The Pain begins. I do not see how the Republicans can talk their way out of this mess which has been building and accelerating under a Republican President and a Republican Congress. This will be a much larger concern than what is happening in Iraq.
A prescient article written June 2005
The Deal Story of 2008:
Will the U.S. Get LBOed?
November 20, 2007 WSJ
China and the Gulf states are hungry, and they've just sat down for an American buffet. In the last few months alone, state-affiliated funds and companies have taken bites of American icons, picking up small stakes in Advanced Micro Devices, MGM Mirage, Nasdaq Stock Market, Blackstone Group and Bear Stearns.
The deals were designed to be small enough to avoid scrutiny from the U.S. government. This conveniently played into the hands of sellers, who were able to offload pricey positions while giving virtually nothing in return, such as board seats or veto rights.
But the mergers-and-acquisitions story of 2008 will be how these foreign sovereign funds -- sitting on an estimated $2 trillion to $3 trillion of reserves -- direct their appetites. Fattened by the U.S.'s own trade imbalances and encouraged by favorable currency rates, they aren't likely to stay so compliant for long. Further down the buffet line sit entire U.S. companies.
Seven sovereign funds, including those of Abu Dhabi, Kuwait, China, Singapore and Russia, now sit on piles greater than $100 billion. Outside the U.S., these funds have proven more adventuresome, with a Dubai company recently moving to take ownership of the airport in Auckland, New Zealand.
This foreshadows some uncomfortable economic and cultural reckonings for the U.S. The modern gamesmanship of corporate interests is beginning to look more like "The Great Game" of national interests, where capital, as much as armies, can be deployed for strategic effect. And on this field of play, the U.S. looks caught off guard -- not unlike the cocksure Olympic basketball squad, run out of the gym by ostensibly weaker teams.
"When governments act in this field, the motives are different," says Deszo J. Horvath, Dean of the Schulich School of Business at Canada's York University. "The motives are longer-term security issues, which can have nothing to do with current economics."
Sen. Evan Bayh captured the new concerns at a congressional hearing last Wednesday. "The definition of national security interest is broader than it used to be," he said. "[Y]ou'll see the Chinese going around the world acquiring what they view as strategic energy interests, and it is not impossible that financial positions might be used in a similar vein."
That's why this incoming wave of foreign money will reveal more about the U.S. than about countries initiating the deals. Laws overseeing foreign investments were just given a much-needed overhaul. But at its core, the issue is as much about emotion and pride as it is about process, says Ivan Schlager, a partner in the Washington, D.C., office of Skadden Arps, who handles cross-border transactions.
Foreign investments touch a nerve, especially when so much American economic power appears at the mercy of China, which holds U.S. Treasury bills, or the Gulf states, which have such a big say over U.S. energy costs. For 2007, foreign buyers have accounted for 20% of M&A in the U.S., according to Dealogic, the second-highest level since 1995.
"We have not fully grasped what is happening here, and we have no counterstrategy," said Patrick Mulloy, Washington representative of the Alfred P. Sloan Foundation, a group studying technology, business, and economics.
Can the U.S. accept the foreign investments as an essential element for lubricating a dynamic economy? Tighter economic ties create less incentive for war and terrorism. And below the radar, a recent series of foreign investments have closed without incident. "No one raised serious objections when Sabic [a state-owned Saudi Arabian company] bought GE Plastics in a competitive auction. Are we culturally ready? We're a very welcoming and open society," adds Mr. Schlager.
Until it's not. Already the country has proven touchy, famously fretting when a Japanese businessman overpaid for the Pebble Beach golf resort back in 1990, or when a Dubai-backed company looked to take over a series of U.S. ports in 2006, setting off a talk-radio furor that squelched the deal.
It's easy to find conspiracies in these governmental funds, in part because they have such little transparency. The Group of Seven leading nations recently called upon the International Monetary Fund and World Bank to study ways to improve disclosure and accountability.
With a weak dollar and the ever-enriched positions of petro-based economies, it's inevitable that the worries will continue to stew. And it's inevitable that they will one day interfere with a big sovereign-fund investment plan.
The irony is the U.S. is, in essence, funding its own potential takeover. In Wall Street parlance, they call it getting LBOed. "We're moving to a sharecropper economy," said Mr. Mulloy in an interview. "The other guys are going to be owning, and we're going to be working for them."
Email email@example.com. For a daily comprehensive look at the world of deals visit wsj.com/deals.
An issue that is under the public radar, not really "debate fodder"ReplyDelete
Not really sound bite material
So it just doesn't matter.
Game theory tells US so.
When our elected leaders don't defend our border and say that America is a "state of mind" more than physical space on a map, this is only a natural progression.ReplyDelete
When the world is chunked into major economic blocs where nations are symbolic memories of a more barbaric past, it is important that you are positioned to be on the Boards of Directors at the right global companies.
Citizens of the World need not bother themselves with national sovereignty.
Brother D-Day: Citizens of the World need not bother themselves with national sovereignty.ReplyDelete
"My kingdom is not of this world: if my kingdom were of this world, then would my servants fight, that I should not be delivered to the Jews: but now is my kingdom not from hence." -- Master Je Tzu
LONDON (MarketWatch) -- National strikes that have paralyzed France's transport system since last week are costing Europe's third-largest economy up to 2 billion euros ($3 billion) a day and putting hundreds of small companies at risk, economists say.ReplyDelete
The strikes took on a new dimension Tuesday as civil servants, from teachers to air traffic controllers, hospital workers and meteorologists, began a mass walkout. The energy union and France Telecom employees also joined the action, which began last Wednesday and had previously been limited to the transport sector.
