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Dr. Kamil,..Re:the coming economic downturn.
Welcome to the Dell thread. Obviously you have given considerable thought to where global economies are headed. With respect I was wondering why you thought that the global ills will be a synchronous event? In the past, we've all endured non-synchronized rolling periods of growth and slowdown. When some economies are growing, others are contracting. I am curious why this scenario would change?
You are correct that Canada and Mexico are by far the biggest trading partners of the US and economic contraction in these countries will have a much more pronounced affect on domestic US economy. However, since Canada is primarily dependant on natural resources, the effects of the Asian crisis are more critical. Also, we managed to endure the Mexican Peso crisis in 1994. But demand will return once some stabilization returns to SE Asia. It is reportedly already happening in South Korea and Thailand. Presumably, these countries along with China will lead the return of growth in that region.
The US is slightly different as it is more of a service economy and therefore is somewhat insulated where domestic demand remains strong. That isn't saying that the US can survive with a crippled manufacturing sector, it's just saying that it is somewhat cushioned.
For this reason, some of us still have some confidence that the well managed, best performing companies will find opportunities to continue to perform.
BTW, the weaker US$ should help your area. Maybe the launch of the Euro will keep the US$ pegged to some lower level?
Regards,
Lee |
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