Uncertainty in financial markets: "Time and again over the past few years, business and financial elites have decried the lack of certainty. Fortune 500 companies have routinely cited “uncertainty” emanating from Washington as a reason to delay hiring or hold off on investing. That was the primary conclusion of a University Colorado study this spring, whose authors concluded, “If policymakers would like companies to increase their hiring and investments, they should focus on policies that decrease business uncertainty.” That was particularly true at the end of 2012 as tax policy and the sequester were clouded in political controversy..... .....We need to remember and accept, therefore, that there is no certainty, and that using uncertainty as an excuse for inaction is a cop-out. Businesses have not hired en masse because they haven’t needed to, not because Washington has created a haze of uncertainty. If businesses needed more people in order to make more money, they would hire. In truth, they tend to need more efficiency and more technology, so they spend money on technology instead of expanding the workforce — and use government dysfunction as a convenient scapegoat. For its part, the financial world craves certainty because so many assumptions by those who “do this for a living” have proven wrong over the past decade. The Fed is one voice among many, and one input. Investors should not need the central bank to tell them what interest rates will do. After all, the Fed only sets the short-term rates for the United States. That’s important, but it is still only one variable. If you want to know what interest rates will be in a year, you have to do your own thinking, and your own analysis. You can’t rely on what the Fed says, because what the Fed says is only one analysis and one input. And it is far from infallible. No one knows the future. And in the face of that inherent uncertainty, it’s up to each of us to analyze what we can and chart out likely scenarios. There is no certainty, and the sooner we embrace that fact, the better." -The Edgy Optimist m.theatlantic/business/archive/2013/09/the-most-important-lesson-the-fed-taught-the-world-this-week/279881/
Posted on: Sat, 21 Sep 2013 15:27:49 +0000
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