One intriguing idea is that implicit stimulus of the contraction in oil prices – James Hamilton has a post up today on that. So things may be just grim, not apocalyptic.

Of course, that's anyone's guess. The whole rally started the day Vikram Pandit announced that Citigroup had a better January and February than people believed. That was taken as a sign that the government was not going to nationalize the banks. Geithner's public-private plan – with details – only confirmed the hopes that the government would not nationalize. We've learned since then that the gains at Citi and BoA were based on AIG payouts and not actual operations. But that helped turn the psychology around a bit.

Another possibility is national psychology, including that from Washington. Obama deftly used the “catastrophe” of recession to get support for the stimulus bill. That language may have daunted investors. Since passage of the stimulus, Obama clearly feels his role is to talk up – and not down – the economy. (I don't blame Obama for this, by the way. All leaders talk up or down a crisis depending on their own agenda). That may – I stress, may – have had an effect on changing market psychology. The percentage of Americans who believe we are on the right track has also gone up since passage of the stimulus.

We'll see though. I thought the GM announcement would send the market back down again. That it didn't show this rally to be more robust than I imagined.

That's the essential quesion, isn't it — if? So, what's the alternative? Hmmm…

I will be the first to admit that I don't know what the answer is, and I can't come up with one myself. The best I can do is follow the logic of whatever plan is offered. But I have to say, the GOP plan makes considerably less sense to me than Obama's. I'm not saying Obama's plan excites me. If nothing else it requires a successful pivot sometime in the future that may not be politically possible. All I'm saying is that the GOP plan appears to me toxic right from the get go, both economically and politically — with no indication that anything will change, ever. I dunno, but I'm not inclined to assume the public is that altogether gullible. Rather, in large part, they — like me — look to leadership if to do nothing else but simplify the viable alternatives.