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Asia will benefit from Europe's turmoil

Michael H | Photodisc | Getty Images

The euro's runaway liquidity will help to support Asian equity market valuations and will provide the region with cheap finance to underpin its buoyant economies. Europe's intractable political and economic instabilities will also send trade deals to Asian businesses.

Numbers are showing some of these things already at work. Last Friday, for example, Asia-Pacific's main equity gauge closed only 5 points below its record-high level reached over the last twelve months. Since the beginning of the year, that index gained 17.3 percent – well ahead of the euro area's 10 percent (in U.S. dollar terms), despite the 0.05 percent interest rate offered by the European Central Bank (ECB).

The ECB's stated intention to significantly accelerate the growth of an already huge euro supply will continue to feed carry trades -- borrowing the cheap euro to invest in higher-yielding assets – but it won't do much else. Indeed, as the ECB evidence shows, its virtually free-money policies over the last three years have failed to raise and steady the euro area consumer lending in an environment of high unemployment (11.5 percent at the last count), or to stimulate investment spending at a time of declining aggregate demand and idle production capacities.

Read MoreInvestors may catch a bad case of the European jitters

Asia's policy makers who were fretting about the prospect of rising interest rates in the United States can relax. They can now count on waves of cheap European money coming their way, on top of an existing pool of large dollar and yen funds sloshing about in global financial markets.

Asia will be able to finance its trade and budget deficits at rock-bottom credit costs because even Germany seems unable to stop the ECB's printing presses. And, if Asian leaders want to be prudent, they could use this liquidity manna to deleverage their economies a bit. In particular, private debt ratios (i.e., private debt relative to the gross domestic product – GDP) in a number of these countries are currently estimated between 150 and 200 percent.

At any rate, the excess liquidity spilling over from Europe will be a strong contribution to Asian economies, whose growth this year is expected to be in a range of 4-7.5 percent for seven of the region's largest countries.

Read MoreECB's stimulus surprise: Reactions around Europe

China, of course, is the growth leader and the main contributor to the rapidly rising intra-Asian trade, which is making the entire region less dependent on out-of-the-area trade flows. Last year, for example, China was one of the main export destinations for Japan, South Korea, Indonesia, Thailand, Malaysia and the Philippines.

Asians are moving, Europeans are thinking about it

EU sanctions against Russia have also shown that a number of Asian countries have become serious global competitors in areas as diverse as agriculture and fisheries, manufacturing (including top IT products) and financial service industries.

I was not surprised to see that Asians could readily provide substitutes to EU farm and seafood exports, but I did not expect that they could instantly supply sophisticated hardware and accompanying software to manage Internet traffic that a sanctions-bound Western firm could no longer provide.

Read MorePutin, Ukraine agree ceasefire holding, more needed

During a recent international meeting in Europe, I also heard anecdotal evidence offered by a conference participant from Central Europe about a large car-washing complex a South-Korean company sold and installed in his country for about half the price quoted by a German firm.

And, apparently, the Koreans had the whole project up and running in record time. The Germans, he said, needed months to make up their mind, "behaved like we were their colony and like it was their birthright to sell us the stuff."

The competitive Asia

The Chinese are also taking European market shares. Having become important actors in Italy's sophisticated textile industry, they are now building bridges, highways, high-speed train lines and modernizing deep sea ports on schedules and prices no European company can compete with.

Read MoreChina's economy is not experiencing a hard landing

Most of this will probably be old hat to some of you. But did you know that some Asian financial centers offered Russia a full range of debt management and credit services they were denied in the West? That was news to me.

And I was also intrigued to see how much the Japanese went out of their way to "explain" to Russians that they were forced by Americans (presumably because of their defense ties with the U.S.) to go along with sanctions, but that they were looking forward to resuming close economic and political relations with Moscow as soon as possible.

That was repeated last Thursday (September 4) by Tokyo's Governor Yoichi Masuzoe at a meeting hosting heads of Asian cities. [Mr. Masuzoe is a political ally of Prime Minister Shinzo Abe and has done delicate missions to China.] Japan, apparently, hated to see all the business deals going to China, South Korea and other Asian competitors.

These details are illustrating a simple idea: Throughout this financial crisis the ECB has done everything possible to support the euro area economy. But pushing more liquidity won't make a difference in the face of highly restrictive fiscal policies, uncompetitive labor and product markets and trade wars. The newly pledged extra liquidity will just spill out – with most of it probably going to Asia for higher returns.

That is unfortunate for the euro area. But there is more. Capital will likely continue to flow out of Europe – again, mainly to Asia -- because the continent – supposed to be a haven of peace and economic prosperity -- is undermined by unending political crises.

Ukraine is just one of the acute cases with no military and/or political solution anywhere on the horizon. Next in line are brewing crises in Moldova, Georgia, Nagorno-Karabakh (Armenia and Azerbaijan) and frozen conflicts in the Balkans.

Read MoreWest must arm Ukraine to fight 'invasion': McCain

And then the new political fault lines are developing within the EU itself. An economically exhausted and hopelessly indebted south seems increasingly unwilling to go along with a German-led north perceived as insensitive and gung-ho on trade wars and hostilities that are highly damaging to the union's economic interests.

Who will solve these problems?

France, with rising unemployment, recessionary economy and an all-powerful presidential office whose current occupant has a record-low 13 percent approval rating? Germany, whose governing coalition is showing worrying signs of discord, and who, because of its history, cannot take on and exercise a leadership role alone?

Read MoreSinatra's 'My Way' for France and Italy

Investment thoughts

Asia looks good. The more I write this refrain (a recurring call in my columns), the more I ask myself whether I am wrong. And, so far, the answer always is: Asia does look good … given the alternatives.

As I wrote this on a Sunday morning (September 7) in a relatively advanced Asian country, I saw from my hotel window bulldozers and workers on a large construction site in a 35 degree temperature and a relative humidity of 80 percent.

A few hours later, a German friend told me over a delicious Asian tea that, by law, construction sites in his country must close during the weekend; they also have to close down, he said, when it rains or when the temperature falls below zero.

Read MoreGerman austerity 'obsession' is wrong: Economist

So, take your pick investors.

Here you have 70 percent of humanity hard at work, determined to develop, modernize and improve its livelihood.

And then you have Europe, arguably the world's most beautiful and rich continent, bent on destroying itself with petty hatreds and tragicomical rivalries of another age.

Michael Ivanovitch is president of MSI Global, a New York-based economic research company. He also served as a senior economist at the OECD in Paris, international economist at the Federal Reserve Bank of New York and taught economics at Columbia.