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Certainty – we need some certainty

Had lunch with a lawyer with a strong tax and estate planning practice, and who heads up a firm that specializes in that area. Was wanting to introduce him to our title company and as in all business conversations, we got around to talking about the economy.

I asked him what his clients were thinking, as he represents a number of very wealthy and sophisticated investors – you don’t come to him unless you have enough money to justify the cost of planning. His take – they have cash but they’re sitting on the sidelines. They don’t know where healthcare is going, they don’t know where tax policy is going, and they’re going to sit on that cash until they’ve got some clarity. Every time a politician from either party speaks, but predominantly the President since he currently has majorities in Congress, it’s a different signal or it’s another claim of improvement which is falls on deaf ears because they keep being proven false.

His take for helping restart the economy (besides a flat tax, which isn’t going to happen) – state now, right now, what the tax plan is. Are the tax cuts going to be allowed to lapse? Get the healthcare bill “fixes” out there now so people can make plans. As an employer, I can tell you that the healthcare issue has employers spooked. And the cost, which no one seems to have a solid take on, makes us all believe that it’s going to come from us employers.

Government right now is sending too many mixed signals. I deal with banks regularly, and what I’m hearing is that they’ve got regulators crawling all over them, but they’ve got the President exhorting them to lend. When they do get approval, for anything going to secondary market it seems like it’s 90 days or more to close.

No matter where you are on the political spectrum, you can appreciate that if you’re an investor in the fall of 2010, there is too much up in air to make a big bet. About the only thing happening is sellers are trying to get out of some investments because they’re convinced the capital gains tax is going up. The economy won’t turn around until the government decides what it’s going to do.

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