Thomas Cooley, dean of NYU's Stern School of Business, writes:

We are entering a precarious phase of the economic and financial crisis. On the one hand, there are encouraging, if weak, signs of an economic recovery. There is evidence of a revival in lending. Consumer confidence is improving quite a bit both in the U.S. and Europe.

But on the other hand, lots of things are not happening. Many investors are sitting on the sidelines, as is much money. Why? Because it is impossible to know what the rules of the game are. And that's because the administration and the Congress keep changing the rules in capricious ways in pursuit of larger political objectives. . . .

Why would private capital get involved when the rules of the game are so capricious? No one would take that gamble when it is clear that, in dealing with the government, private capital will always take a back seat to politically powerful entities.

And that is the larger worry that current policy has neglected. Firms and markets can function quite well within a framework of rules. Indeed, rules are good for the orderly conduct of business. But when rules get imposed or dispensed with willy-nilly in the interests of politics, it is very dangerous. We have should have learned this lesson long ago.

Set aside the merits of various individual policy decisions -- whether made by this Administration, the Bush folk, or Congress. When the rules of the game can change at any moment, essential players won't join the game -- and that's no good for any of us.