Henry,
My concern going forward is the balance between the 3 big currency blocks and their relationship to the strength of the US economic engine.
History suggests that our economic expansion cannot be sustained indefinitely and the question of a "soft and hard landing" becomes an important consideration when investing abroad. The question of whether we are experiencing an unbalanced asset bubble or a logical self sustaining economic expansion is paramount to any answer....before investing assets outside of our financial block. History suggests that...."[Economic engines] are severely damaged when falling asset prices caused saving to rebound, often to above normal levels, to correct previous overborrowing. In Britain, for instance, private net saving swung from minus 6% of GDP to plus 6% between 1989 and 1994."
Message 11864404
The Wallstreet Journal printed Friday, Dec. 10, 1999 had an excellent article on the recent lecture subject of Robert Mundell "A Reconsideration of the 20th Century."
I would hope that if it is available on their web site someone could post it. It is to long to type in.....
In this article and throughout the conversations on this thread is the theme instability of exchange rates among the three currency blocks. "The concluding words of this lecture were these: "It remains for the next century to see whether a restoration of the international monetary system is compatible with the power configuration of the world economy."
I suspect International Monetary instability will complicate investing anywhere outside of our currency block and will inject serious risk complications both in asset value and currency conversion attributes. Although I applaud the process that has led the USA to it's present position of dominance.... History suggests we should be wary of economic imbalances, and today a significant imbalance exists between these three major blocks both in production, consumption, technologically and currency value. Whether the International Monetary Structure and its processes, those that the world has embarked on with Nixon, Reagan, Greenspan and their international compatriots, can eventually reduce these imbalances naturally and derive parity of participation and a rejuvenation of prosperous markets within the respective blocks is the most important question going forward. Will the ECU survive and will Yen block escape it's fatigue?
I suspect that currency and international monetary instability will come to the foreground again...this should happen shortly...within the coming months.
Chip |
