Mitt Romney is optimistic about optimism. In fact, it’s pretty much all he’s got. And that fact should make you very pessimistic about his chances of leading an economic recovery. 
 
 As many people have noticed, Mr. Romney’s five-point “economic plan” is very nearly substance-free. It vaguely suggests that he will pursue the same goals Republicans always pursue — weaker environmental protection, lower taxes on the wealthy. But it offers neither specifics nor any indication why returning to George W. Bush’s policies would cure a slump that began on Mr. Bush’s watch. 
 
 In his Boca Raton meeting with donors, however, Mr. Romney revealed his real plan, which is to rely on magic. “My own view is,” he declared, “if we win on November 6, there will be a great deal of optimism about the future of this country. We’ll see capital come back, and we’ll see — without actually doing anything — we’ll actually get a boost in the economy.” 
 
 Are you feeling reassured? 
 
 In fairness to Mr. Romney, his assertion that electing him would spontaneously spark an economic boom is consistent with his party’s current economic dogma. Republican leaders have long insisted that the main thing holding the economy back is the “uncertainty” created by President Obama’s statements — roughly speaking, that businesspeople aren’t investing because Mr. Obama has hurt their feelings. If you believe that, it makes sense to argue that changing presidents would, all by itself, cause an economic revival. 
 
 There is, however, no evidence supporting this dogma. Our protracted economic weakness isn’t a mystery; it’s what normally happens after a major financial crisis. Furthermore, business investment has actually recovered fairly strongly since the official recession ended. What’s holding us back is mainly the continued weakness of housing combined with a vast overhang of household debt, the legacy of the Bush-era housing bubble. 
 
 By the way, in saying that our prolonged slump was predictable, I’m not saying that it was necessary. We could and should have greatly reduced the pain by combining aggressive fiscal and monetary policies with effective relief for highly indebted homeowners; the fact that we didn’t reflects a combination of timidity on the part of both the Obama administration and the Federal Reserve, and scorched-earth opposition on the part of the G.O.P. 
 
 But Mr. Romney, as I said, isn’t offering anything substantive to fight the slump, just a reprise of the usual slogans. And he has denounced the Fed’s belated effort to step up to the plate. 
 
 Back to the optimism thing: It’s true that some studies suggest a secondary role for uncertainty in depressing the economy — and conservatives have seized on these studies, claiming vindication. But if you actually look at the measures of uncertainty involved, they’ve been driven not by fear of Mr. Obama but by events like the euro crisis and the standoff over the debt ceiling. (O.K., I guess you could argue that electing Mr. Romney might encourage businesses by promising an end to Republican economic sabotage.) 
 
 You should also know that efforts to base policy on speculations about business psychology have a track record — and it’s not a good one. 
 
 Back in 2010, as European nations began implementing savage austerity programs to placate bond markets, it was common for policy makers to deny that these programs would have a depressing effect. “The idea that austerity measures could trigger stagnation is incorrect,” insisted Jean-Claude Trichet, then the president of the European Central Bank. Why? Because these measures would “increase the confidence of households, firms and investors.” 
 
 At the time I ridiculed such claims as belief in the “confidence fairy.” And sure enough, austerity programs actually led to Depression-level economic downturns across much of Europe. 
 
 Yet here comes Mitt Romney, declaring, in effect, “I am the confidence fairy!” 
 
 Is he? As it happens, Mr. Romney offered a testable proposition in his Boca remarks: “If it looks like I’m going to win, the markets will be happy. If it looks like the president’s going to win, the markets should not be terribly happy.” How’s that going? Not very well. Over the past month conventional wisdom has shifted from the view that the election could easily go either way to the view that Mr. Romney is very likely to lose; yet markets are up, not down, with major stock indexes hitting their highest levels since the economic downturn began. 
 
 It’s all kind of sad. Yet the truth is that it all fits together. Mr. Romney’s whole campaign has been based on the premise that he can become president simply by not being Barack Obama. Why shouldn’t he believe that he can fix the economy the same way? 
 
