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To: JRI who wrote (75849)	3/6/2001 11:51:04 AM
From: pater tenebrarum	Respond to of 436258

if you don't mind, i will address this in detail later...anyway, you listed most of the factors driving this thing anyway, with the exception of so-called 'hot money' flows...the very mobile capital pool that flits from one market to the next in search of inflation...as well as the dollar 'overweight' in foreign CB accounts. that is something that will imo change and drive the dollar down in the medium to longer term. one thing about Europe, it's true that labor is its big Achilles heel...inflexible regulations, high cost, lack of mobility. however, the better developed social safety net isn't all bad...it helps cushion economic downturns for j6p, and while there is an ongoing debate as to how the system can be improved (it's obviously not exactly perfect right now) i don't think Europe will ever change towards something even remotely resembling the US system. something else you have to consider are the issues of private sector debt and household exposure to equities...both are much lower in Europe than in the US. this is a drawback during upturns, but a great boon during downturns. Europe couldn't care less about the stock market wealth effect...whereas in the US the stock market has become absolutely central to economic performance. a weak stock market has thus also an effect on currency exchange rates.