the country still faces enormous economic hurdles, did little to stabilize fluctuating stocks.
From the diplomatic dining room of the White House, Obama blamed the months-long debate over raising the debt-ceiling for last week's credit downgrade.
Also read: Media Companies Suffer in Stock Market Crash
After witnessing the brinksmanship, the markets and rating agencies "doubt our political system’s ability to act," Obama said.
But the president said investors still believe that the country's credit is solid, despite Standard and Poor's decision to revise the United States' AAA rating to a AA+ score after market close on Friday.
"No matter what some agency may say, we've always been and always will be a triple-A country," Obama said.
But the markets continued to fall after Obama's low-key address about the United States' financial troubles.
The NASDAQ and the S&P 500 has dropped over 4.4 percent by noon PT on Monday. For its part, the Dow Jones Industrial Average was down nearly 500 points.
"Here is the good news. Our problems are imminently solvable and we know what we have to do to solve them,” Obama said.
As part of that remedy, Obama expressed confidence that Republicans and Democrats could work together to pass new legislation that combines entitlement cuts to Medicare and tax reforms. Though he added that if Republicans in Congress did not extend jobless benefits and agree to some revenue generating measures such as taxes, it could result in the loss of 1 million jobs.
"We didn’t need a rating agency to tell us that the gridlock in Washington over the last several months has not been constructive," Obama said.
Obama's speech came as polls showed approval for his handling of the economy slipping in key swing states such as Florida.
Re-election prospects aren't Obama's most immediate concern. The president also has his work cut out for him convincing investors that American companies and markets continue to be a good place for their money.
The latest fall in the markets came on news that Standard & Poor's had dropped the credit ratings of Fannie Mae and Freddie Mac, as part of its larger debt downgrade for the United States.
Entertainment and technology stocks were not spared from the bloodletting. They may have posted bullish earnings last week, but Viacom's stock dropped 4.3 percent and Time Warner's fell 4.8 percent. Big media rivals also felt the pain, News Corp. plunged 4.8 percent, Disney dropped 4.3 and Sony fell 4.8 percent. Apple shares dropped 4.2 percent.
Pity poor CBS. The company fell nearly 10 percent, as investors grew anxious about the ad-dependent media giant's ability to withstand the downturn.
The president also addressed Saturday's shoot-down of a helicopter in Afghanistan. Thirty troops were killed in that incident, making it one of the worst day of American losses in the decade-long war.
"These men and women put their lives on the line for the values that bind us together as a nation," Obama said.
Obama said the country would continue to press on in Afghanistan.