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**Drugmachine** · 11-01-2005, 05:08 PM

Of course, this doesn't play out in a vaccum. The artificially low rates of Japan and China push the dollar down against the Euro, and hurt both American and European producers. The strong "rush to the bottom" effect made by trade liberlization with 3rd world or nominally first world nations, which do not enforce environmental, labor or health protections, also hurts the industrialized nations. Over the long run things will stabalize, but we are in the transition phase, and it will hurt. Also, the US foolishly, IMO, has gone too far to the right in protecting our theoretical "property rights" and thus allowing greater and greater wealth disparities, which create unstable economic and social situations. Its a difficult balance, Europe is too far to the left, the US moving too far to the right, IMO. At least Europe is moving in the right direction, albeit very slowly.

The Euro was orginally pegged at 1.17. Today it's around 1.32 so a 12-13% fluctuation is significant but moreso when aggregate GDP growth is zero or slightly less. One model poses that the US and the EU economies are trailing out of their zero employment growth mini recessions and heading toward a vague stagflation where the gap in long term and short term rates closes. At the same time though corporate profits and outright cash are way way way up. So in part large firms are cannibalizing small businesses using financial tools and the small businesses are caught in a no growth trap.

11-01-2005, 05:08 PM	#4
Drugmachine Join Date Apr 2006 Posts 4,490 Senior Member	Of course, this doesn't play out in a vaccum. The artificially low rates of Japan and China push the dollar down against the Euro, and hurt both American and European producers. The strong "rush to the bottom" effect made by trade liberlization with 3rd world or nominally first world nations, which do not enforce environmental, labor or health protections, also hurts the industrialized nations. Over the long run things will stabalize, but we are in the transition phase, and it will hurt. Also, the US foolishly, IMO, has gone too far to the right in protecting our theoretical "property rights" and thus allowing greater and greater wealth disparities, which create unstable economic and social situations. Its a difficult balance, Europe is too far to the left, the US moving too far to the right, IMO. At least Europe is moving in the right direction, albeit very slowly. The Euro was orginally pegged at 1.17. Today it's around 1.32 so a 12-13% fluctuation is significant but moreso when aggregate GDP growth is zero or slightly less. One model poses that the US and the EU economies are trailing out of their zero employment growth mini recessions and heading toward a vague stagflation where the gap in long term and short term rates closes. At the same time though corporate profits and outright cash are way way way up. So in part large firms are cannibalizing small businesses using financial tools and the small businesses are caught in a no growth trap.
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