Actions by which the government arbitrarily alters the terms of contracts create what economic historian Robert Higgs terms "regime uncertainty."... Regime uncertainty discourages private investment and impedes economic recovery because investors must take into account, not only the increased uncertainty due to the recession, but also uncertainty about what the government will do next.

Get ready for permanently higher interest rates, as "regime uncertainty" adds a premium to the vast majority of risk pricing in the economy (except the narrow slivers that the government is directly subsidizing).


tvsterling at 06:34 2009-06-14 said:
This is basically a call for market forces to clean up the mess. Too late for that. The financial sector has developed too much power over society & the government. For the common good they have to be taken down. I can sympathize with the objections to the abuse of law & the constitution but you know what; they started it. Look at the bad effects the financial sector has had on the country in recent history. Look at the undemocratic influence they have developed. They now represent a huge reckless, lawless power base. If the country is to survive the rest of us have got to put them back in their place.What about the 'Regime Uncertainly' of massive nationwide riots? That possibility is definitely on the minds of government officials now. Permalink

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