Is uncertainty one of the reasons banks aren’t lending and the economy remains lethargic? I’d say the answer is a clear yes. I’ve had this debate with a number of people in the past months. Most recently with Thom Hartmann. And all you really have to do is talk to bankers or small business owners to get a sense that uncertainty of regulations and taxes is holding the economy back. But Daniel Henninger summed up the view well in his column last week:
You cannot understand the way any business functions and then pass a 2,000-page law to regulate the health economy and then a 2,000 page law to re-regulate the entire financial economy. You cannot—in one year—load 4,000 pages of limitless uncertainty on the back of the economy and expect it to grow without Washington life support.
Rather than wait for Barack Obama or Ben Bernanke to figure this out, Congress’s new Republicans should look to do whatever they can to unlock and liberate the American economy. If this means tossing over some cherished provision in the famously titled “Dodd-Frank bill,” such as the Consumer Financial Protection Bureau, so be it. Whatever is causing the uncertainty crisis, get rid of it.
Yes, getting rid of uncertainty would go a long way toward helping the economy. Which I say intentionally repeating myself from back in August.
If we dealt with uncertainty, then we’d just have balance sheet issues and a strong aversion to debt to deal with. Sigh.