Production profits are rarely more than 10% and require massive capital outlays, marketing profits margins closer to 30% and with outside suppliers, often require much less capital outlays. Profits from intellectual property dwarf manufacturing profits as well. If the world economy stays "open", there is no big advantage of having a large percentage of the population sweating in steel mills and assembly plants when they can earn a better living other wise. We are moving from a "brawn" economy to a "brain" economy, and while it involves temporary dislocations in the market, the end result is possibly a higher standard of living. Just as the transition from a mainly agrarian society (50% of workers worked in food production at the turn of the last century, today less than 2% and they produce much more food) to an industrial society caused major improvements in the standard of living, the shift from "pure production" to technology development, as well as to more services could cause an increase in the standards of living.
As for the US/Euro and US/yen ratio, we may be just in the middle of a multi year trend (getting the dollar back maybe as low as in the early nineties). Yet, currently the Euro will face two major challenges, economic activity in Europe will take longer to get back to "par" than in the US, something which will moderate the dollar fall (which is itself due to the fact that we are still serving as the world economic "locomotive" with an excessive negative balance of payment). To throw a monkey into the world currencies, two dinar currencies are being attempted and I have no idea how these will impact international monetary flows.
Zeev
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