Editorial Cartoon by Matt Wuerker

Is it possible to have too much hope? To be too optimistic? Yes, if that hope keeps you from facing -- and dealing with -- unpleasant realities.

That seems to be what's happening regarding the financial institutions responsible for the economic meltdown.

Let's start with the banks' toxic assets.

When Tim Geithner unveiled the Public Private Investment Program, he said that dealing with these assets was a "core" part of solving the financial crisis.

But the banks would much rather keep pretending that their toxic assets are not that toxic, and worth much more than they really are -- a risky charade the relaxed mark-to-market rules allow them to continue to pull off.

So, last week, the PPIP program was apparently scrapped.

Does this mean that the toxic assets are no longer a "core" part of the problem? Or that hoping they're no longer part of the problem will somehow make them no longer part of the problem?

"Hope sustains life, but misplaced hope prolongs recessions." So says Jim Grant, publisher of the Grant's Interest Rate Observer newsletter, whom I interviewed last week on Squawk Box. Because of misplaced hope, Grant says, business people, homeowners -- and administrations -- often refuse to admit the truth and take the painful steps necessary to turn things around.

Now President Obama is laying out the details of his administration's plan to remake the financial regulatory system.

Geithner and Larry Summers introduced the plan in an op-ed in the Washington Post, proclaiming, "we must begin today to build the foundation for a stronger and safer system."

Among the proposals: "raising capital and liquidity requirements for all institutions"; "consolidated supervision by the Federal Reserve"; "robust reporting requirements on the issuers of asset-backed securities," including "strong oversight of 'over the counter' derivatives"; and providing "a stronger framework for consumer and investor protection across the board."

The devil, of course, will be in the details of the final legislation.

And on how much muscle Obama puts behind pushing these measures through and ensuring they become law without being watered down. Especially at a time when the latest stock market bubble has undermined the urgent push for reform, which seems to have given way to a push to move on to other things and leave that little financial kerfuffle behind us.

And investors seem anxious to do the same.

Witness what Morgan Stanley analysts call the "fierce rally" in the collateralized loan obligation market.

CLOs are made up of sliced and diced assets (including high-risk and junk loans) -- and are kissing cousins to the collateralized-debt obligations (i.e. crap) at the heart of the financial meltdown. But according to the Morgan Stanley analysts there has recently been a "remarkable change" in investor sentiment toward these securities, including an "exuberance" for the lowest grade junk being sold.

In other words, we are right back to risky business as usual. No harm, no foul. Let's get back to the fun we were having before this whole worldwide economic collapse thing started happening.

It puts a whole other spin on the audacity of hope.

Too many in Washington -- and in the media -- continue to take the well-being of Wall Street as the proper gauge for the well-being of the rest of America.

Yes, the Dow is up more than 30 percent since March.

But another 345,000 jobs were lost in May, raising the number of the unemployed to 14.5 million, and the unemployment rate to 9.4 percent. Since the start of the recession in December 2007, unemployment has almost doubled.

What's more, over the past two decades, the top 1 percent of Americans has done very well in terms of wage growth.

Things have not been nearly as good for everybody else.

Are the reforms going to be sufficiently fundamental to avoid a repeat of the boom and bust cycles, in which only a select few enjoy the boom and everybody else pays for the bust?

Arianna Huffington's e-mail address is arianna@huffingtonpost.com

(c) 2009 Arianna Huffington. Distributed by Tribune Media Services, Inc.

The Complex Case of Complexity
by Alvin and Heidi Toffler

In an important recent speech, months after the current financial crisis began, the chairman of the U.S. Federal Reserve Board, Ben Bernanke, placed partial blame for the catastrophe on "the sharp increase in the complexity of the financial products offered to consumers." Unfortunately, his description of the problem comes late and underestimates its importance. ...

Recent Commentary on the Economic & Financial Crisis

Recent Political Commentary

Obama's First 100 Days:
Our Jekyll & Hyde President
by Victor Davis Hanson

In matters of foreign policy during the president's first 100 days, we have seen two Barack Obamas. So which Obama persona is the real president -- Obama I, more radical than Jimmy Carter, or Obama II, a smoother centrist than Bill Clinton?

Obama's First 100 Days:
Obama's Liberal Arrogance Will Be His Undoing
by Jonah Goldberg

The most remarkable, or certainly the least remarked on, aspect of Barack Obama's first 100 days has been the infectious arrogance of his presidency. There's no denying that this is liberalism's greatest opportunity for wish fulfillment since at least 1964. But to listen to Democrats, the only check on their ambition is the limit of their imaginations.