Last week’s top conversations were started by APViewpoint member Lance Roberts and thought leaders Robert Huebscher and Ron Rhoades. They generated thoughtful discussions on: why $19 trillion in federal debt is a problem; the global manufacturing crisis; and the DOL’s BICE exemption.
Lance Roberts’ Why $19 Trillion in Debt IS a Problem inspired five comments from advisors contesting his claim that U.S. government deficit spending has been squandered on unproductive social welfare programs, which Roberts claims have a negative return on investment. Advisors argued that services such as Social Security and Medicare are productive because they have positive economic effects such as increases in consumer spending. Moreover, advisors added, federal funds can be allocated to both social services and long-term government projects, not just one or the other.
Bob Huebscher’s Bruce Greenwald: The Crisis Bigger than Global Warming inspired 11 comments in which advisors generally agreed with Greenwald’s assertion that there is a global manufacturing overcapacity. APViewpoint members posited that, given the recent staggering manufacturing productivity increases and the slowing demand for manufactured goods, firms will exit the sector in the short term and wages will fall. However, some argued that it will take a very long time for manufacturing wages to reach a new equilibrium unless we see a catalyst or “a confluence of policy changes or economic potholes that augur in the next way forward.” For instance, a change in the international monetary system, which currently allows countries to use their exchange rate as a competitive weapon, would precipitate a transformation of the global manufacturing industry.
Ron Rhoades’s "Business As Usual" Under the DOL's BICE Exemption? Or - Transformational? received 11 comments about the DOL Fiduciary Rule’s Best Interests Contracts Exemption (BICE). Advisors deliberated over the impact that the final rule will have on different types of institutions, concluding that insurance companies are likely to avoid becoming fiduciaries by affiliating with a broker-dealer or RIA to ensure that they meet the definition of “Financial Institution” under the BICE exemption. Advisors also discussed the effect that the DOL rule will have on financial products. Although some maintained that “the DOL's rule-making efforts will also force products to compete on their merits, not on the basis of how much commission is paid or how much revenue sharing or ‘marketing support’ payments are paid to the BD firm,” others questioned the likeliness of such a positive outcome.
