Worth reading in full. I would have added uncertainty about the ability of our economic stewards to stir our economic ship off the rocks of a double-dip recession... Not only that it obviously matters per se but that it matters a lot in pushing consumers and producers towards belief consistent with a positive growth macro-equilibrium (as in multiple equilibria and sun-spots.)

... and a growing sense of unease with living in a political and economic MATRIX (as briliantly exposed by Krugman recently) does not help, of course.

As far as I can tell our Administrative stewards have no credible plan for moving us off the rocks. In fact, they are so beholden to certain interests that they are incapable of taking the necessary steps. Watching Bush et al trying to deal with corporate corruption and accounting reform, for example, is ... amusing ... shall we say...

And meanwhile the Fed is being packed with conservative board members who won't make a rate cut unless they have absolutely no choice. Ironically, despite the low Fed rates, there seems, in fact, to be a credit crunch going on for most businesses.

Ian, if you look at longer-term interest rates, they haven't decreased all that much, and they are those that are supposed to matter for investment (and to some extent durable consumption.) This must be a reflection both of expectations of higher future rates and market foresight concerning the government's fiscal position for the years to come and beyond...

... and perhaps also of increasing uncertainty about market solvency in the mid-run (think of insurance companies, (pension funds) and banks... in the end the risk as to be born by someone... and that's problematic when the asset side tanks.)