The only thing worse than the game of charades being played in Washington over the debt ceiling and the government shutdown?
The reality that those jokers will be back to business as usual the moment this particular can is kicked a little farther down the road.
Neither party is serious about reining in out-of-control government spending. Both just want the party to keep going as long as possible before the painful choices must be made.
President Obama and Congress already presided over the loss of our AAA credit rating. You think they really care that they’ve set us on a path for junk-bond status just a few years from now?
If you’re ready for an alternative to the dysfunctional U.S. political system and a slow-growth U.S. economy, allow me to suggest an alternative — Northern Europe.
Opportunities in the North
If you avoid the countries tied to the Euro death-spiral, you can find some outstanding opportunities.
My favorite region of the world to invest in right now are the Nordic countries — Demark, Finland, Norway and Sweden.
Why do I like them so much? For starters, the Nordics are free countries, with happy, well-educated populations, and a focus on education and cutting-edge R&D. All four are among the six least corrupt countries, too.
What I like even more is that all four major Nordic economies rank among the world’s 20 most competitive. Couple that with moderate corporate income taxes, and you can see why the Nordics are more hospitable homes to investors than the good old U.S. of A.
The fact that three of the four were smart enough to avoid the trap of giving up their own currencies to become part of the Euro is just the icing on the cake.
Today, one country stands out as my favorite, thanks to its outstanding finance minister and his proven record of cutting taxes and welfare spending — Sweden.
Strong Leadership in Sweden
Under Finance Minister Anders Borg’s leadership, the country is making all the smart moves our elected leaders are NOT making.
Sweden’s income tax base was broadened and tax rates were sharply reduced. Spending was cut on old-age pensions, child allowances, unemployment benefits and housing subsidies. Union power over wages was reduced. Important sectors like banking, air travel, telecommunications and electricity production were deregulated. Low inflation and balanced budgets became broadly-embraced popular goals.
Borg’s goals were clear: to reward work by cutting income tax rates; to push people back into the labor market by reducing some government benefits; and to promote productivity by increasing competition.
Despite the fears of radical socialists, the country hasn’t turned into some kind of capitalistic free-for-all. Sweden still has less economic inequality than most advanced countries.
For the first time in decades, this country’s tax-to-GDP ratio is now below 45%. What’s more, productivity and real wage gains have continued even in a sputtering global economy.
The bottom line? Sweden’s smart governmental choices have produced sustainable economic growth and attracted entrepreneurs and start-ups at a rate we only wish we could copy.
2 ETFs to Invest in Sweden
I’m not counting on the fools in Washington to smarten up any time soon, so I recommend that you cash in on Sweden’s wise choices through two simple investments.
First, you can profit from the country’s best companies by buying the country ETF, the iShares MSCI Sweden ETF (EWD). Up 113% in the last 5 years (the Dow is up only 33%), it’s a fine choice.
You get to participate in the healthy growth of companies like Ericsson (ERIC), Hennes & Mauritz, Volvo (VOLVY), Swedbank (SWDBY), Svenska Cellulosa (SVCBY) and many more underappreciated gems, all in one easy package.
Alternatively, you can invest in the country’s currency through the Currency Shares Swedish Krona ETF (FXS). With both the U.S. dollar and the Euro losing value because of their easy-money policies and fundamental economic weakness, FXS should appreciate nicely over the next 24 months.