More On The Uncertainty Trope

Ritholtz:

Uncertainty has become a news media darling since 2008. The recession, credit crisis and market collapse drive lots of interest in the idea.
It does not take much deep thought to recognize the utter nonsense of this. Anyone complaining about a lack of certainty — in policy, in the economy, in markets or even the weather — simply reveals how little they understand about all of these things.
From the investor’s perspective, markets require uncertainty to function. Indeed, they thrive on doubt, imperfect information and a lack of consensus. Uncertainty drives the market’s price-discovery mechanism. Investing requires differences of opinion, for when there is broad agreement about an asset’s fair value, trading volume falls.
Without uncertainty, who would take the opposite side of your trade?
History teaches us that whenever the opposite occurs — when groupthink and consensus overwhelm doubt — the herd tends to be embarrassingly wrong. In those rare instances when there is a near-total lack of uncertainty in the market, the outcome usually is a spectacular disaster.

I love the part about groupthink and consensus.  As he points out, remember what happened when everybody was certain we had a new economic order during the dot.com bubble?  I get much the same feeling when farmers are certain that Chinese demand means commodity prices will rise forever, and farm ground prices will rise with them.  You know, they aren't making any more land.

But back to the uncertainty.  Republicans have been fueling this talk ever since Obama got elected (and long before that).  Business owners claim they can't make decisions because they don't know what tax rates they'll face in the future, or what the environmental regulations will be.  So what?  Do they know what the economy will be doing in the future?  Do they know if consumer wages will ever rise or if health care costs are going to slow their inexorable rise?  I bet they don't.  Are they going to be certain of much if Mitt Romney is President?  I'm not certain if Romney is for or against an individual mandate.  He's been both.  I'm not certain that Republicans aren't the real cause for much of this uncertainty.  Anyway, if somebody tells you that economic uncertainty is all because of the current President, I'd be skeptical of buying what they are selling.