The confidence game

So some banks will be repaying the TARP today.

Officials say they now are confident that the strongest banks no longer need the money, and they want to provide those banks with a public vote of confidence. The officials caution, however, that repayments should not be seen as evidence of economic recovery. Consumer demand remains weak. Unemployment continues to rise. It is still highly likely that the economy will contract during the second quarter.

And in the NY Times we have this story:

Mr. Obama thinks that the way to revive the economy is to restore confidence in it. If the mood is right, the capital will flow. But this belief is dangerously misguided.

And then you have four pages of well reasoned arguments why this approach is "dangerously misguided." Here's some of his points.

• Instead of promising the imminent return of good times, why isn’t Mr. Obama talking more about the importance of living within our means and not spending money we don’t have on things we don’t need?
• Why is the morphine drip still in the veins of the financial system?
• Is there to be any limit on bailouts?
• Why has Mr. Obama surrounded himself largely with economic advisers who are theoreticians and academics — distinguished though they may be — but not those who have sat on a trading desk, made a market, managed a portfolio or set a spread?
• Why isn’t the Obama administration working night and day to give the public a vastly increased amount of detailed information about what happens in financial markets?
• Why is the government still complicit in making the system ever less transparent, even when it comes to what should clearly be considered public information?
• Why do we still not know why Mr. Paulson, Mr. Geithner and the Federal Reserve chairman, Ben Bernanke, allowed Lehman Brothers to file bankruptcy last Sept. 15 but then, a day later, saved A.I.G.?
• Why hasn’t President Obama insisted on public hearings over what happened during this financial crisis?
• We are 139 days into his presidency, and while there is still plenty of hope that Mr. Obama will fulfill his mandate, his record on searching out the causes of the financial crisis has not been reassuring.

The markets have rallied 40%, and the world's markets are up by half, and he's not reassured?

Tell the truth? Everyone already knows the truth. The system was insolvent, and the Government's conduit to bail it out was AIG. And if the rest of the truth was told, consumer confidence would be hurt, and not helped.

It was the Government's version of truth; not the shortsellers.

And last I looked, they're in charge, and the shortsellers aren't.