<<<<<<<<<Remember also that the economic statistics probably overestimate US growth and understimate eurozone growth>>>>>>>>>>>>>>>>
Date: Mon Sep 15 2003 15:25
trotsky (Apollo@US growth) ID#377387:
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well, like i said, those growth rates are not comparable. first of all, Euro-zone data are never annualized ( US GDP data always are ) , a fact which is usually overlooked in US mainstream commentary. what's more, US GDP growth is a fiction - 1. the GDP deflator was lowered from 1.6% to 0.9 or 0.8%. 2. a full 45% of last quarter's GDP growth is due to hedonic indexing of computer hardware ( i.e., the money never changed hands - it's a statistical artifact ) , and yet another roughly 45% of the reported GDP growth was due to once-off military spending by the govt. - however, this is basically a waste of resources. so we are left with only 10% of the reported 3.6% annualized GDP growth, i.e., 0.36% annualized growth. if the GDP deflator were left at previous levels, we'd be looking at negative 0.7% growth. so US GDP growth, i repeat, is fictional. there is none, in reality. this becomes immediately clear when one looks at industrial capacity utilization, which resides exactly at the same point which it inhabited at the depths of the 'official' recession. the conclusion is that no recovery has, or is taking place. thus comparisons that appear to indicate that Euro-zone growth is much lower are likewise not valid.
i agree however that a weak dollar is not necessarily a good thing for e.g. PM stocks, most of which have non-dollar based production cost inputs. and although i would say that none of the big fiat currencies are better than any other in the final anlysis, i still expect the dollar to weaken against both the euro and the yen. note that the euro has a huge advantage in the form of the strict Maastricht criteria ( even though some of the zone's economies are veering off course a bit at the moment ) as well as the narrow ECB mandate, which does not give the ECB the same policy leeway that the Fed has. as a result, the ECB is less likely to printalot. |
