It was cold, but I decided to go to Annapolis to check if my boat was still floating. It was an excuse to leave my usual habitat and regain some perspective on how the world works. I brought along my laptop. It is my umbilical cord in case of an emergency -- my ultimate connection.

The marina has wireless internet and the temptation was too great. I needed to review what was happening. The connection worked and I was in business. Technology never fails to amaze me. It was exactly like in my office. But this time I was sitting at my nav table with the water sloshing against the hull. In my cocoon.

I called my uncle in New Zealand using Skype and I could see him because he used a web cam. And all this was free. Incredible. I also caught up with some of my reading. The first item was the low productivity of the European countries. I expected these issues to become a problem since the inception of the EU. See my previous observations.

Spain and Italy cannot compete with Germany. In a normal environment they would devalue their currency and/or lower interest rates. But this cannot be done in an economic area with one central bank and one currency.

The outcome is capital flowing from low productivity countries to higher productivity ones such as Germany. Life becomes very difficult for low productivity countries in large economic areas with one currency. Similar problems are being faced by Ohio, Michigan, and West Virginia here in the USA.

“China welcomes ideas on how to improve its economy” I read on the Xinhua web site. “The hard evidence is that China’s soft power policy is working”, a Financial Times columnist penned a few days ago.

It is interesting to compare the two approaches to diplomacy. We are the strong guys, bashing the world to understand that democracy is the way to go.

China’s leaders go around the world totally unnoticed. Africa, Asia, the Middle East, Russia, …. They are weaving a web of common business interests. Who is going to be right? Confucius or Calvin?

(This Observations appeared in the 3-12-2007 issue of The Peter Dag Portfolio ).

George Dagnino, PhD Editor,
The Peter Dag Portfolio.
Since 1977
2009 Market Timer of the Year by Timer Digest
Portfolio manager

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