The New Economic Map of the World. Asia's Effect on the Western Economy. Post-Globalized Economies.

Essay by rev_20High School, 11th gradeA+, October 2004

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The world is settling into three major blocs, and only one is especially interesting from an investment viewpoint. The

first bloc is Europe, which includes the expanded European

Union and will eventually include Russia and the UK. The

problems in Europe are well-known. The population is aging,

the economy is mature, the continent is burdened by an

accumulation of socialist policies, the entrepreneurial spirit is dampened by regulation and bureaucracy, and people put living the good life ahead of working hard.

The American bloc isn't much better. These economies are

also relatively mature, although there are opportunities

below the Equator. The US has grown soft. No politician

can propose anything that involves sacrifice. The price of oil soars and you don't do anything to seriously encourage

conservation. The war in Iraq causes a major increase in the

budget deficit, but you believe growth will generate tax

revenues to take care of the problem.

I am more concerned

about the trade deficit. Your manufactured products are

uncompetitive and you don't provide the necessary incentives to expand the knowledge-based industries where you have an advantage.

The increasing cost of healthcare and retirement benefits

will be a drag on US profitability and will discourage investment.

Litigation costs are a terrible drag. Only in America does someone think when something goes wrong, "Who do I sue?" As a result, the economy will grow slowly and the dollar will continue to decline. Eventually the dollar will reach a point where investment in the US will become attractive again, and some of your products will be more competitive. Looking out further, there are promising prospects in nanotechnology and biotechnology, where you are the leader. But those are four to eight years ahead of us.

Then there is Asia, which is only beginning a long cycle of...