Stress Test: Obamas Rosy Scenario

Barack Obama’s wholesome optimism is doubtless sincere, and so was Herbert Hoover’s. But in Hoover’s day, people did not believe him. They could see for themselves it wasnt true. In time, Americans came to revile Hoover for his repetitious happy talk.

President Obama is now flirting with the same fate. He and his lieutenants, much like the Bush administration before them, are convinced that the nation’s crisis can essentially be reversed by restoring “confidence” among investors, producers and buyers. So they talk up every budding blossom as proof. So did Hoover.

Reality is unlikely to cooperate, because the core of this crisis is not psychological. It is about real breakdown and real loss–trillions of dollars lost to the collapsing financial values, thousands of businesses and banks deeply damaged by collapsing balance sheets and markets. Wishing does not necessarily make it so. Talking up the economy prematurely may actually yield an opposite result–deepening cynicism and mistrust, a sense that the authorities do not know what they are talking about or, even worse, are concealing the truth.

William Greider via Stress Test: Obamas Rosy Scenario |