Posted by
John Galt on Thursday, July 15, 2010 1:39:24 PM
"Fear comes from uncertainty. When we are absolutely certain, whether of our worth or worthlessness, we are almost impervious to fear"
William Congreve
Last week, the news was full of encouraging headlines. Canada added 93,000 jobs in June bringing their unemployment rate to 7.9%. Australia saw the most robust job growth in four years, adding almost 46,000 jobs. Growth in Asia was so strong that South Korea raised interest rates and announced a return to “pre-crisis” policies. Taiwan, India and Malaysia had already raised their interest rates with Thailand and the Philippines expected to follow. It almost made you feel good about the future except that none of these headlines was from the United States.
You hear the phrase everyday from the talking heads on CNBC or Fox Business. “Uncertainty” is holding back the Nations economy. Despite sitting on cash hoards estimated at $1.6 trillion dollars, Corporate America remains fearful of the policies of the Obama Administration. So much so….CEO’s who once supported Obama, are now calling his administration “anti-business”. “It is without question, the most hostile administration to business and to the role of business that we’ve had in decades,” said Mort Zuckerman, owner of the New York Daily News during an MSNBC interview. Tuesday, The Washington Post reported a 65% decline in donations to the Democratic Party from Wall Street, no doubt the result of the financial regulation bill nearing passage in Congress.
The claim of “uncertainty” is only partially true. Corporate America is certain they will experience higher taxes in 2011. They’re certain healthcare costs will be increasing. They will no doubt see an increase in regulatory compliance costs as well as energy costs. No….Corporate America is CERTAIN they will be paying more in 2011. The uncertainty is “how much” and when will the bills come due? Until Obama provides some clarity to these questions, Corporate America will hold their ground and sit on their huge cash pile. Small business, which requires a free flowing capital market, is paralyzed as lending has dried up while banks wait to see the impact of financial reform.
One only needs to study the Great Depression to understand what is going on in today’s business world. Amity Shlaes, author of The Forgotten Man and a Bloomberg columnist, recalled parallels with Franklin Delano Roosevelt when banks held a “capital strike”.
“In the 1930s, the capital strike was followed by the depression of 1937-38 within the Depression. Today too, capital ponders going on strike. And without big policy changes the economy will face similar consequences” wrote Shlaes in a December editorial. “The results of the 1930s capital strike were wicked. The DOW erased two years worth of gains, heading to Hoover-era levels. Unemployment, in the lower teens, leapt to almost 20 percent” Shlaes added.
Recently, Obama is reaching out to business leaders as the “anti-business” rhetoric finds more ink in newspapers across America. On Wednesday, Obama met with Warren Buffett at the White House. He also conferred separately with Bank of America CEO Brian Moynihan and Honeywell Chairman David Cote. On the same day, one of the most ardent Obama critics, the US Chamber of Commerce, held their own Job Summit. They urged the president to curb regulations and continue the Bush tax cuts to avert a double-dip recession.
I doubt any of these business leaders quoted Ayn Rand during their meeting with the President. Perhaps he should consider this quote from Atlas Shrugged:
“Until and unless you discover that money is the root of all good, you ask for your own destruction. When money ceases to be the tool by which men deal with one another, then men become the tools of men. Blood, whips and guns – or dollars. Take your choice – there is no other – and your time is running out."
This is John Galt Speaking!