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To: Robert Douglas who wrote (2746)	12/27/2000 1:18:48 PM
From: Ahda	Respond to of 3536

But my benign scenario requires a healthy Europe and Asia, something that seems to be questioned regularly on this thread. If both of these regions are economically sick, then I see no other course but worldwide recession. I agree with most of what you have stated. I tend to think once you give a start to others and i am more thinking in terms of China and India, poverty has no other way to go but up. We risk going down as we are to up.

To: Robert Douglas who wrote (2746)	12/27/2000 2:37:16 PM
From: Henry Volquardsen	Respond to 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.

To: Robert Douglas who wrote (2746)	12/27/2000 9:34:05 PM
From: Hawkmoon	Read Replies (1) \| Respond to of 3536

If both of these regions are economically sick, then I see no other course but worldwide recession. That's always a possibility, but I would suspect that permitting such an event would be tantamount to a declaration of surrender by Central Bankers. And I think we both know that hell will freeze over before they give up. Let's not forget that AG hiked interest rates in the US during a time of relatively benign inflation. We certainly haven't see consumer price inflation anywhere near the 6% level the last time the Fed commenced a rate raising binge. So until the rate cuts come through and change consumer psychology, reduce the cost of capital, and spur investment and business risk once again, we'll see capital migrate towards those economies that pay the highest rates amongst the 3 primary currencies. And the odds are that will remain the US. Btw, I'm always open to someone providing a positive argument for investing in Europe over the US. Thus far, few have been either willing, or able, to do so. Regards, Ron