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"Socialist" Europe is now richer than America





handfleisch
European countries generally guarantee one month vacations, universal health insurance, extensive public transit systems, paid maternity leave, and a host of other public, taxpayer-funded benefits. They also have tightly regulated markets and banking/investment systems. And their economy is doing better than the USA and they are getting richer, which shows the argument that all these kinds of things are harmful to business and the economy is just BS.

http://www.businessweek.com/print/globalbiz/content/sep2009/gb20090916_175802.htm

Quote:
Europe Now Richer than North America
A survey on global wealth finds that net assets have fallen more than 20% in North America vs. 6% in Europe, making it now the world's richest region

By Valentina Pop

Europe has emerged as the richest region in the world, pushing North America, where wealth has declined by more than 20 percent due to the economic crisis, off the top spot, a study has shown.

The world's richest also feel the recession biting, especially in North America, where the financial crisis first unfolded a year ago, reveals a survey on global wealth carried out by the Boston Consulting Group Boston Consulting Group, a global management consulting firm.

North America's wealth, measured in assets under management, plummeted by 21.8 percent, the steepest decline in the world. A lesser fall was registered in Europe, where assets shrunk by 5.8 percent compared to last year, down to €22.2 trillion—a quarter of the globe's total wealth.


http://www.forbes.com/2009/09/15/europe-richest-region-markets-economy-assets_print.html

Quote:
Europe Richer Than America
Parmy Olson, 09.15.09, 6:30 AM ET

LONDON -

As market participants reflect on the anniversary of the collapse of Lehman Brothers, so emerges the sobering consequence of the market crash that followed: North America's wealth has now fallen the most out of any other region in the world, allowing Europe to step up to the plate as the world's richest continent.

North America, defined as the United States and Canada, had $29.3 trillion in assets under management in 2008, while Europe had $32.7 trillion, according to a survey by the Boston Consulting Group.

North America had the steepest decline of all regions last year, with total wealth as measured by assets under management dropping by 21.8%. One reason is the region's heavy investment in shares: North America still has the highest proportion of wealth held in equities, according to Boston Consulting, at 38% in 2008. That proportion had been even higher in 2008, at 50%.
deanhills
I found the following comment to the Forbes article that makes good sense:
Quote:
The article's title is misleading considering that the amount of capital PER CAPITA under management is still higher in North America.

"Europe," although undefined in the article (be it the present European Union or the the geographica Europe), has a larger population than the defined "North America".

http://rate.forbes.com/comments/CommentServlet?op=cpage&sourcename=story&StoryURI=2009/09/15/europe-richest-region-markets-economy-assets.html&com=85922

Also, I cannot help to wonder what percentage of the holdings that are managed in Europe are owned by Americans as "offshore" investments. It would have made sense to me that your savvy American investor would have exported their investments at the time when the fiasco happened:
Quote:
North America, defined as the United States and Canada, had $29.3 trillion in assets under management in 2008, while Europe had $32.7 trillion, according to a survey by the Boston Consulting Group.

http://www.forbes.com/2009/09/15/europe-richest-region-markets-economy-assets.html
lagoon
What can I say, we're just smarter. Very Happy

*braces for American invasion*
handfleisch
deanhills wrote:
I found the following comment to the Forbes article that makes good sense:
Quote:
The article's title is misleading considering that the amount of capital PER CAPITA under management is still higher in North America.

"Europe," although undefined in the article (be it the present European Union or the the geographica Europe), has a larger population than the defined "North America".

http://rate.forbes.com/comments/CommentServlet?op=cpage&sourcename=story&StoryURI=2009/09/15/europe-richest-region-markets-economy-assets.html&com=85922

Also, I cannot help to wonder what percentage of the holdings that are managed in Europe are owned by Americans as "offshore" investments. It would have made sense to me that your savvy American investor would have exported their investments at the time when the fiasco happened:
Quote:
North America, defined as the United States and Canada, had $29.3 trillion in assets under management in 2008, while Europe had $32.7 trillion, according to a survey by the Boston Consulting Group.

http://www.forbes.com/2009/09/15/europe-richest-region-markets-economy-assets.html


Thanks for noticing that. Yes, per capita measurement is important, and so in that way America might still have the most bucks per person. All the same, it doesn't change the basic trend and point of the original article, which is that Europe is gaining and prospering while America is falling back. And it doesn't change my point, which is that this tends to prove the observation that the "socialist" benefits of four-week vacations, comprehensive health insurance, etc., are not a drag on economies and may in fact be a boon to commerce.
deanhills
handfleisch wrote:
Europe is gaining and prospering while America is falling back.
Perhaps Europe may be gaining very slowly, but I don't see it prospering though. The European Union at the beginning of the year predicted a decline in the economy of 5% and this month revised it to a decline of 4% and saying that they do not see further declines for the rest of the year. I don't see that as prospering. Rather than "containing" the damages.

You're the expert on America, I'm really very confused when I have to figure out what the situation is, as there is a Tower of Babel versions of its economy, and its budgets are very complicated for me to read. The European Union's seems to be more transparent to follow. All I know for certain is that Obama is spending a lot of money to revive the economy, and since you say America is falling back, maybe it is not working .... so far. Maybe there should be more focus on fixing the economy and less on "winning" a health care bill. If Obama could fix the economy, and make that his focus, and "win" that, the health care bill would come on the back of that, I'm almost certain of that.
handfleisch
deanhills wrote:
handfleisch wrote:
Europe is gaining and prospering while America is falling back.
Perhaps Europe may be gaining very slowly, but I don't see it prospering though. The European Union at the beginning of the year predicted a decline in the economy of 5% and this month revised it to a decline of 4% and saying that they do not see further declines for the rest of the year. I don't see that as prospering. Rather than "containing" the damages.

You're the expert on America, I'm really very confused when I have to figure out what the situation is, as there is a Tower of Babel versions of its economy, and its budgets are very complicated for me to read. The European Union's seems to be more transparent to follow. All I know for certain is that Obama is spending a lot of money to revive the economy, and since you say America is falling back, maybe it is not working .... so far. Maybe there should be more focus on fixing the economy and less on "winning" a health care bill. If Obama could fix the economy, and make that his focus, and "win" that, the health care bill would come on the back of that, I'm almost certain of that.


I am no expert but you are thinking very short term. I admit "prospering" was the wrong word, but the point is, Europe is both weathering the crisis better and gaining relative to America. This despite or because of its regulated markets and host of government sponsored employee and societal benefits. That is my main point. To go off on Obama and the health care bill etc is both channeling the subject elsewhere and thinking extremely narrowly. On the other hand, actually, fully implemented comprehensive health insurance in the USA would help the stability and prosperity of the country according to many experts, and that is part of my point. For example, a majority of bankruptcies in the USA are caused by medical bills. Did you know that?

Obviously the financial crisis was years in the making. It was at a critical point for a while there, but since then the bailouts by both the Republican and Democratic presidents and the stimulus package seems to be working as a stop-gap.

But it's time we look to see if European-style investment in worker benefits and infrastructure improvement would increase the stability and prosperity of the USA. Because with the other program, which basically works to ensure a desperate workforce begging for basic health insurance and minimal employee benefits, the USA is falling behind.
deanhills
handfleisch wrote:
I am no expert but you are thinking very short term. I admit "prospering" was the wrong word, but the point is, Europe is both weathering the crisis better and gaining relative to America. This despite or because of its regulated markets and host of government sponsored employee and societal benefits. That is my main point. To go off on Obama and the health care bill etc is both channeling the subject elsewhere and thinking extremely narrowly. On the other hand, actually, fully implemented comprehensive health insurance in the USA would help the stability and prosperity of the country according to many experts, and that is part of my point. For example, a majority of bankruptcies in the USA are caused by medical bills. Did you know that?
OK, agreed Europe is managing its crisis better, and probably will have more positive outcomes as a result. The US is not managing its crisis as efficiently. Yes, I did read about the bankruptcies, but still can't believe it, as I thought the greater percentage was bankruptcies that came from real estate. That was how the economic crisis started anyway, people could no longer pay their loans and mortgages, so where did the medical bills get its high ranking from all of a sudden. This is exactly what is confusing for someone from outside the United States. What is fact, and what is fiction? And for what purpose?

