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The World Financial Rollercoaster

Columnist: Lawrence Amaturo
February, 2019 Issue
Columnist

Lawrence Amaturo
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You’re gonna want to stay alert this year and remember to keep your head on a swivel throughout 2019. It’s ramping up to be quite a roller coaster around the globe, particularly in Washington, Sacramento and right here in the North Bay.

World financial markets are encountering a two-pronged dilemma, softening Chinese consumer spending and a record high debt of $250 trillion. Let me repeat myself, $250 trillion in global debt. That’s three times what it was only two decades ago. Of course, Uncle Sam is the largest borrower, but by no means the only one. The Institute of International Finance tracks the seemingly unquenchable appetites our leaders have to spend money that isn’t their own, and our nation’s habits seem to have caught on quite nicely in Asia and Europe. Just a number of countries (the U.S., China, Japan and the Eurozone) make up two-thirds of household debt, three-quarters of corporate debt, and four-fifths of government debt.

The problem is particularly acute in Asia, as four Asian countries have debt levels at or greater than their entire gross domestic product (GDP). South Korea begins 2019 with a “mere” 1:1 ratio, while Singapore and China have debt levels at 20 percent and 60 percent above their gross domestic product. Hong Kong alone now has debt that’s 220 percent of its GDP! A few bad months of consumer spending could put us all in harm’s way.

Yet despite this abundance of global and national debt, our politicians in D.C. and Sacramento continue playing to our emotions rather than our intellect. I guess they do so because it works. As they deliberately distract us over the pros and cons of spending money for a wall along our Southern border, we lose focus on the other line items in the 2019 National Budget. We all know this is a make-believe squabble over $5 billion, but I recognize this as a calculated diversion intended to keep us silent on the remainder of the budget. This border wall, if approved, would equal only 0.1 percent of the U.S. budget for 2019.

Why aren’t our Democratic and Republican leaders talking about the other 99.9 percent? Because they don’t have to! They must find real humor as we everyday Americans argue and divide ourselves over a rounding error rather than discuss the other 99.9 percent of their $4.4 trillion-plus budget proposal. It’s a disgrace and we seem to keep falling for it year after year. But as long as we keep falling for it, our politicians will keep serving up this manure with a mix of false concern and warm smiles.

California residents may be in the worst shape to handle all this mismanagement. As many here might welcome a Trump impeachment and more social program spending, our state would feel the blow like no other. Sacramento’s leadership spending propensities rely on the uber wealthy to pay and pay. And pay they do! California’s population numbers more than 40 million, but it’s the top 157,000 taxpayers who contribute half of the state’s tax base. Any significant stumble in the U.S. Stock Market, business, real estate and private equity markets will instantly threaten Sacramento’s expensive social engineering and public welfare projects. It happened this way in 2009 and very well may happen in the coming year.

But fear not! My doom and gloom is meant only to shock your system in preparation for a series of health topics our editorial team has assembled this month. Our “Healthy Living & Prevention” issue covers a range of topics—from weed as medicine to intestinal bugs, and how America’s excessive consumption of sugar continues to spike an obesity epidemic. We have the latest information on the health issues busy people face. This  month’s cover story, “Working with Addiction,” by Judith Wilson takes a look at America’s struggle with opioid and alcohol addiction, and the business of rehab in the North Bay.

And finally, if you’re an employer, be sure to check out this month’s special feature, “Connecting the Dots” by Jean Doppenberg. New California laws have toughened restrictions on employers who conduct interviews, background checks and credit report inquiries on job candidates. Find out what you need to know to stay in compliance.

Stay in touch! Your thoughts are always welcome at Lawrence@Northbaybiz.com

 

 

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