Which economic bloc is going to perform best this year, Europe or North America? The consensus is that the US is heading for very low growth, say under 2%, while Europe will do better, with 2.5% at least.
But, contrary to the European Central Bank, I reckon Europe will perform worse than the US over the next 12 months. Europe, with its decades of declining investment-to-GDP ratio, has none of the hidden springs of productivity the US can draw on. Furthermore, Europe is going backwards on economic reform. That's particularly so in France, where half-witted socialists are attacking profitable corporations that rationalize their operations to make money for shareholders. No wonder the euro continues to languish. Perhaps if Silvio Berlusconi carries out the reforms he promises for Italy, it will kick Europe's bureaucrats and politicians into action. But don't hold your breath.
