I think that a lot of it has to do with our differing political systems and central banks. I hear constant criticism of our Federal Reserve Bank and of Ben Bernanke in particular. But what is he guilty of?
Is it creating an environment in which people aren't afraid of their shadow and actually want to invest? Is it giving us confidence that he has our back if something goes wrong? Is it that he's recognized that deflation, not inflation, is the bogeyman? Is it his understanding that Europe could pull down the U.S. economy, and make the recovery so uneven that he could not afford to raise rates like so many wanted him to do?
How about the U.S. political system? We aren't crazy about it. But, let's face it, we don't see rioting in the streets. When we hear the term "Occupy Wall Street" these days, we think of an advertising campaign about a brokerage firm.
Granted, our political parties disagree over what needs to be done. The Democrats are insisting that there be some tax hikes--a responsible and easily defended position--while the Republicans insist on none, which is a reasonable position for now, given how weak the economy is. Neither is anti-business, per se (though at times Obama sure sounds like he is).
But contrast that with Europe, where the European Central Bank inspires no confidence whatsoever. The ECB hasn't even taken back its second rate boost from last year. Unlike the U.S. Fed, in which there are many voices but only one matters, we are given to believe that many people matter in the ECB--and that they don't agree on much at all.Really, why should there be any confidence? You have some people signaling that the euro should be broken up. Others love it. Some want bonds printed by the ECB. Others think that's preposterous. You have banks in Europe that would have been shuttered in the United States years ago for reckless lending.
This country has standards, at least. Europe has no real rules at all.
All this means that no one really knows what's going on. That produces a situation in which you don't want to put money to work, because you are afraid it will be instantly for naught. It would be better to go buy U.S. Treasuries.
Obviously, the United States is not perfect; we have tons of flaws. But when you compare us to Europe, it's night and day. I would fear having any investment confiscated over there. I would fear and imminent outbreak of class warfare.
Here we just debate the merits of private equity. And even then, we don't reach many conclusions of any gravitas.
In short, it doesn't really matter at this point how well a company is doing in Europe. The fact that it is in Europe means it is subject to these inanities--and, in the end, that's all that really counts.
