Obama sees some light

Obama's comments that there are tiny signs that the U.S. economy is improving is interesting because he would hardly have said this if it was going to backfire. He is much too clever for that. There are in fact a lot of little signs all over the place, including China, which, let's face it, is just as important as Washington these days.

So let's say the world economy does start to get better -- and financial markets seem happy to accept this -- what about the banks? Economists seem divided into two camps. One says we are having a pretty nasty recession but one that will end. The other says that banks are so beaten up and  indebted that the global economic foundations cannot hold. 

I guess I am in the first camp. The reason is basically that the second offers no hope to anyone. Agreed this is a different recession than others I have gone through. But markets and economies have shown in the past that they are primarily driven by sentiment. So when things start to look up, sentiment improves. Obama is feeding this.