First, Citi seems to have indicated that it may have a profit this quarter. Now, this comes on top of close to $40 billion in losses, and who knows what kind of extraordinary special write downs there might be in addition to this profit. So it's a little like the guy in the burnt out butcher's shop saying, "Well, we did sell some kielbasa!" But the notion that, with government help, Citi could turn out to be solvent would be a dramatic boon to the markets. (Just don't count on it yet. We still have no idea of how to value all those zombie assets.)
Second, Goldman Sachs is talking seriously about returning the government's money (take a look at Stephen Labaton's interesting story in the Times). Ironically, the bailout was supposed to restore confidence in the markets. But it's hard to imagine anything that would be more encouraging right now than Goldman or Wells Fargo coming out and saying they don't need it. Goldman in particular, it seems to me, has been unfairly tarred here. Having read the mortgage market right, Goldman has still had the stigma (and boy, it has turned out to be a stigma) of taking taxpayer funds. They're very much in their rights to toss it back and not offer much in the way of a thank you. Then they can all go on some fancy junket.
The final reason for optimism? The chorus of doom saying has reached a crescendo. So far, the evidence of this crisis is that the conventional wisdom is consistently wrong. Miserably wrong. And there is no better barometer of the conventional wisdom than Thomas Friedman's column. Today, more finger wagging about the impending disaster. According to Friedman, we're at "9/12" or at "August, 1914". Umm, maybe. Or maybe we're at 1618, right before the 30 Years' War. Or maybe ... the sack of Carthage! Why look just a century back? Yes, those who forget history are condemned to repeat it. But those who who start volunteering historical analogies by the bushel in an effort to make up for failing to predict the last crisis by talking up the next one are ... I don't know. Maybe they are condemned to write books that sell millions of copies to folks who have no intention of ever reading them.
Update, 2 years later: So just how wrong did Friedman turn out to be? His dire warning came the very week the Dow Jones average hit rock bottom. Right on cue, the market turned around just as the conventional wisdom had coalesced around the idea that this was the end of capitalism.
