Presidents don't have full control over the economy. They do, however, have the capacity to sometimes inspire confidence in their leadership, which can have a very direct impact on the state of the economy.
The more confident people feel about the economy, the more likely they are to spend. The more confident businesses are, the more likely they are to hire. The more confident investors are, the more likely they are to invest.
And that is one reason why it's so important to have a leader who instills confidence that he or she is capable of making the right decisions to ease some of our anxieties.
And so today, the news that Barack Obama will nominate Timothy Geithner, the New York Federal Reserve Bank head, has had such an impact, and a very positive one.
As Bloomberg reports:
U.S. stocks rose and the Standard & Poor’s 500 Index rebounded from an 11-year low on expectations President-elect Barack Obama will nominate New York Federal Reserve Bank chief Timothy Geithner to head the Treasury.
"This news could really give the stock market a badly needed shot in the arm," Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York, wrote in an e-mail to clients. Geithner is a "fantastic choice to help lead the financial markets out of the wilderness."
A brief bio on Tim Geithner:
Geithner has helped lead U.S. efforts to combat the deepest financial crisis in seven decades, helping oversee the decisions this year to intervene in American International Group Inc., rescue Bear Stearns Cos. and leave Lehman Brothers Holdings Inc. to fail.
Geithner, 47, is also a veteran of other crises from his time at the Treasury, where he served as an undersecretary for international affairs at the end of the Clinton administration.
It seems that Tim Geithner is somewhat of a pragmatist, and certainly has less baggage attached than one man considered for the position, Lawrence Summers, who made some pretty sexist statements while at Harvard regarding women's propensity for math and science.
Now, I'm not making any judgments on Tim Geithner: I don't know quite enough about him to make that assessment.
The point of this diary is just to point out that Barack Obama seems like he's already making some decisions to calm the financial sector, and he's not yet President.
I hope and believe that having Barack Obama as President will instill a lot more confidence among people of the nation, and this is the first evidence that he can: