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...