Photo Credit: MDV || May you live to see many beautiful sunrises!
Regardless of your political point of view, life will go on after the election. Truth, given the two leading candidates, I get why many feel bad — they are both personally flawed to the degree that we shouldn’t want to entrust them with power. We all are sinners, myself included. That said, those who lead scandalous lives are unfit to lead society.
But under most conditions, cultures, economies, and governments survive bad leaders. This is true globally. This has been true in the US historically.
And guess what? The markets really don’t care that much about current politics. Markets in aggregate react to changes in the long-term view of economic activity. The only things that interfere with economic activity to that degree are:
I’m sure there are things I left out, which could make for a lively conversation in the comments. But note this: in general, though the sudden events may have severe effects on economies and markets, they tend to be the most transitory. It’s the gradual changes that have the most effect in the long-run.
Also note that most of these do not get affected much by normal politics. Yes, the “one child policy” affected human fertility, but look at efforts by governments to get husbands and wives to have children and the effects are tiny at best. And even the “one child policy” is partially reversed, and I expect that it will be dropped in entire. (And then the Christians and Muslims can stop hiding their children…)
Governments can intervene in economies lightly or moderately, and people adjust. Overall productivity doesn’t change much. At severe levels of intervention, it changes a lot. Intelligent people look for the exits, even at the cost of being exiles.
Governments can go to war, and if it is small relative to a country that is involved, the effects are light. Big wars are different, and can destroy productivity for a generation, or permanently, if the culture doesn’t survive.
The Great Depression, bad it was, and loaded with policy failures of Hoover and FDR, ended in less than a generation. The markets recovered as if it had never happened, and then some.
Are our government policies, including those of the central bank, lousy? Yes. WIll they get worse under Trump or Clinton? Sure.
Things won’t likely be bad enough to derail the economy and the markets for more than a generation, so invest for the future. The Sun will rise tomorrow, Lord willing.
But, the Son of God will reign forever.
The collapse of debt fueled bubbles can only affect less than a generation. Why? They don’t affect productive capital assets, they only affect who owns them, and receives benefits from them. That is why depressions have far less effect than major wars on your home soil or major plagues. Eventually a new group of people pick up the pieces at reduced prices, and use the capital to new and better ends.