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Strategies & Market Trends : Currencies and the Global Capital Markets
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To: Robert Douglas who wrote (2746)12/27/2000 2:37:16 PM
From: Henry Volquardsen   of 3536
 
I wouldn't go as far as saying Europe is sick. There are structural problems and some of those are being addressed. This translates into to slower European growth than potential but not an outright decline in demand. Also a lot of the structural issues are choices made by cultural preference so they have been there for a long time and are not a net change to the mix.

A lot of my negative talk about Europe is really negative talk about the Euro. It is just structurally flawed, imo, and this will lead to a weaker Euro over time. But that is not necesarrily a drag on growth. In fact much of the Club Med faction are advocates of using a weak currency to support export growth so this is not a problem to them. In fact given my views on the basic deviousness of French politicians I tend to think they planned it this way :)

Regarding Asia. My biggest concern is Japan. Yes there are problems in the rest of Asia but many of them have taken steps to address this problem. They will of course be hurt in a downturn but not as badly as 97-98 and will probably recover more quickly.

That leaves Japan. They clearly have not made sufficient structural reforms. But this has been dragging on so long that it is becoming besides the point. The world has accomodated itself to a very low demand Japan. So a deterioration in Japan is not really a change of the demand equation since few are expecting that much.
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