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Pastimes : Clown-Free Zone... sorry, no clowns allowed

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To: GraceZ who wrote (37292)	11/14/2000 2:06:20 PM
From: LLCF	Read Replies (1) of 436258

< Europe is less efficient than we are because of tax rates and other structural factors like strangulating and arbitrary labor and environmental laws.> While this is true, what matters IMO is CHANGE in these structural factors, not today's scorecard. <At the same time Europe has an average interest rate around 4% where ours is equivalently 6.5%.> Whether this is a factor or not is reliant on expected inflationary differentials... the way GreenJeans has been pumping away, it is not clear to me that this is a reason to hold dollars over Euro's in the long run. <Europe isn't inclined to improve their efficiency because they are prejudiced by their socialist mandates. > I disagree with this statement, I don't think he/she is paying attention, I think the gap is lessening. Also, whether or not this is the case I find it difficult to explain why the DM remained so strong against the dollar after the war until re-unification when in reality these structural 'problems' were worse than today. Anyway: 1.) It appears to me that simple short term supply and demand factors are at the root of the current dollar strength only a small part of which is explained by the structural factors sighted. Explaining the 30some% drop in the Euro this year in this way would be impossible IMO. 2.) I find it interesting that explainations usually seem to 'pop up' to explain phenomena... ie. the same type of 'structural talk' was spewd about during the Japanese bubble. 3.) I disagree also that the oil price increase hits both currencies equally... I DO believe this is a factor with the Euro this year... interestingly enough partly because of the structural factors he sights! 4.) If I were you I'd ask Heinz and get a REAL opinion! FWIW DAK

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