Home Logon FTA Investment Managers Blog Subscribe About Us Contact Us

Search by Ticker, Keyword or CUSIP       
 
 

Blog Home
   Brian Wesbury
Chief Economist
 
Bio
X •  LinkedIn
   Bob Stein
Deputy Chief Economist
Bio
X •  LinkedIn
 
  Politicians Should Stop Giving Investment Advice
Posted Under: GDP • Government • Monday Morning Outlook • Trade
For the past six years, the conventional wisdom has predicted the end of the world. On the left, they say "Tea Party austerity" is a catastrophe and an "income divide" spells doom. On the right, the election of President Obama made collapse inevitable. Anything and everything that could be spun negatively, has been.

Lately, it's China and Greece, but before that it was a never-ending string of horror stories. Most of these pessimistic forecasts rely on the trauma of 2008/09 to lay the foundation for fear and almost all of them end with a commercial to buy gold.

However, what most investors don't realize is that since the weekend of the Lehman Brothers collapse in mid-September 2008 the total return on the S&P 500 of 93% has soundly outperformed gold, which is up 52%. On both the right and the left, they say stocks are up only because of the Fed and Quantitative Easing. The Right uses that as a scare tactic, while the Left says it's helping the rich.

What's fascinating is how lazy politicians have become. Rather than make a case for following their worldview, they use fear and spin economic data. The result is that those who listen to them have gotten really bad investment advice. And by generating fear, both sides of the political spectrum support the case for more government intervention. We expect that from the Left, but we can't understand it from the Right.

Nowhere is there more evidence of the failure of big government than in the Greek economy. But, instead of convincing people that more government is bad, Greece apparently makes those in government want more government. Greece has a GDP close to metro-area Detroit. And so what if Russia bails them out? Greece is a black hole of government deficits that would make Russians fear Socialism again.

And China is overblown as well. American exports of goods to China are only 0.7% of US GDP, versus about 1% to South & Central America. Can you imagine someone running a commercial saying, buy gold because of Argentina?

In 1989, Japan was the #2 economy in the world, and business schools used it as a model of how to run a country. Let government influence capital investment – that's the ticket. But how'd that work out? Talk about economic malaise. And, yet, the US surged ahead in the 1990s.

The greatest theme of the last several years should not be the world coming to an end; it ought to be the failure of government efforts to make people better off by redistribution or directing capital investment. But where is the battle cry from the Right? It's almost like supporters of free markets secretly want governments to keep implementing bailouts so they can complain about something.

If we want sustainable economic growth that truly lifts living standards, smaller government is the answer, not bigger government. The Right could win that argument if it tried. But with fear driving politics, it makes the debate harder to win

Brian S. Wesbury - Chief Economist

Robert Stein, CFA – Deputy Chief Economist

Click here for PDF version            

Posted on Monday, July 13, 2015 @ 10:01 AM • Post Link Print this post Printer Friendly

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
Search Posts
 PREVIOUS POSTS
M2 and C&I Loan Growth
The Trade Deficit Came in at $41.9 Billion in May
End of an Era
The ISM Non-Manufacturing Index Increased to 56.0 in June
Happy 4th of July
M2 and C&I Loan Growth
The Best Era America Has Ever Seen
Nonfarm Payrolls Increased 223,000 in June
The ISM Manufacturing Index Rose to 53.5 in June
Ignore Greece
Archive
Skip Navigation Links.
Expand 20242024
Expand 20232023
Expand 20222022
Expand 20212021
Expand 20202020
Expand 20192019
Expand 20182018
Expand 20172017
Expand 20162016
Expand 20152015
Expand 20142014
Expand 20132013
Expand 20122012
Expand 20112011
Expand 20102010

Search by Topic
Skip Navigation Links.

 
The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
Follow First Trust:  
First Trust Portfolios L.P.  Member SIPC and FINRA. (Form CRS)   •  First Trust Advisors L.P. (Form CRS)
Home |  Important Legal Information |  Privacy Policy |  California Privacy Policy |  Business Continuity Plan |  FINRA BrokerCheck
Copyright © 2024 All rights reserved.