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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Mike M2 who wrote (89075)	1/31/2001 9:03:39 PM
From: Mark Adams	Read Replies (1) \| Respond to of 132070

Thanks Will. The part of most interest was And look at the economic fundamental: the region's current account is in equilibrium with a slight surplus, a gross investment ratio of about 21% is fully matched by domestic savings; broad money growth of 5.3% is a little in excess of the central bank's target of 4.5%, but little more than half the rate in the United States. Debt and credit expansion are incomparably lower than in the United States. In short, absence of any excesses. So what is ailing the euro? Three things: statistics, perceptions and propaganda. The main argument for dollar strength and euro weakness is the perception that the U.S. economy is going from strength to strength because it is enjoying peerless productivity gains from vastly superior investments in the new information-technology. Didn't really address the underlying social issues that concern me over the long term viability of the euro, but does paint a somewhat nicer picture of the regions positives intermediate term. The labor issues do exist, and the technology investment has lagged. The latter may be a positive, as it leaves room for things to improve. Labor issues are more difficult to resolve, and in some cases may indirectly inhibit investment. What is the point of improving productivity if you cannot realign labor requirements to the post improvement level required? Regarding productivity, the following occurred to me tonight; Productivity growth has within it the seeds of it's own demise. Should productivity growth outrun demand growth, with fewer people resources producing more goods, it is possible that fewer people will have the means to purchase those goods. Until such time as the goods price deflates enough, a shift lower on the supply/demand curve. Self correcting? As tight labor causes companies to retain employees longer than they otherwise would, will the cause productivity to temporarily fall off the cliff too?