Wednesday, January 20, 2010

The Recession Ended at 10 p.m. Eastern Time?

I have to agree with this blogger when he says that Brown winning in Massachusetts may have finally created certainty with businesses.

Businesses, investors and individuals require a level of confidence before they will make certain economic decisions. A corporation is merely a collection of humans and humans, when confronted a gigantic unknown--like how health care reform will affect them--lack the confidence to move forward.

The election of Mr. Brown is a signal that gridlock on major legislation affecting massive swaths of the economy will return within a year. Gridlock is good, because it removes the uncertainty of government action.

Now they don't need to have a reserve for possible health care losses or a cash hoard to pay for higher electric bills due to cap-and-trade. Now they can start to open up hiring and using their capital to grow again. Now a bipartisan jobs bill with a payroll tax holiday and corporate tax cut should be next on the agenda.

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