The Decline of Europe -- again!

The economic gap between the US and Europe just keeps growing.

AFP reports:

Weak economic growth in the eurozone compared with the United States and Asia is resulting in job losses and corporate relocations, such as those announced by the US computer giant IBM.

The group said last week it would eliminate 10,000-13,000 jobs worldwide, with most of the cuts to come in Britain, France, Germany and Italy.

Europe accounts for about one-third of IBM's global work force of around

IBM chief financial officer Mark Loughridge said the group would create smaller, more flexible local units to improve contacts with clients while eliminating corporate bureaucracy in lower-growth countries and shifting resources to higher-growth markets.

It was the latest in a series of examples that showed Europe was finding it harder to attract investment by major companies.

Last year, such investment grew by only 1.7 percent, following a slight decrease in 2003.

In Germany, which has the eurozone's biggest economy, business investment growth was even weaker, posting an increase of 1.0 percent in 2004, following a a 3.0-percent drop the previous year, according to data compiled by the Ifo economic institute.

Meanwhile, investment in the United States climbed 3.3 percent in 2003 and then soared 10.6 percent in 2004, boosting the economy as a whole.

Economists forecast investment growth will exceed 11 percent in the United States this year.

Read it here.

We have been incessantly lectured by moralists [but not by economists for the most part] that Americans consume too much, and that is the reason for a host of problems. Actually, the problem is that other countries consume too little.

Christoph Weil, an economist at Deutsche Bank, said that "businesses feel they are operating in a persistantly uncertain climate in the eurozone, mainly because it suffers from very weak consumption."

Household spending remained subdued there last year, growing by 0.6 percent in the fourth quarter after three quarters of quasi stagnation according to the European Union's statistics service Eurostat.

Economic illiterates point to the weakening dollar as a sign of economic problems, but in fact it is a boon to our economy.

Gross domestic product across the 12-nation zone expanded by only 2.1 percent in 2004.

"The second big handicap in terms of investment is the strong euro, which penalises investment compared with the dollar zone," Weil said.

I'm not saying that the US doesn't have economic problems, but we're outperforming the rest of the world and have been for many decades.