A poet Ben Bernanke is not. "Unusually uncertain" is the best he could come up with in his midyear report describing the economy to Congress.

But just as we need not look for rhetorical flourishes from the Federal Reserve chairman, Wall Street awaited his remarks with unrealistic standards. The Street must have wanted a cheerleader or a hyped-up pitchman pointing to better days. Instead, Bernanke's measured gloom sent stocks into a tailspin Wednesday. Bright corporate earnings then moved stocks higher for the rest of the week -- good for the options traders playing the volatility.

Bernanke's comments actually build a case for gradual improvement. He spoke about the distressing plague of joblessness, noting that about 8 million people, half the total number of the unemployed, have been without work for at least six months. And this is an economy that has faced a massive stimulus from federal spending and the Fed's policy of virtually no-interest money. As the stimulus runs out, Bernanke said, corporate and household spending should more than pick up the slack.

Much better than that, however, is that his testimony included a long addendum about the biggest choke point in the economy, the inability of small business and consumers to get credit. It was based on comments the Fed received at more than 40 meetings held around the country this year.

It shows Bernanke gets the importance of smaller banks and the box they're in. The banks are getting mixed messages -- make loans for the good of the U.S. of A., but also clean up your balance sheet. Banks are still dealing with so many bad loans that they have to turn away good business. Bernanke is behind better training for bank examiners to ensure they are properly classifying loans and helping with "second looks" at applicants with recent problems but otherwise decent credit histories.

Now if he could pass the word along to the Federal Deposit Insurance Corp., closing in on 100 bank closings this year. The FDIC has to protect its insurance fund, but the shutdowns usually assign the closed banks' assets to larger institutions. The big get bigger and, in many communities, there is less competition for future credit. The same regulators slapping banks for their real estate loans now didn't bat an eye about them in 2006.

The fed at its meetings also heard participants back initiatives to expand Small Business Administration loans and programs to help Community Development Financial Institutions, those 800 or so entities like Chicago's ShoreBank Corp. that have a mission to serve the poor.

Bernanke isn't endorsing every credit proposal urged on the Fed, but they are on his mind and that's progress in that slow-motion bureaucracy.

Maybe he'll also consider cutting the interest paid to banks with excess reserves. They need an incentive to put the money to work.

Then there's the heart-to-heart talk he must have with President Obama. The president has gotten health-care and financial services reform, both 2,000-plus-page bills that, merits aside, have made some CEOs nervous about hiring. It's time for leadership on deficit reduction, the confidence booster that could make the greatest difference.

CAT'S MEOW: Caterpillar (CAT), is one of those companies that first feels a recession's sting and is among the first to glimpse a recovery. The machinery manufacturer gave markets a lift last week by reporting a 91 percent increase in its second-quarter profit, citing more business from miners, road builders and even for home construction. Its biggest growth was in markets such as China and Brazil. CNBC screamer Jim Cramer cut to the chase on this one. "Caterpillar is not just sitting around waiting for Ben Bernanke and President Obama to stimulate the economy," he said. "They're moving to where the economies are stimulated."

GLOOM AND DOOM: Christine Benz, Morningstar's director of personal finance, smartly dissects the trend of fund managers issuing pessimistic outlooks about investments and the economy. Benz, who heard the dour remarks at a Morningstar-sponsored conference, said it's worthwhile considering why despair is all the rage.

She said that after two recessions this decade and the collapse of all we held dear, such as housing values, audiences are more receptive to downbeat forecasts, so the managers provide them. It makes them look sober when investors need comfortable words. And it's a good career move. "Right now, the risk of being bearish and getting it wrong is a lot less than the risk of being bullish and wrong," Benz said.

CLOSING QUOTE: "If one believes that government spending can create economic growth, then the answer should be simple: Let's have a huge pretend war that rivals the Second World War in size. However, this time, let's not kill anyone. . . . [W]hy not have the United States declare a fake war on Russia (a grudge match that is, after all, long overdue)? Both countries could immediately order full employment and revitalize their respective manufacturing sectors.

"Instead of live munitions, we could build all varieties of paint guns, water balloons and stink bombs." -- Peter Schiff, president, Euro Pacific Capital