When every action is seen as wonderful and receives exaggerated praise, regardless of how truly awful it was.
Like at a sports event when the team is losing so bad they just want the game (and their shame) to be over, yet the cheerleaders still (have to) go out and cheer 'yeah Team - you're the best'.
When what should be said is 'You Suck' but instead what's said is 'good job', 'keep at it', ... that's the Cheerleader Syndrome.
Frank: Did you see that? Why are they cheering? Doesn't anyone realize how bad that sucked?
Miles: Yeah, it was awful. Looks like the cheerleader syndrome has taken over.