Mark

🇺🇸🇪🇺 Europe once had factories and no money. Now it has the money, but it sends much of it away. Where do European savings go? Across the Atlantic, into America, where they flow into US equities, Treasuries, and other financial assets—and, increasingly, into the valuations of a handful of tech giants. Those returns are difficult for American factories to match, which helps push capital toward finance and technology rather than manufacturing. Meanwhile, European plants face high energy costs, weak investment, and growing Chinese competition—all problems that more capital could help address, yet European savings continue to finance American assets. I call this “the West’s carry trade against itself”: Europe saves; America turns those savings into financial assets and inflated tech valuations; meanwhile, China builds the factories. The chart below shows twenty years of this dynamic. More on this soon: open.substack.com/pub/europe…