The Continent Warms To The New Economy

Alan Greenspan may believe in the New Economy, but outside of Britain, Europeans have tended to be skeptical of the idea. Germans, in particular, still like to build things and are wary of companies that don't seem to have much more than a Web site and a quirky business plan. That's starting to change, however. It can be seen in places like Frankfurt. Something is happening in this city, where bankers such as the Rothschilds invented risk capital two centuries ago. The elixir of entrepreneurship, technology, and investors' willingness to risk money is starting to take hold. Some of the signs are tangible: a 28% rise since 1997 in the number of Germans who own stocks. A fourfold rise in the Neuer Markt, Frankfurt's answer to Nasdaq, since the end of 1997. Initial public offerings by software, biotech, or Internet companies practically every day.

Other signs are less tangible. There appear to be more Porsche Boxsters on fashionable Goethe Street, more well-dressed young people in the coffee bars. Where once London was unchallenged as Europe's financial capital, now Frankfurt is luring top merger and acquisition specialists. It is easy to see Frankfurt's ascendancy in the context of competition with London. But it is more than that. All over Europe, new financial centers are sprouting, each with its own strengths. Paris is a focal point for corporate bond issues, for example. Expect cities such as Amsterdam, Milan, and Madrid to develop theirown niches. It's not a zero-sum game. On the contrary, these financial centers will complement one another, with salutary consequences for the whole region. Hail the New Economy--European style.

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