Western Independent Banker - July/August 2008 - (Page 24)

Productivity, Technology and Export Growth Trump Housing’s Fall in the Long Run The Economy According to Brian Wesbury today? Are you making high-risk investments today? NO! In fact, you are holding back like crazy. Inventories are razor thin. We are more likely to see problems at retailers because their inventory is too low.” He added, “People are holding off on decisions today because they are fearful of the future. Recessions surprise people. We let our guard down and things happen.” He says there are three types of people when it comes to perspectives on the economy and financial markets: • Traders – They don’t care if the market goes up or down. They just want to buy low, sell high. Long term for them is about a week. • Investors – They want to invest in good companies with good management that are making profits, entering markets, doing things right and competing. They want dividends. • Economists – “We were put on earth to make weathermen look good.” Economists don’t always look at the same period of time going forward, so their forecasts don’t always match up. Forecasts on cable news stations can take short-term information and make it seem long-term. He said there are two things that John Maynard Keynes, probably the most famous economist out there, preached that dominate what is believed about economics today: 1. The consumer is the heart of the economy. If the consumer doesn’t spend, the economy isn’t strong. That’s why we look at “consumer confidence” all the time. 2. We – a collective we here on earth – cannot be trusted. We can’t control ourselves. So we must have a government to keep us in line. “Sometimes ‘we’ are driving too fast. That’s why the Fed raises interest rates before things www.wib.org Western Independent Banker The Wall Street Journal ranked Wesbury as the nation’s #1 U.S. economic forecaster in 2001 and USA Today ranked him as one of the nation’s top 10 forecasters in 2004. He writes frequently for the editorial page of The Wall Street Journal and is the economics editor of “The American Spectator.” In 2007, he was named a CNBC Contributor. THE WRAP UP speaker at WIB’s Annual Conference provided attendees with a generally optimistic long-term outlook on the economy. Brian Wesbury, chief economist at First Trust Advisors L.P., a financial services firm, and advisory board member of First Trust Capital Partners, an affiliated private-equity firm, shared with the audience that although the housing market is in chaos, housing is not the dominant force in our economic model today, and he doesn’t believe that we are in, or will have, a true recession. 24 He explained how our national acceptance of talk of a recession has changed dramatically. In the past, politicians who used the word “recession” were immediately vilified. “If you’re not pessimistic today you are in trouble. It used to be that if you were pessimistic you got in trouble.” Wesbury pointed out that people are being more careful now because they are worried about a recession, and that should keep us from entering into one. “If you are a businessperson and are worried about a recession, are you building up inventory http://www.wib.org

Table of Contents Feed for the Digital Edition of Western Independent Banker - July/August 2008

Western Independent Banker - July/August 2008 Contents A Message from the President & CEO Getting Creative and Competitive with Leaders' Incentive Compensation Financial Covenants - What Good Are They Really? Homes Within Reach Revisiting Credit Quality and Risk Management Loan Yield Shock Wave - What Can You Do? What Lending Crisis? - Community Banks Flex with Lending Strength How to Fine-Tune ALLL During Uncertain Times Productivity, Technology and Export Growth Trump Housing's Fall in the Long Run - The Economy According to Brian Wesbury Distressed Real Estate Loans and Their Property Tax "Kicker" WIB Calendar Welcome New Members Index to Advertisers advertiser.com

Western Independent Banker - July/August 2008

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