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While we sometimes get accused of partisanship here at Research Edge, that accusation is often coming from people that are themselves, partisan.  We have a strong belief in free markets, which sometimes manifests itself in a view, but the reality is we follow politics as a means of inferring investment trends and thinking about managing risk. 

Obviously, the last few weeks have provided data points for us to contemplate the next four years under the foreign policy of an Obama administration.  While there are some similarities to Bush, and some continuations of Bush administration policies, there are also some marked differences that indicate that the future may be dramatically different than the post 9/11 era, in which the Bush Doctrine, that of pre-emption, stood paramount.

This weekend we noted with interest the front page picture on the New York Times of President Obama shaking hands with Hugo Chavez and also both Obama and Secretary Clinton's limited response to Nicaraguan President Daniel Ortega's rant against United States foreign policy.  Interestingly, oil is down almost 8% today on the back of Obama's engagement with Chavez this past weekend, which may be signaling that the implications for this action, at least in the short term, are positive from a geopolitical risk perspective.  Although clearly with all equity and commodity markets down broadly today, it is difficult to extrapolate too much into this move in oil.  Nonetheless, it is important to consider the longer term implications of Obama's foreign policy. 

We asked a father of one of Research Edge's Analysts, a retired Brigadier General, his thoughts on this weekend's events and the emergence of President Obama's foreign policy in general.   We don't necessarily endorse his thoughts, nor consider ourselves competent enough in foreign policy to adequately gauge them, but we take the former General's thoughts seriously. He is a serious man who has seen the consequences of foreign policy acted out first hand through the course of his career, sometimes at great cost. We have pasted his email response below:

"I have been enjoying the nice weather and also was traveling (as you know) this weekend - so I did not see the speech (and this news junkie has not seen any since Friday morning).  But I gather that our 'friends' have been helping our current Commander in Chief point out our deficiencies as a county.  So I just scanned the NYT online and did a search on Ortega's speech.  And we have our share of mistakes in the past.  BUT - always remember that Ortega is a Marxist, and will always be one.  And trash talk is cheap.  What really scares me is the message that total passiveness and cozying up to bullies (like Chavez and Castro) sends to the other snakes that lurk under rocks out there.  Lots of people can interpret no reaction from us as being weak.  Like it or not, I agree with the adage that other countries do not have to agree with us, but they should respect us and have a healthy fear that we will not be weak if anyone attacks us.  The old school yard bully routine.  Just take a look at Jimmy Carter's performance as Commander in Chief - Iran considered him weak and treated this country as if they had nothing to fear (as was true).  Iran only freed the hostages on inauguration day in 1981 because they assumed (correctly) that Reagan would take action; the window to maximize their position was closing.  Obama could well be walking down the same path - and not really realizing it, given his blind spots.  The unintended consequence of that is what could lead to problems.  Some group somewhere will push us; it is just a matter of where and when.  And I don't mean pirates - that is a totally local (Somalia) issue due to a failed nation state.  The key will be what the response of this administration is when someone bloodies us.  That is what you need to watch for, and what will tell everyone what to expect until 2012 at least. And then, depending upon the miscalculations on either side, we could be in one heck of a mess.  I just hope the first problem is not a spill over of drug violence from Mexico (on a larger scale than the current violence constrained to drug operatives) on a large scale - I don't think this administration has the guts to deal with that issue if it is the first one out of the chute."

Clearly, the General see's tail risk that could be that a passive foreign policy could leave the United States vulnerable.  President Obama has certainly not indicated that he will in any way act passively when the country's interests are at direct risk, and in fact acted very decisively with the Somalian pirates, but clearly his willingness to not either dress down or respond to Daniel Ortega does provide some evidence of the direction of Obama's future foreign policy positions.  As does his willingness to engage with Iran, Cuba, and Hugo Chavez in Venezuela when his predecessor was much less willing.

Daryl G. Jones
Managing Director