Spanish King Telling Chavez to Shut Up Becomes Ringtone Hit in SpainReplyDelete
11-19-2007 7:19 PM
By MAR ROMAN, Associated Press Writer
MADRID, Spain (Associated Press) -- Many Spaniards were so amused when their king told Venezuela's president to "shut up" they want to hear the words every time their phone rings.
About half a million people have downloaded a mobile phone ringtone featuring the phrase
"Por que no te callas?"
or "Why don't you shut up?" leading Madrid daily El Pais reported on its Web site Monday.
That's what King Juan Carlos told Venezuelan President Hugo Chavez during a heated confrontation at a summit in Chile last week.
The ringtone is thought to have generated around $2.2 million for the companies selling it, El Pais said.
T-shirts and mugs featuring the words are also becoming a profitable business, and videos of the confrontation have been a hit on the YouTube Web site.
Chavez's opponents in Venezuela are no less obsessed.
Pirated copies of the quote have been popping up in the South American country.
In Venezuela, T-shirts with the slogan in Spanish have the "NO" in uppercase _ a call for voting against constitutional reforms that would significantly expand Chavez's power. The Venezuelan leader says the changes would empower neighborhood-based assemblies and advance the country's transition to socialism.
"The king said what Venezuelans have wanted to say to Chavez's face for a long time," said Jenny Romero, 21, a student sporting one of the T-shirts in Caracas. "I'm wearing this T-shirt to protest everything bad that has happened in the country."
The spat last week began when Chavez repeatedly called former Spanish Prime Minister Jose Maria Aznar a "fascist."
Spain's current prime minister, Jose Luis Rodriguez Zapatero, asked Chavez to be more diplomatic and show respect for other leaders. As Chavez repeatedly tried to interrupt, King Juan Carlos leaned forward and said: "Why don't you shut up?"
Obama and Huckabee surge ahead in Iowa!ReplyDelete
All my life there has been a big chuck of land owned by a Dutch land bank in our county. No one ever sees them, these absentee landowners. Also, we had an old single guy, largest landowner in our county, a Norwegian immigrant, in our church, finally died, left every acre to people back in Norway. It isn't right, this absentee landlordism. I can understand why people in other countries get pissed. On the other hand if I ever moved to Sweden(not in the cards) I'd like to be able to own something there. But try owning something in Saudia Arabia, you have trouble doing that. I think our American laws are all out of joint on this kind of thing.ReplyDelete
Though I've read Hillary might be the easiest to beat, I don't believe it, and I hope she gets slapped around. Go Obama!ReplyDelete
Nah, the last two polls (out at the same time, covering the same period) show Romney up about 5.5 points.ReplyDelete
No, but he's surging forward, "ahead" may have been a poor choice of words ...ReplyDelete
RCP - IowaReplyDelete
Looks like there's around 20% not saying yet out there in Iowa, on the republican side, from that poll.ReplyDelete
Well, here we go. The U.S. Supreme Court has taken the D.C. gun ban case. This is a big one.ReplyDelete
D.C. Gun Ban Case--Washington Post Right in the middle of the election. Good timing, United States Supreme Court.ReplyDelete
Bobalharb: D.C. Gun Ban Case--Washington Post Right in the middle of the election. Good timing, United States Supreme Court.ReplyDelete
Do you want it now with a 5-4 conservative majority, or in 2011 when Hillary has replaced Kennedy and Scalia with two comrades from the 9th Circuit?
Now, if that's the option. I'd rather they didn't monkey with it at all.ReplyDelete
John Lott's WebsiteReplyDelete
"This case is a big risk."
More fun that seems to have occurred under the republicans:ReplyDelete
Wounded soldiers asked to return signing bonuses
That is out landish, isn't it. ash?ReplyDelete
Beancounters, large and in charge.
It is truly absurd!ReplyDelete
To included the 2nd Admendment in the 14th, to make the "right to bare arms" civil and individual, or a "right" granted to the States, to maintain their independent militias.ReplyDelete
Good as time as any, for the Supremes to decide, if local and State Government are covered by "shall pass no law," or not.
ahhhh the "right to bare arms" . I figured short sleeve shirt need not be specifically mentioned in the Constitution in order to be protected.ReplyDelete
For women, the right to bare arms is not found in Sharia law.ReplyDelete
While some hold those rights to be self-evident, dont't they?ReplyDelete
When in all reality they are neither self-evident nor universal.
Trish will love Yoni forevermore if she listens to this.ReplyDelete
Hewitt: Hour 2
- Yoni the Blogger reacts to the Chalabi interview, and Congressman David Dreier talks about the presidential race heating up in Iowa and New Hampshire.
The Right To Bear ArmsReplyDelete
Returning the signing bonus--bs. Ash and I are in agreemnet! Rat too!
"With this sickle I reap my freedom"ReplyDelete
bob's coat of arms
"Musharraf to doff his uniform shortly"ReplyDelete
You guys complain about a lack of fiscal discipline, and here you are calling for money to be paid for services not rendered!ReplyDelete
Can't win for losin!
What, you want major league pitchers to keep everything, even if they blow out their arm and never pitch again?ReplyDelete
No way to run a ballclub.