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Strategies & Market Trends : Currencies and the Global Capital Markets
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To: Hawkmoon who wrote (2886)1/5/2001 11:42:44 AM
From: Robert Douglas   of 3536
 
Ron,

Thanks for the link to John's post. I agree with most of it, as you know by reading what I have written on this thread. The part that I don't necessarily agree with is the notion that the rest of the world will founder if the U.S. goes into recession.

The reason that I don't is that I believe interest rates around the world are too high, given the benign nature of inflation. They are too high primarily because they are following the lead of the U.S. Why does Euroland need high rates with their high level of unemployment? The only reason is to protect the currency.

That reason is disappearing as U.S. growth flags and the dollar loses its steam. With lower rates abroad, I think the overseas economies will snap back much quicker since they are much earlier in their respective economic cycles than is the United States. I see good growth in Asia and Europe after this brief pause. They've had their recessions, now it's our turn.

I think the importance of the U.S. has been exaggerated worldwide. It will be good for the global economy to see that the sun doesn't rise and set in America. Just like 10 years ago the world was in awe of Japan's supposedly bulletproof economy, the world has given the U.S. more credit than it deserves. Taking its reputation down a notch will be good for the world and in the long run, good for the U.S.
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