GE's Jack Welch Blasts Obama's Leadership

President Obama’s “divide-and-conquer” approach isn’t what great leaders do, Jack Welch said Thursday on “The Kudlow Report”.

The renowned former General Electric CEO chided the president for blaming others for economic woes.

“It was the insurance executives in health care. It was the bankers in the collapse. It was the oil companies as oil prices go up. It was Congress if things didn’t go the way he wanted. And recently it’s been the Supreme Court,” he said.

“He’s got an enemies list that would make Richard Nixon proud.”

Welch, who helmed GE for 21 years and founded the Jack Welch Management Institute at Strayer University, penned an op-ed article for Reuters with wife Suzy Welch this week in which he tackled the idea of Obama’s enemies list.

“Surely his supporters must think this particular tactic is effective, but there can be no denying that the country is more polarized than when Obama took office,” Welch wrote, making a case for presumptive Republican presidential nominee Mitt Romney.

“Without doubt, Romney is not the model leader (his apparent lack of authenticity can be jarring), but he has a quality that would serve him well as president — good old American pragmatism,” he wrote. “Perhaps that’s the businessman in him. Or perhaps you just learn to do what you’ve got to do when you’re a GOP governor in the People’s Republic of Massachusetts or the man charged with salvaging the scandal-ridden Salt Lake City Olympics. If Romney’s long record suggests anything, it’s that he knows how to manage people and organizations to get things accomplished without a lot of internecine warfare.”

In 1981, Welch became GE’s youngest CEO, and increased its market value by $387 billion, making it the world’s most valuable company. But the move came in part by slashing GE’s workforce by more than 100,000 workers, earning him the nickname he despised, “Neutron Jack,” a reference to the bomb designed to eliminate people while leaving buildings intact.

Welch argued that “great leaders are interested in coalescing” the way they would run a company.

“You don’t have one division pinned against the other,” he said. “You try to get the whole company pull together.”

I asked him whether he thought Romney could win the White House. “Absolutely,” he said. “It’d be great for the country. We’d be a stronger country. We’d have more jobs. We’d have more people getting a piece of the pie. And we wouldn’t have this divisive nature that we have with this president, screaming at one group and then screaming at the next group in a high-pitched voice.

“He was in Florida this week screaming and yelling about rich people. He went after the Supreme Court. We’ve got to stop this, Larry.”

Earlier in the interview, Welch said he was seeing modest growth in short-cycle sectors such as food and chemicals, along with “real strength” in non-residential construction and infrastructure.

“While the economy was strong, it wasn’t accelerating the way I thought it would after the fourth quarter,” he said.

Tailwinds included consumer confidence and the Federal Reserve.

“On the negative side, though, we’ve got gasoline prices, we’ve got Europe, we don’t know where China is going and we’ve got tax increases right around the corner,” he said.

A King Dollar Tax Cut

You wouldn’t know it from falling stocks, but the Fed’s apparent decision to hold off on future bond buying, or QE3, in response to an improving economy may turn out to be a very bullish omen for the equity market and the economy.

In fact, less stimulus from the central bank sets up a potential tax-cut effect. Here’s why: Limits to the Fed’s $3 trillion balance sheet will bolster the value of the dollar.

The beleaguered greenback has fallen roughly 40 percent over the past ten years as a result of the Fed’s interventionist go-stop-go policies. Since the banking crisis of 2008, the dollar has dropped 8 percent.

But as the Fed ended QE2 last year, and as its bond-buying “operation twist” comes to an end in June, the dollar has started rising. In response, gold prices have been falling significantly. Slower money creation will do that.

And along with gold, oil prices are now slipping lower, with West Texas crude approaching $101. Still too high, but much less scary. Wholesale unleaded gas prices also could fall in response to the drop in crude, which might take the pressure off retail gas at the pump. If that’s the case, and the King Dollar scenario plays out, the recent energy-price shock could reverse, imparting a mild tax-cut effect on consumers and businesses.

Although Bernanke & Co. do not target the dollar, a stronger greenback is the surest way to bring down energy and food prices, which all too often have plagued households and the economy.

The Joint Economic Committee has estimated that the cheap dollar has contributed about 45 cents to the rising gas price. Lately, with the drop in crude oil, nationwide gas prices could be starting to level off at just over $3.90 -- even though refiner closings and bottlenecks in some parts of the country have pushed that price much higher.

No, a stronger dollar won’t offset the failure to implement the Keystone Pipeline. But it could provide some motorist relief at the pump.

The point is, if the Fed quits printing new money, the value of dollar money will go up. And the inflation tax will go down. Despite Ben Bernanke’s economic worries, the Fed is beginning to see that the economy is at least growing by roughly 3 percent. That’s not fabulous, but it’s not bad either.

The latest ISM surveys for manufacturing and services, the decent 209,000 ADP employment report for March, and pretty good car sales all suggest that the first-quarter economy was just as good as the fourth-quarter economy. And these economic stats are moving the Fed away from more easing moves. Hence, King Dollar is recovering at least a bit.

The dollar view on the economy and stocks is a minority case, but a very important one that should not be overlooked. During prior stock market booms, particularly in Reagan’s first term and Clinton’s second term, King Dollar rose and gold fell, oil prices came down, and foreign capital sought out dollar investments in the U.S. because of the reliability of the currency.

For investors, a strong dollar helps.