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Strategies & Market Trends : Mish's Global Economic Trend Analysis

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To: Chip McVickar who wrote (30465)	5/20/2005 4:29:44 PM
From: regli	Read Replies (1) of 116555

>ECU was put in place so the banks and industrial sectors of the various countries could become multicountry--multinational conglomerates extending their domination over the entire European community and in the process compete with Asia and the USA.< The ECU was an expected and necessary development within the EU. For the EU countries to be competitive, it didn't make sense to have to deal with lots of different currencies and accounting standards. These were a major source of inefficiency therefore lead to a lack of competitiveness. Obviously, there were multinationals much before the formation of the ECU. The primary purpose of the formation of the EEC was to create greater economic cooperation through free trade allowing EEC companies to grow to compete with the much larger U.S. companies that were threatening to take ever bigger sections of the European market. They realized that a major global market was developing and in this new environment size mattered. For an illustration, just look at the market share in Germany of Opel (GM) and Ford in the 50’s through 70’s. > There are some flaws in my argument... the recent inclusion of backwater countries will see significant growth... as the need for cheap labor sucks in the multies...!!!< You are obviously commenting without much awareness of Europe. You might remember a few other backwater countries like Spain, Portugal and Greece (as they were considered then) that joined the union before this latest expansion. However, I am not denying that the expansion has its problems. Europe is learning to cope (with difficulty) with multiculturalism. However, on the whole I believe that the expansion keeps the EU competitive and it has lead to a much more dynamic business environment. With China and India appearing on the scene labor arbitrage is unavoidable even across much larger distances and obviously borders. Lower labor costs within the EU will ease the transition to this much tougher world. And not to forget about the most important benefit for the citizens of the EU, when was the last time that there was a threat of war among EU participants? If you go back in European history, I would like you to point out any another period where for 50 years there was prosperity and no threat of war among ANY of the players. There is no question in my mind that the EEC/EU played a major role in this huge development.

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