Obama’s Presidency Disappoints as Predicted

Nicholas Vardy

Nicholas Vardy has a unique background that has proven his knack for making money in different markets around the world.

[I am taking a break for the holidays but I want to share with you a past issue of the Global Guru I wrote on the eve of Barack Obama’s first inauguration in January 2009. Even with the benefit of 20/20 hindsight, there is very little in the piece I’d change today.

And I think the analysis is particularly apt in the context of the aspirations and rollout of Obamacare.

I wish you and yours a Happy New Year.]

The Obama Presidency: The World’s Biggest Mania?

The siren call of manias, financial and otherwise, is difficult to resist. I recall that at one point during the height of the dotcom boom in 1999, out of a total of nine former roommates during my years at Stanford University and Harvard Law School, six had founded or were working for dotcoms. By all standards, these were all hardworking, highly educated and risk-taking people who saw their new ventures as a way to change the world. Had any one of them ended up being a founder of Google, instead of ending up at one of the thousands of dotcoms that flopped, he surely would have been widely hailed by the media as a visionary genius. Sadly, in the end, no amount of hard work and brainpower could resist the tsunami of the dotcom collapse. It was fun while it lasted. But today the whole episode seems more embarrassing than alluring.

I find the parallels between the dotcoms and the incoming Obama administration disconcerting. Almost from Day One, the whole Obama campaign reminded me of an over-hyped dotcom business plan — a cocktail of money, media and the madness of crowds. Obama put together a slick, if deliberately vague, business plan, and he packed his “Advisory Board” with big hitters, ostensibly making the success of his venture inevitable. And much like any mania, the Obama campaign also offered those associated with it the vicarious thrill of participating in something new and exciting that would change the world.

The Obama Presidency: Buckley’s Warning

William F. Buckley once famously observed, “I’d rather entrust the government of the United States to the first 400 people listed in the Boston telephone directory than to the faculty of Harvard.” I confess the idea of having smart people with big ideas and little experience in a position of power is rather unsettling. I know their ilk well, because as a classmate of Obama’s at Harvard Law School, I was one of them. When you’re too book smart, there is a tendency to come up with intellectually satisfying, but ultimately ineffectual solutions to complex problems. That doesn’t mean you shouldn’t try. But unless you’ve had the real world experience of, say, leading a platoon into battle, you never really internalize the wisdom that the most carefully conceived battle plans never survive the first shot fired. The real world is a gritty, imperfect place populated by people driven by emotions and contradictory agendas. Success is more about adapting to and dealing with unexpected challenges — and a good dose of dumb luck. Sure, intelligence and calm temperament can help. But you can’t learn to surf by reading a book. And as Mitt Romney, fellow Harvard Law (and Business) grad, founder of Bain Capital and former presidential candidate observed: “The Presidency of the United States isn’t an internship.”

Lack of experience, combined with idealism, can lead to a curious admixture of callowness and arrogance. For example, anyone who has ever run a business knows that it’s crucial to manage expectations. In contrast, the Obama campaign made no bones about raising expectations to Olympian levels. In dotcom terms, Obama has promised to out-google Google a thousand-fold — using the most powerful nation on earth as his platform. Once Obama steps into the Oval Office, he and his team will have to work frantically to meet those expectations. And even the most zealous “Obamaniac” would find it hard to argue that our new president subscribes to the time-honored maxim of “Under-promise, over-deliver.”

The Obama Presidency: The Lesson of Macquarie Island

I recently came across a news story that illustrates the dangers of the kind of well intentioned but naïve intervention in American economic life that you can expect to be the hallmark of the Obama Administration.

In an effort to save native seabirds, a few years ago the Australian authorities removed all the feral cats from Macquarie Island. Unexpectedly, this allowed the rabbit population to explode and, in turn, destroy much of the fragile vegetation that birds depend on for cover. The well-intentioned act of removing the cats from Macquarie Island caused completely unanticipated environmental devastation that cost authorities 24 million Australian dollars ($16.2 million). As one observer commented: “It seemed like a good idea at the time.”

With the benefits of 20/20 hindsight, the shortcomings of the plan were clear as day. “What was wrong was that the rabbits were not eradicated at the same time as the cats,” asserted University of Auckland Professor Mick Clout. “It would have been ideal if the cats and rabbits were eradicated at the same time, or the rabbits first and the cats subsequently.”

