Sunday, January 20, 2008

Selling of America.

By Terry Bankert

Posted first to Flint Talk

Will the economic chaos of Michigan and Flint happen to the rest of the country?

Is America in a period of economic instability?

What is really going on? Who do we trust to tell us?(trb) Follow the money!(trb)

Overseas Investors Buy U.S. Holdings at a Record Pace (Nyt012008)

I know little of macro economics and will not rely on internet fanatics for answers. Lets start with the New York Times!(trb)

- QUOTATION OF THE DAY - "This is a phenomenon that could be called the growth of state capitalism as opposed to market capitalism. The United States has not ever been on the receiving end of this before." - JEFFREY E. GARTEN of Yale School of Management, on the purchase of American companies by investment funds controlled by foreign governments. (Nyt012008)

What does this term State Capitalism mean?

(trb) State capitalism , in its classic meaning, is a private captialist economy under state control. This term was often used to describe the controlled economies of the great powers in the First World War. In more modern sense, state capitalism is a term used to describe a system where state is intervening in the markets to protect and advance interests of big business. This practice is in sharp contrast with the ideals of market capitalism.

It is logical to assumes that an economic shift has begun before the economic lay people are aware of the shift. In retrospect what does an economic shift look like?(trb)

Last May, a Saudi Arabian conglomerate bought a Massachusetts plastics maker. In November, a French company established a new factory in Adrian, Mich., adding 189 automotive jobs to an area accustomed to layoffs. In December, a British company bought a New Jersey maker of cough syrup.(Nyt012008)

We have heard the political arguments for new industry and diversifications. This is good, right?(trb)

For much of the world, the United States is now on sale at discount prices. (Nyt012008)

Who has put my country up for sale? Is it the republican president and his congress? Or was it collectively the 30 second sound bite, form over substance mediocre media and institutions to include unions and elected bottom feeders that have led our precious America for the last eight years?(trb)

With credit tight, unemployment growing and worries mounting about a potential recession, American business and government leaders are courting foreign money to keep the economy growing. (Nyt012008) Is it in our interest to let this happen? Which prodigy of a mating canine do we allow to be our spokesperson on this issue?(trb)

Foreign investors are buying aggressively, taking advantage of American duress and a weak dollar to snap up what many see as bargains, while making inroads to the world’s largest market. (Nyt012008)

Is the enemy now among us? Are we protected from the potential of foreign corporate terrorism?(trb)

Last year, foreign investors poured a record $414 billion into securing stakes in American companies, factories and other properties through private deals and purchases of publicly traded stock, according to Thompson financial, a research firm. That was up 90 percent from the previous year and more than double the average for the last decade. It amounted to more than one-fourth of all announced deals for the year, Thomson said. (Nyt012008)

Look I do not pretend to understand but I do not trust any spokesperson that relies on the patronage of big money like this Thompson firm must. Do you have any answers? We are at economic war, the enemy is on our shores and the big money interest have gone multinational and sold us out. These interests use Bush as an employee and are probably attached to every other political leader from any party. If true who can we trust? A presidential selection paradigm may well be it’s the economic take over by foreign and multinational corporations stupid! Just who do you trust?(trb)

During the first two weeks of this year, foreign businesses agreed to invest another $22.6 billion for stakes in American companies — more than half the value of all announced deals. If a recession now unfolds and the dollar drops further, the pace could accelerate, economists say.(Nyt012008)

The county may be heading for a recession, