Thus far in the still-early months of his term, President Obama has largely stuck with his promise for rhetorical moderation and a change in the often vicious tone that has come to characterize American politics in recent years. In fact, on issues ranging from the continuing war against al-Qaeda to the emerging debate about health care, Obama has often disappointed his far-left flank with his insistence on moderation and search for various forms of compromise, and their disappointment is a good thing for anyone who values real-world policy progress over political vendetta.

But when it comes to demonizing “speculators” for their expectation to actually receive promised returns on investment even during times of general economic downturn, the President has sometimes indulged in recklessly populist rhetoric that is now starting to undermine his actual policies.

Specifically, the President’s plan for purging banks of their so-called “toxic assets” relies on the willingness of investors to buy up assets that have little value now but which might reap gains later, after the housing market recovers, for example. But investors have to have an eye on the fate of financial executives who saw their regular compensation packages buried under a deluge of political torches and pitchforks as well as Chrysler investors who the President demonized as “speculators” for having the temerity to actually insist on the place established for them at the front of the line under regular principles of U.S. bankruptcy law. If they actually do run the risk of buying up toxic assets in the hopes of making money down the road, might those gains be put at risk by government action taken to punish all profit-making as “speculation”? The chance that government double standards might saddle them with the risk of loss and cancel any risk of gain acts as a strong deterrent against participating in the toxic-asset bailout at all.

As a result, toxic assets are remaining on the books, thus keeping a live and armed landmine buried beneath the global financial system in spite of trillions already spent (supposedly) to disarm it.

Extreme rhetoric, it seems, has more consequences than merely wounded egos. It can seriously affect actual policy effectiveness. Some of the more…um, passionate members of the government, media, and blogosphere might consider keeping this in mind as we move forward on major policy debates about not only our still-fragile financial system, but climate change policy and health care policy as well.