Decision Making 101
Executives, traders, CEO’s are all paid to make decisions. They are expected to look at all of the facts, and determine the best course of action. Weigh the options, consider the probabilities, calculate the expected values and make a decision that will have an impact on the lives of all of the people involved. If a company chooses one vendor over another, not only are all of the people affected at both vendors and our company, but the lives of all of the children and spouses as well. Decision makers are burdened with tremendous responsibility, and must cope with stress and doubt around the clock.
When the future seems more uncertain, decisions become even more difficult. When conditions are in a state of flux, EVEN IF THEY ARE IMPROVING, a decision maker often chooses to wait. Waiting and being patient are valued skills, and when the facts are changing, they are most needed. Starting a course of action, when you know that in a matter of days it might be necessary to stop, and even reverse course would seem reckless and frantic. Therefore decision makers will sit on their hands and do nothing when conditions are changing.
Knowing this:
1.What will happen before a big vote on tax increase ?
2. What will happen before a big vote on tax decreases?
3. What will happen during stimulus package implementation?
4. What will happen when rates are getting slashed?
5. What will happen when rates are getting raised?
6. What will happen before almost anything big gets finalized?
If you answered: We should see economic activity slow – YOU RE RIGHT !
This crippling fact is often why the Government and the Federal Reserve seem to get results that are contra to classic economic dogma. They seem to forget that at the end of the day, the markets, and the economy consists of millions of individuals, all acting rationally, all fearing their own humanity, not wanting to commit an error. They will each choose to wait and see how things unfold.
If our Government wants to help our economy, they should understand that enacting policies has a large cost. Unless the benefits are going to be very large, it is probably best to do nothing. Doing nothing reassures decision makers. Doing nothing lets decision makers plan for the future. Our medical community lives by the Hippocratic Oath; First Do no Harm. I can think of no better motto for our Government to live by.
J.O.Y. to the world
peter
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