With few exports and high interest rates Europe will go into a deep recession?

.."Wonder how much of $9 Trillion of US debt is held by the Chinese. "..

After a expected 20% fall in the $USD, by Jun 2008, the $9 trillion will be $7 Trillion.

 

Hm, what's the trade balance of Europe?

Effect of interest rates on real economy is highly overrated. Look at Japan for example.

 

Germany is doing quite well and exports ae strong in spite of the strength of the euro. Remember that Europe has access to cheap labor markets in the east. The Germans btw compete with QUALITY. Also, remember that the ECB is probably the best-behaved of the three regions which is a huge strength. Don't rule out Europe: it's still sexy...

 

I feel bad for small and micro businessmen there that have to listen to that nutjob Tirichet talk his ECB "mandate" bullsht while he drives most of the EMU into recession.


Fed Versus ECB

While two Fed cuts slashed the target rate for overnight loans between banks to 3 percent in nine days, the European Central Bank kept its benchmark rate unchanged at a seven-year high of 4 percent in an attempt to curb inflation. The ECB will keep rates unchanged at its Feb. 7 meeting, according to all 55 economists surveyed by Bloomberg News.

``If aggressive cuts by the Fed can stimulate the economy, then the U.S. will definitely lead the way in terms of economic recovery,'' Yu said. ``The ECB is behind the curve, so it's time to move back'' into the dollar, he said.


The rest of the article is worth reading too.

http://www.bloomberg.com/apps/news?pid=20601068&sid=ahDiVVyeilGY&refer=economy

 

The latest trade balance report of the largest economy in the world, the EU, was a 2.6 billion euro surplus. -- (source: Eurostat).

The EU has a more legitimate central bank and monetary system than the Mickey Mouse Fed.

 

I am convinced the US will come out of this period of economic uncertainty that might turn into a deeper contraction much stronger than Europe. It always did. 1974, 1980, 1990, 2003. Nothing has changed. The US labor market is more flexible, companies can add and remove capacity with ease. On the other side, Europe's level of unemployment has historically risen through every recession since the end of the 60s. It's a permanently rising plateau of people that will never again see employment by traditional market means (maybe though through socialist programs).

We Europeans are pessimists by nature. Just like in sports, it's not that hard to compete with and win against pessimists.

 

http://www.treas.gov/tic/mfh.txt latest data of major treasury holdings owned by foreigners - could be worse, mind your the oil exporters seem to have a fair chunk and some of them aren't too friendly with the US

 

mild and short lived??? how can you be so sure?!

plus don't forget higher tax rates

 

Yes and the reason is simple: education and science are highly respected in Europe. That's why, for example, that France's nuclear program was highly successful and ours was a disaster. The bankers there do what they think is intellectually right and damn the politicians. Our Fed, again with the exception of Volcker, just wants to make everyone feel good.

American values and culture has its own advantages, but Americans tend to forget that Europeans are a force to be reckoned with for the foreseeable future because they often cannot see past the end of their cultural nose...

 

Speaking of Volcker, from the WSJ, Volcker: I Endorse Obama

“After 30 years in government, serving under five Presidents of both parties and chairing two non-partisan commissions on the Public Service, I have been reluctant to engage in political campaigns. The time has come to overcome that reluctance,” Mr. Volcker said in a statement today. “However, it is not the current turmoil in markets or the economic uncertainties that have impelled my decision. Rather, it is the breadth and depth of challenges that face our nation at home and abroad. Those challenges demand a new leadership and a fresh approach.”

He concluded: “It is only Barack Obama, in his person, in his ideas, in his ability to understand and to articulate both our needs and our hopes that provide the potential for strong and fresh leadership. That leadership must begin here in America but it can also restore needed confidence in our vision, our strength, and our purposes right around the world.”

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It should come as no surprise that the only competent Fed chairman was a democrat.