There needs to be one person in the room smart enough to ask the right question at the right time. It appears Obama and his administration are lacking that essential wisdom. As the president was slinging accusations towards the financial sector, he won the battle by convincing mainstream Americans that the banking industry was solely to blame for the financial crisis. But he may have lost the war.
The question that should have been asked -- do we need a cooperative, healthy financial sector to sustain this economic recovery? -- was never asked. Now, it's the banks who are getting the last laugh and the Democratic Party is about to pay the price. Housing weakness is going to take the Democrats out of office. Obama thought that he didn't need the bankers; he thought that the cyclical recovery would be strong enough to overcome all obstacles; he thought that he could ram through his health care and financial reform agenda without respecting the economic climate. But he thought wrong. The elephant in the room is that Obama needlessly declared war against the financials and his agenda will be repealed because of it. Imagine a football coach declaring war on his linemen -- no coach in his right mind would ever do that because he knows without the full effort and support of his line the team doesn't stand a chance of winning. Well, the financial sector is like the offensive and defensive lines of the economy. Their contribution often goes unnoticed but it is the primary enabler of success. Lending enables growth. What would you do if you were one of these banks that had been publicly vilified by Obama? You would probably do the same thing they are doing, or should I say not doing: The banks aren't lending; the banks are on strike against the Obama administration; the capital channels that allow housing to breath are completely clogged. That is the real story on a day like Tuesday when existing-home sales plummeted to their worst levels ever. 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