Rick Schwartz wrote an article earlier today about why he thinks the effects of the economic crisis will start fading away.

He lives in the United States so from that perspective, I understand the validity of the points he’s making. But as someone who lives in Europe, I will try to explain why I think he is misinterpreting the signs he’s seeing.

I wish the crisis could indeed be over but unfortunately, that’s not the case and without some fundamental changes, I just don’t see it happening.

First of all, I agree with Rick that a lot of people from the US are starting to feel better about the economy in general.

I work with lots of people from the States and noticed this myself.

Unfortunately, this temporary improvement is, in my opinion, a result of the fact that capital is fleeing to the US and not a result of the fact that things have fundamentally changed for the better. In other words, capital is fleeing:

1) to the US dollar
2) to the US stock market
3) to US assets such as real estate

This will probably persist for a while longer but it is not a sign that the world’s economy is getting better.

In fact, quite the opposite.

As you probably know, I live in Europe.

Over here, the problems are waaaay more complicated than in the US. With countries like Greece or Spain which have unemployment levels that are close to 30% and without more flexibility from the ECB, I just don’t see a way out.

On the other hand, when it comes to Japan, their central bank is *too* flexible, so people are reluctant when it comes to that economy as well.

The result?

Capital is fleeing to the only reasonable safe haven I can identify, the United States.

As I said before: the dollar will probably rise, US stocks most likely as well even after the occasional correction and so on.

The US isn’t in amazing shape but compared to Europe or Japan, for example, it’s a lot more attractive.

It’s doing better and will continue to do better for the time being not because their economy is indeed seeing fundamental signs of improvement but because other economies are in such bad shape that the US is the only reasonable alternative.

As I said before, I understand the things Rick says he’s seeing.

Other people from the US feel the same way and I can confirm that.

But unfortunately, what he’s seeing is a result of capital flight to the US for the reasons I mentioned previously and not a result of the objective/sustainable improvements all of us are looking for.