Pressed on the subject, Donahue allowed that fears of further market turmoil and insufficient consumer demand were also players in business decisions. At this point, Pfeffer offered a useful addition: Businesses are herd animals, he said. They tend to spend all at once and hoard all at once. So the fact that many of them are hoarding now is convincing the rest of them to hoard now, and the question is how you break that cycle so a few major players step out and invest and make their competitors feel like they'd be missing out if they didn't do the same. But that sort of change requires some positive shock -- great jobs data, say -- and it's not clear where that'll come from.
I laughed when I read his -- I think Klein is pretty sure where he thinks it should come from -- government spending, another stimulus, "relief". But I will give Klein the benefit of the doubt and assume he's really perplexed.
It will come from government changing direction, eliminating capital gains taxes, letting the business community know that no more drastic changes are in the planning, so that businesses don't have to worry about increases in the cost of doing business. It will come from a government which ends corporate welfare/protection and announces a change in policy which will allow the free market to work in open competition without government interference. This would shock businesses into hiring and expanding, and it would bring in huge amounts of foreign investment.
I hope this resolves the issue so Klein can go forward confident that there's a solution.