Originally posted by: Genx87
Originally posted by: Tango
Originally posted by: Genx87
Originally posted by: sandorski
Originally posted by: Genx87
Originally posted by: sandorski
They're not screwed, just wondering what's next after the French and Dutch Constitutional rejection. Don't gloat yet, US economic policy isn't working and in the coming weeks Dollar/Euro values will settle out as before.
Our GDP growth is about double the EU's.
It must be doing something right.
The US GDP Growth would be much higher if the US Government wasn't sucking so much money out of it with Deficits. The Trade Deficit also deflates Growth and the 2 Deficits together are increasingly alarming Investors. If the US doesn't turn around those Deficits the sh1t is going to hit the fan eventually and depending how hard it hits you could end up envying Europe's Growth(assuming they still have it). There is a growing number of Investors/Analysts predicting a US Recession in 2006, so like I said, don't Gloat yet.
I doubt it, the EU is forcasting sub 2% growth for the forseeable future. The US is growing at 3.5% through the 1st qtr. We grew 4.4% last year and even in a recession in 02 we grew at a faster pace in war than the EU does in relative peace.
The deficits are 1% point different as a % of gdp. The United States is 3.7% while the EU is 2.7% and the EU carrys a higher debt to gdp ratio than the United States.
Lets not get started on unemployment.
btw when we hit a recession the EU will follow suit just like they did the last time we had a recession in 01-02.
As already said many many times... EU and the USA have a totally different culture and economic philosophy. The EU doesn't want an high GDP percentual increase, because it isn't ready for the politics that this would require. The EU economic pact is called "stability pact", and it requires stability above everything else. Add the social system, free education, healthcare, funds given for culture and the arts and you will understand the european priorities.
They are two different systems, not comparable. And an high GDP increase is not necessary for a overperforming currency... just look at the Swiss Franks....
The euro/dollar exchange rate should be 1 to 1, and eventually it will be so. My personal opinion is that the dollar will surge in the next 12 months, then decline again in 2007, then gradually rise again untill parity. Nobody knows anything for sure, of course, as the variables are too many and unpredictable.
Well if they dont want high gdp growth that is what they will get. They will also fall further off the face of the earth as a result until their gdp is so small compared to the rest of the worlds they are insigificant.
If this is too plan that is a terrible plan imo.
Well, it depends on what you want. Most people in the US take for granted the fact that a fast growing GDP is what everybody around the world wants, at any cost. You could be surprised to learn that most people in Europe don't really care about this. In a global system this should require the EU a series of measures tailor-made for large corporations, and the quitting of many social programs. Not a lot of europeans are willing to trade a faster growing economy for a worse quality of life. Most people want a stable, controlled growth, together with an as-equal-as-possible-in-a-capitalistic-system richeness distribution, the best free services, education, aid to the arts and healthcare. For some people money
is not the most important thing for an happy life. A rampant economy is necessary to the US mainly because they want to play a major role in international politics, so that they need a constant flow of resouces in order to increase and consolidate their sphere of influence around the world. This is not the case for european countries. Europe has already been home to the world superpowers in the past, and nobody wants to goback to those times. People just want stability and an high quality of life.
Examples: a corporation in France or germany faces hard times with the very strong workers unions. It has to pay a lot of money for a 35-hours-a-week employee who also requires long paid vacations and paid illness periods (even if very long). To fire an employee in Europe is very hard, cause the laws always protect the worker against the employer... so the corporations are unlikely to expand very fast, they want to be very very sure before hiring somebody that this guy or gal is going to be needed in the long period. Alternative: go to Bangladesh or Niger and pay ultra-low wages to local workers. But this is morally unacceptable to most europeans, and if people find out this kind of exploitation the bad advertising can be a very strong backfire. A lot of people dont' buy anything made by Nestlè because of their policy in Africa and Asia. Also the unions fight hard against corporations relocating their facilities to developing countries, and again firing people can become a very expensive move.
With these and other policies it becomes very hard for big groups to increase their production very fast, and here's explaines some of the reasons why of the little annual GPD growth of the EU economic zone. On the other hand you get a very very high quality of life for everybody.
Living between europe and the US I can see the difference. You won't find Microsoft or Dell in Europe. But I never meet girls with 3 jobs in France, while I have met a lot of single parents in need to work a 60 hours schedule in the US. Or compare the cost of education, healthcare, or the incentives for the arts. I have a lot of friends in Europe that are artists whose work has no commercial purpuse and are getting their wages from the government, just to let them create their art and thus improve the cultural patrimony of a society.
In a word: two different systems, very different, leading to different results. None of the two can be said better that the other. Nobody would trade "his" system for the opposite one.
And the euro/dollar exchange rate is not a measure of the health of an economic system. Just like the US were doing fine last year, when the Euro traded for 1.36 dollars, it doesn't mean that now something has changed that you only need 1.23 dollars for an euro. You have political reasons, and financial reasons that have much an higher weight on this that real economy, beginning from the different "cost of money". The Federal Reserve has been raising the rates and is expected to continue, while the european central bank is expected to lower them. Then you have the Us twin deficits, Iraq situation, the worries about the devaluation of the chinese yuan etc etc etc. When the euro traded at record levels was not because the economy in europe was doing great, but because there were too many uncertain things about the US financial positions. And traders only love certitude.
It's a Tradition and has little to do with the allocation of real political power in all European "Monarchies".
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