This is a research study I found that made good sense. People who go bankrupt are people who are spending more than they have:
Quote:
Finally, we estimate the sensitivity of bankruptcy filing to medical conditions,
conditional on households with different consumption patterns. Although households
with medical conditions are twice more likely to file for bankruptcy (33.5 percent) than
households that do not have medical conditions (14.8 percent), employment status makes
a much smaller difference to filing probability (20.9 percent for unemployed filers and
15.0 for employed filers). Interestingly, the difference between filing probability for
unemployed and employed filers is very similar to the difference between the filing
probability between households that display higher consumption-to-income ratios and
those that display lower ratios. Consumption makes minor difference for households that
are already adversely impacted by health problems and unemployment. In contrast,
greater mortgage and credit card debts can more than double the filing bankruptcy for
households that do not experience such adverse events (i.e. for households that do not
have health problems, having a higher level mortgage can increase the filing probability
by about 200 percent, from 8.8 to 25.7 percent). Given that only about 5 percent of the
control households experience serious medical conditions and about 13 percent of the
households experience unemployment, our analyses indicate that consumption pattern has
considerable impact on the filing probability for the majority of the population.

Source: http://www.gsm.ucdavis.edu/uploadedFiles/Faculty/Directory_and_Profiles/personal_bank.pdf

OK, back to your argument that possibly the medical health care bill will help the economy, which one are we talking about, just personal economy or the total economy, and if you would take the value of percentage of medical costs featured in personal bankruptcies and consider the BIG bankruptcies below of last year, how do they total up? Shouldn't the economy as a whole be fixed first including providing employment to people who are out of work, and then the percentage of personal bankruptcies related to medical bills be attended to afterwards?

Quote:
Company Bankruptcy Date Total Assets Pre-Bankruptcy
Lehman Brothers Holdings, Inc. 9/15/2008 $691,063,000,000
Washington Mutual 9/26/2008 $327,913,000,000
Worldcom, Inc. 7/21/2002 $103,914,000,000
General Motors 6/1/2009 $82,290,000,000
Enron Corp. 12/02/2001 $65,503,000,000
Conseco, Inc. 12/17/2002 $61,392,000,000
Chrysler 4/30/2009 $39,300,000,000
Thornburg Mortgage 5/01/2009 $36,521,000,000
Pacific Gas and Electric Co. 4/06/2001 $36,152,000,000
Texaco 4/12/1987 $34,940,000,000
Financial Corp of America 9/09/1988 $33,864,000,000
Refco 10/17/2005 $33,333,000,000
IndyMac Bancorp 7/31/2008 $32,734,000,000
Global Crossing 1/28/2002 $30,185,000,000
Bank of New England 1/07/1991 $29,773,000,000
General Growth Properties 4/16/2009 $29,557,000,000
Lyondell Chemical 1/06/2009 $27,392,000,000
Calpine 12/20/2005 $27,216,000,000
New Century Financial 4/02/2007 $26,147,000,000
UAL Corporation 12/09/2002 $25,197,000,000
Delta Air Lines 9/14/2005 $21,801,000,000


Source: http://en.wikipedia.org/wiki/Bankruptcy_in_the_United_States
ocalhoun
Or perhaps all this big spending is catching up to us in the form of a weak dollar?
deanhills
ocalhoun wrote:
Or perhaps all this big spending is catching up to us in the form of a weak dollar?
Right, it is sort of spinning out of control, probably people are selling their dollars and buying euros. So yes, the more debt, the lesser value in dollars and more value in euros, and then of course the US stands a great chance of falling behind Europe.

I just can't see it however! For me the United States is still the stronger of the two when looked "in total", they have the bulk of military on their shoulders as well, with their presence in the Middle East, which is actually protecting Europeans as well. People with so much socialism in their make-up and with so many social unions and large unemployment funds can only be "comfortable". People who are suffering, usually work on ideas to get out of it and become stronger as a result. My money is on the United States. I wish it could re-organize a new kind of Government, neither Democrat, nor Republican. But even with those two, I'm sure people in business and commerce will work their way around it, "can do" style. They always do.
Arseniy
States are going to die.
Gigantic amounts of outer credits, stagnating economical situation...
Out of money and with current crisis euro is going up instead of dollar.
That's another provement of the fact that smaller area is easier to maintain Smile
deanhills
Arseniy wrote:
States are going to die.Smile
Good point! I wonder what is happening to California, and cannot understand how some of the wealthiest people in the world could be living in a State that is bankrupt. That by definition should say that something is really screwed up with financial reporting. The "haves" and "haves not" do not match up. Ditto for all the other States too. Nothing is transparent. Unless you are a financial genius perhaps.
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