Reuters reports this afternoon:
President Barack Obama said on Friday the recession-hit U.S. economy was showing "glimmers of hope" despite remaining under strain and promised further steps in coming weeks to tackle the financial crisis.
"We’ve still got a lot of work to do," Obama told reporters after a meeting with economic and regulatory teams plus Federal Reserve Board Chairman Ben Bernanke. But he added, "We’re starting to see progress."
Obama spoke a day after encouraging trade and jobless figures pushed stocks higher, and White House economic adviser Lawrence Summers predicted the economy would emerge from a sense of "freefall" by the middle of the year.
With the Treasury Dept. and Federal Reserve trying to hush up any suspicions of major banks failing the current "stress tests" (which Emptywheel and Scarecrow both wrote about this morning), it seems like the Obama administration has decided on conscious strategy of encouraging positive thoughts about the economy.
Presumably they’re smart enough to know there’s no way to happy-talk their way out of a genuinely deep hole (remember what they did to John McCain for saying "the fundamentals of the economy are strong" last fall?). But even so, maybe Obama and company think a little optimism will help keep the economy from plunging further into the ground.
The most charitable interpretation of Team Obama’s timidity in challenging the banksters is that a bolder approach would intensify the sense of crisis, with counterproductive results. Extending George Soros’ metaphor that the financial system is "on life support," the argument would be that you don’t want to unplug the machines at the patient’s weakest point and say, "Now or never — get up and walk!"
At the same time, of course, it’s useless to keep the patient on life support if you don’t ever do anything about the underlying disease. And so the point of continued artificial support is to give more gradual treatments (e.g., the"further steps in coming weeks" promised in the Reuters story) time to take effect.
Thus, a little public optimism may not necessarily be a mirror to reflect reality, as the old saying about art goes, but rather a tool for helping to shape it — nudging stock prices higher, making people feel less nervous about spending money, and as a result buying more time to implement the serious measures that are really needed. Um, assuming that the will to take those steps actually exists.