We increasingly view the economic and investment landscape in three parts - a 'Tripolar World' - that is split between emerging markets (the good), the US (not so bad) and Europe and Japan (the ugly). Whereas emerging economies are likely to grow in the mid-to-high single digits this year and next, developed world growth should be anemic, with US growth in the low single digits while Europe and Japan flirt with dipping back into recession. This perspective drives our strategic and tactical positioning, which favors emerging markets and developed world companies able to take advantage of emerging world growth.

The Good: The emerging market story is well known. Led by rapid development in China and India, emerging market economies' share of global output is slated to overtake developed world economies by 2013 (see Weekly Chart). However, we believe a fundamental shift is beginning to take place in the composition of emerging market growth

David Fuller's view I commend this report to the Collective as it is likely to interest even the most experienced internationalists. However I disagree with one point.

I think it would be a big mistake to lump Europe together in their 'Ugly' category. While the authors do separate out Germany for its ability to remain competitive, this does not go far enough in my view. There is no reason why central and northern Europe cannot remain extremely competitive. Germany is a class apart, not least in terms of manufacturing excellence, from the world's most reliable automobiles to the infrastructure equipment for which Siemens is justifiably renowned. Developed Europe also has a large and generally well educated source of labour in Eastern European countries, some of which will prosper.

Veteran subscribers will be familiar with Europe's problems of Socialistic policies leading to Eurosclerosis. More recently, sovereign debt problems have given people ample reason to question the euro's survival prospects. Today, no one knows how this will play out although just about everyone has an opinion and it is unlikely to be favourable. They may be right but I suggest that there is a larger issue: so long as Germany is the euro's anchor, Euroland will not follow the US Government's and Federal Reserve's policies which risk excessive inflation over the longer term.