 But will he get a chance to put that theory to the test? At the moment, I’m not optimistic. ||||| Wall Street executives who lost a bet that Republican Mitt Romney would defeat President Barack Obama are bracing for tougher regulation and hoping a deal can be struck with Congress to cut the deficit. 
 
 Obama’s choice to succeed Treasury Secretary Timothy F. Geithner will be watched closely for signs about the administration’s approach to business and the deficit, industry executives said. Erskine Bowles, who served as chief of staff under former President Bill Clinton, would be a sign that Obama is willing to endorse a bipartisan debt-reduction plan supported by many business leaders, they said. 
 
 “With the appointment of the Treasury secretary, Obama will be sending an important message to the public and to the foreign governments who own a lot of Treasuries,” Curtis Arledge, chief executive officer of Bank of New York Mellon Corp.’s investment-management arm, which oversees $1.4 trillion, told journalists in New York yesterday. “If he goes with somebody like Erskine Bowles, then the message will be that he cares about the deficit and is serious about cutting it.” 
 
 Shares of Wall Street firms fell in New York yesterday on what analysts said were dashed hopes that a Romney administration would roll back or temper the 2010 Dodd-Frank Act that overhauled financial regulation. Morgan Stanley (MS), Goldman Sachs Group Inc. (GS), Bank of America Corp. (BAC) and Citigroup Inc. (C) each tumbled more than 6 percent, putting them among the 10 biggest decliners in the Standard & Poor’s 500 Index. (SPX) 
 
 Campaign Contributions 
 
 Employees of Goldman Sachs, Bank of America, Morgan Stanley, JPMorgan Chase & Co. (JPM) and Credit Suisse Group AG made their firms the five biggest sources of campaign contributions to Romney, according to data compiled by the Center for Responsive Politics, a Washington-based research group that tracks political donations. 
 
 Still, executives at the firms downplayed the significance of the election, focusing instead on the need to achieve political agreement on debt reduction and avert the so-called fiscal cliff of tax increases and spending cuts scheduled to take effect at the beginning of next year. 
 
 “The outcome of the election almost takes a backseat to the formulation of a plan to address the federal deficit,” James Mahoney, Bank of America’s head of corporate communications and public policy, said in a phone interview. “That is clearly the No. 1 focus at this point. It’s an essential ingredient for stability of the financial markets and for a strong economy.” 
 
 Simpson-Bowles Plan 
 
 Wall Street leaders started throwing their support behind Bowles’s debt-reduction efforts even before the election. JPMorgan CEO Jamie Dimon, 56, said last month that the economy “would be booming” if Congress had passed the so-called Simpson-Bowles plan co-authored with former Republican Senator Alan Simpson last year. 
 
 Obama named the two in February 2010 to lead an 18-member bipartisan commission. Its $3.8 trillion budget-cutting plan would have lowered individual and corporate income-tax rates, eliminated deductions such as the one for mortgage interest, raised the gasoline tax and reduced Social Security, Medicare and discretionary spending. 
 
 The plan was rejected by seven commission members, including Romney’s vice presidential running mate Paul Ryan, and failed to reach the 14 votes required to send it to Congress. It never was taken up for a vote by the Senate and was defeated 382-38 in a House vote this year. 
 
 Blankfein Backing 
 
 Goldman Sachs CEO Lloyd C. Blankfein, 58, was interviewed with Bowles and Simpson on CNBC on Oct. 11 to promote reviving a bipartisan plan to reduce the $16 trillion U.S. government debt. 
 
 If there were “some compromise laid out, what kind of stimulus do you think that would provide?” Blankfein asked at the time. “I’d be a buyer of the market.” 
 
 Blankfein, who wouldn’t reveal which candidate he voted for, said now that it’s over, “we can all focus on playing a part toward our shared goal of making our country and economy more successful.” 
 
 Joe Evangelisti, a spokesman for JPMorgan, declined to comment when asked which candidate Dimon supported. 
 
