Sunday, January 24, 2010

Was the President reacting to last week's election results?

One of my favorite bloggers - Professor Greg Mankiw from Harvard - had a piece yesterday about President Obama's proposed regulations on the banks. He quoted an Obama insider who insisted that the timing of the announcements was purely coincidental, and not a reaction to the loss of the Senate seat in Massachusetts.

I hope he's right, but I am doubtful. The Obama team, I think, is incredibly well-disciplined, and almost always "stays on message". They must have anticipated how the financial markets would have reacted - Larry Summers, after all, was a consultant for a hedge fund before he moved back to government - but simply decided that they were not going to worry about it.

That said, if I am wrong and the timing was just unlucky, financial stocks could represent an opportunity in here.

Here's the link to the blog: