Investors move out of Japan and Europe

Markets in Europe will be down for the first time since 2002. According to Bloomberg, The Stoxx 50 and the Euro Stoxx 50, both measures of markets in the region, will fall this year. The markets in Japan will also be down.

Part of the fall-off is clearly due to large banks in Europe as they have been hit by subprime concerns. But a number of other sectors have been hurt as well. European car companies suffer from the same malaise as their U.S. counterparts and have the same competition from Japan. Big European drug companies are up against generic manufacturers, which is pushing that sector down.

The real lesson of the European and Japanese markets is that their tech sectors are very small. To some extent it is tech stocks that have kept the U.S. market in modestly good shape, but Europe does not have the equivalent of an Intel (NASDAQ: INTC), a Google (NASDAQ: GOOG), or a Microsoft (NASDAQ: MSFT). Neither does Japan.

Much of this points to the fact that markets like Europe may not recover any time soon. They lack the key industries that continue to do well and have nothing to offset the "old world" businesses like banking and manufacturing. That makes the long-term view look pretty poor.

Douglas A. McIntyre is an editor at 247wallst.com.