 “To succeed in business you have to be able to compromise, why should that be different in politics?” John Mack, the former chairman of Morgan Stanley and a Romney backer, said yesterday in an interview with Bloomberg Television’s Betty Liu. “Erskine has plenty of experience not only in government but in business. He ran his own business. He grew up in business.” 
 
 Bowles has served as a board member of Morgan Stanley since December 2005, when Mack was CEO and chairman. He is also a director of Facebook Inc. (FB) and Norfolk Southern Corp. His wife, Crandall Bowles, is on JPMorgan’s board. 
 
 Fink, Lew 
 
 Mack said he doesn’t think the administration worked closely enough with the business community, adding that he would be comforted by seeing Obama choose a CEO to run Treasury such as BlackRock Inc.’s Larry Fink, General Electric Co.’s Jeff Immelt, American Express Co.’s Kenneth I. Chenault or Honeywell International Inc.’s David Cote. 
 
 “Not only are they first-class executives but they’re global, and the next Treasury secretary has to have experience in the global economy,” he said. 
 
 Others on Wall Street said that experience in Washington might be more important for the next Treasury secretary than a business background. Jacob Lew, 57, Obama’s chief of staff, has years of experience as both a congressional aide and as director of the U.S. Office of Management and Budget. 
 
 Lew “knows his way around Washington” and also has “strong backing” from Obama, Evercore Partners Inc. CEO Ralph Schlosstein, an Obama supporter, told Bloomberg Television’s Erik Schatzker and Stephanie Ruhle yesterday. Bowles, while also knowledgeable about Washington, “doesn’t bring the same closeness to the president,” he said. 
 
 ‘Massive Negotiation’ 
 
 Harry Wilson, founder and CEO of corporate-restructuring firm Maeva Group LLC and a former adviser to Obama’s Auto Task Force, attributed a decline in stock markets after the election to concern that Obama won’t be able to negotiate successfully with House Republicans to achieve agreement on debt reduction. 
 
 “This president’s been the primary obstacle to it and some of his political staff,” Wilson, a Romney supporter, told Schatzker and Ruhle yesterday. “This is a massive negotiation, and it’s being led by a guy who hasn’t negotiated a deal really in his life.” 
 
 ‘The Taxman’ 
 
 The solution worked out by the Obama administration will probably include more tax increases and fewer spending cuts than investors thought before the election, which is weighing on the market, Pacific Investment Management Co.’s Bill Gross told Bloomberg Television’s Trish Regan. 
 
 “We played the old Beatles song ‘The Taxman,’ on our trading floor this morning,” said Gross, who manages the $281 billion Total Return Fund. 
 
 Winning the confidence of investors, bankers and foreign governments will depend in large part on who Obama chooses to lead Treasury. 
 
 “We hope they do in fact make good progress in terms of the quality of the individual that goes into this role,” Kevin Kabat, CEO of Cincinnati-based Fifth Third Bancorp, said in a phone interview. “It will be really the determining legacy of the next four years.” 
 
 To contact the reporter on this story: Christine Harper in New York at charper@bloomberg.net 
 
 To contact the editor responsible for this story: David Scheer at dscheer@bloomberg.net.
– Paul Krugman has long derided the "confidence fairy": a notion that government cuts will somehow spark more consumers and investors to buy. We're seeing another version of that fairy now, after learning that Mitt Romney, at his infamous "47%" fundraiser, also claimed that his election would offer an economic lift "without actually doing anything," thanks to "optimism about the future of the country." Instead of offering much in the way of policy specifics, Romney is "declaring, in effect, 'I am the confidence fairy!'" Krugman writes in the New York Times. Romney's wrong: For one thing, "business investment has actually recovered fairly strongly since the official recession ended." What's more, as the election has recently appeared to turn in President Obama's favor, "markets are up, not down, with major stock indexes hitting their highest levels since the economic downturn began." Of course, "Romney’s whole campaign has been based on the premise that he can become president simply by not being Barack Obama. Why shouldn’t he believe that he can fix the economy the same way?" Click for Krugman's full column, or over at the Washington Post, Ezra Klein breaks down Romney's tax plan and finds it would raise taxes on those he defines as middle-income.