INTERESTING headlines from the USA this week: “Billionaire sounds alarm on US economy’s ‘death spiral’”.
That certainly gained my attention after a 40-year career in the finance game, including many years working in the USA and Switzerland plus a number of other western and Asian nations.
Fortunately, this headline looks to be publicity for a soon-to-be-published book by a noted economist and venture capitalist who was guest speaker at a forum for media representatives associated with TV news service CNN.
Views expressed included that the USA economy is nearing the point of no return and is approaching its death spiral in a classic fashion; where countries go broke due to too much debt, stoked by volatility and uncertainty in their markets.
This certainly looks to be what is occurring in the USA today under the Trump administration.
None of this is new in the world of finance and we hope that none of these possibilities ever happen, but it certainly helps people focus their attention on government debt and how these borrowings can ever be repaid.
Because many are now watching this problem in the USA, the world’s largest economy, we then look at how other nations might be responding to these issues.
France has just announced new tax hikes where its government is collecting capital in the hope that they can prevent a similar situation.
Italy is raising its capital gains tax from 26 percent to 42 percent to create more revenue.
Even Norway has increased its wealth taxes, adding to the reality of Scandinavia becoming one of the world’s heaviest taxed locations.
We are trained to look at how smart money and professional investors react to the financial risks becoming obvious in a number of nations.
In Norway’s case individuals worth $54 billion have recently left that country, resulting in a loss of taxation of nearly $600 million from its yearly revenue.
Even Spain has recorded one thousand fewer high-net-worth taxpayers migrating from their country, their first ever negative result of this type.
Australia is now considering new taxation for five percent of its comfortably retired superannuants with good investment balances, as one method of correcting its borrowing binge for its non-productive expenditure.
By John BLACKBOURN
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