Obama evidences symptoms of pathological narcissism, which is different from the run-of-the-mill narcissism of a Richard Nixon or a Bill Clinton for example. To him reality and fantasy are intertwined. This is a mental health issue, not just a character flaw. Pathological narcissists are dangerous because they look normal and even intelligent. It is this disguise that makes them treacherous.
http://www.thetruthseeker.co.uk/article.asp?ID=10329
http://www.americanthinker.com/2009/09/is_obama_a_narcissist.html
http://www.faithfreedom.org/obama.html