More than anything else, economies work on confidence. When people believe growth is coming they invest, take risks and it becomes a self-fulfilling prophesy. If a government can credibly instill confidence, it unleashes the economic animal spirits.
Norwegian Finance Minister Siv Jensen was on TV today and said the government is ready to take new measures if growth should slow. It’s a vague, simple promise and it’s music to an investors’ ears; it screams ‘invest here, we’ve got your back!’
In the US, you have the Fed making and fulfilling promises along those lines but the government is hopelessly deadlocked so nothing the President says could credibly underpin confidence. In Europe it’s a mish-mash of broke, cheap or leaderless economies. In Japan, promises have run hollow for a generation.
