Saturday, February 21, 2009

John Key and the Edge of Reason

We can disagree with IMF Chief Economist Oliver Blanchard on a number of things - what is untouchable though is his view that the greatest thing missing in the current climate is certainty.  A major problem with political attempts to "do something" - the fatal temptation and conceit of all politicians is that the something always increases uncertainty - for at least two reasons....

First when governments intervene the rules change and always in unpredictable ways. No one is quite sure what will happen.

Second people react to the unpredictable changes in unpredictable ways.

Saying "we must consider all options" does not let anyone off the hook. It may sound like the much vaunted "common sense" but it creates uncommon uncertainty - and if you follow it up with unspecified offers of non specific "help" which might run from being a guarantor to becoming an equity investor plus everything in between the amount of uncertainty generated has to be colossal.

A better form of uncertainty is silence.......

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