Red and Blue tribal pundits agree that economic recovery can only occur if private capital returns to the market. That’s swell, at least they agree on something. So why is our brain trust in Washington doing every conceivable thing to maximize uncertainty, which only keeps us hiding in our caves hoarding gold?
My partners and I get paid to assess and manage risk when we deploy the money entrusted to our firm to start and grow new businesses. Sometimes we get it right and sometimes we get it wrong. Either way, we don’t get paid to sit on the sidelines avoiding risks at all cost. But our investors do expect us to have enough street smarts to walk away from the table when faced with massive and unrelenting uncertainty.
Multiply that behavior times the millions of decision makers that occupy every nook and cranny of our economy, subject us to a barrage of ever-shifting policy pronouncements that may or may not become law, brandish unlimited power to redistribute gains and losses without rhyme or reason, ceaselessly monkey with fundamental accounting rules, empower shadowy officials to make things up as they go along, indiscriminately conflate and then demonize success alongside fraud, and top it off with a fear-mongering campaign designed to work the populace into a frenzy so you can beat the rival tribe into legislative submission, and you have the perfect policy for turning a recession into a depression.
– Bill Frezza, “How To Turn A Recession Into A Depression”, March 16
I just wrote that I agree with Michael Kahn that the bear market is mostly over. But the one real risk to the downside, the one thing that could turn this recession into a depression and cause the stock market to take another big leg down, is bad government policy. This is the one thing I worry about… a lot. To be continued…….