Louis Belmonte is known for not mincing his words. And he was true to form at Silicon Valley CREW’s annual forecast event, calling Silicon Valley "an island of prosperity in a sea of stagnation" for the following reasons:
- The home mortgage "situation" is still a festering problem
- Median incomes (when adjusted for inflation) are declining
- Rising numbers of older kids still living at home
- There are more businesses closing than opening
- Labor force participation is at 59.5% -- the lowest since the 1970's
Belmonte attributes the stagnation to two main factors -- excessive debt and excessive regulation. On the latter point, he describes federal regulators as attempting to be quarterbacks instead of a more traditional referee role, citing the auto bailout as a prime example.
Inhabitants of Prosperity Island should be cautious of two trends. The first, and more general trend is the slowing of China's economy. While currently not a crisis, Belmonte cited "severe debt problems." More specifically, Belmonte is worried about our local "one-horse economy" and the flow of funds into the Bay Area. Whether you are talking about Initial Public Offerings (I.P.O.'s), corporate buyouts, or Venture Capital investments, there is nervousness to go around based on the increasing complexity of the tech industry.
And, in spite of other major concerns (decreasing home ownership rates, and the "ticking time bomb of public pensions") Belmonte did cite one major ray of optimism. Of all the world economies, the U.S. is best poised to recover. "We are the master of work-arounds" said Belmonte with a smile.
This post first appeared on Start, Expand, Grow, Relocate Business In Silicon Valley - Fremont, California, please read the originial post: here