A committee was formed to mete out blame. Its conclusion? “The unintended consequences of the cat-removal project show the dangers of meddling with an ecosystem — even with the best of intentions — without thinking long and hard.” From now on, “interventions should be comprehensive, and include risk assessments to explicitly consider and plan for indirect effects, or face substantial subsequent costs.”

The experts who put together the original plan probably weren’t stupid and did think “long and hard” about it. Yet examples of misfires like Macquarie Island in the world of environmental protection are far from unique. In fact, substitute any government intervention — whether the Iraq War under Bush or forcing Fannie Mae and Freddie Mac to dole out sub-prime loans to “democratize” the U.S. housing markets under Clinton — and you will get unintended, unforeseeably negative consequences. That’s just the way things tend to work on Planet Earth.

The Obama Presidency: Good Intentions Aren’t Enough

The Obama White House will be bursting at the seams with well-intentioned policies developed by intelligent people. It will also be wracked by big egos pursuing competing agendas. I am skeptical that this cocktail of good intentions and coterie of brainpower can deliver the “change” Obama has promised. Nevertheless, for the sake of the United States, I hope that I am wrong. I hope that Obama can live up to the soaring promises of his dotcom-style campaign and is able to replicate the success of Google in U.S. politics — and that his venture isn’t destined to implode like one of the thousands of other dotcoms launched in 1999 by thousands of talented and well-meaning people, but which are now consigned to the anonymous dustbin of history. So I wish our new president luck. He’s going to need it.

In case you missed it, I encourage you to read my column posted last week about why emerging markets will finally soar in 2014. I also invite you to comment in the space provided below

share on:

Like This Article?
Now Get Our FREE Special Report:
Alternative Investing: Investing in Timber

Stock Investor editor Paul Dykewicz reveals why investing in timber may be one of the best long-term portfolio strategies you'll find today.

Get Access to the Report, 100% FREE

share on:


Dr. Mark Skousen

Named one of the "Top 20 Living Economists," Dr. Skousen is a professional economist, investment expert, university professor, and author of more than 25 books.

Product Details

  • Forecasts & Strategies
  • Home Run Trader
  • Fast Money Alert
  • Five Star Trader
  • TNT Trader

Bryan Perry

A former Wall Street financial advisor with three decades' experience, Bryan Perry focuses his efforts on high-yield income investing and quick-hitting options plays.

Product Details

  • Cash Machine
  • Premium Income PRO (exclusively for subscribers of Cash Machine)
  • Quick Income Trader
  • Breakout Options Alert
  • Hi-Tech Trader

Jim Woods

Jim Woods has over 20 years of experience in the markets from working as a stockbroker,
financial journalist, and money manager. As well as a book author and regular contributor to
numerous investment websites, Jim is the editor of:

Product Details

  • Successful Investing
  • High Velocity Options
  • Intelligence Report
  • Bullseye Stock Trader
  • Eagle Eye Opener

Bob Carlson

Bob Carlson provides independent, objective research covering all the financial issues of retirement and retirement planning. In addition, Bob serves as Chairman of the Board of Trustees of the Fairfax County (VA) Employees’ Retirement System, which has over $2.8 billion in assets.

Product Details

  • Retirement Watch
  • Retirement Watch Spotlight Series
  • Lifetime Retirement Protection Program

Jon Johnson

Jon Johnson's philosophy in investing and trading is to take what the market gives you regardless if that is to the upside or downside. For the past 21 years, Jon has helped thousands of clients gain success in the financial markets through his newsletters and education services:

Product Details

  • Investment House Daily
  • Stock of the Week
  • Technical Traders Alert
  • Rapid Profits Stock Trader


Used by financial advisors and individual investors all over the world, DividendInvestor.com is the premier provider and one-stop shop for dividend information and research.

Product Details

Popular tools include our proprietary Dividend Calendar, Dividend Calculator, Dividend Score Card, and many more.

  • Dividend Investor

George Gilder

George Gilder is the most knowledgeable man in America when it comes to the future of technology and its impact on our lives.  He’s an established investor, bestselling author, and economist with an uncanny ability to foresee how new breakthroughs will play out, years in advance.

Product Details

  • Technology Report
  • Technology Report PRO
  • Moonshots
  • Private Reserve
  • Millionaire Circle


DayTradeSPY was founded by head trader Hugh Grossman, a retired internal auditor for a Fortune 500 company. After years of first-hand experience trying out one trading strategy after another, Hugh instead developed his own trading system centered around day trading SPY options. That’s it... Nothing else.

Product Details

  • Trading Room
  • Pick of the Day
  • Inner Circle
  • Online Workshops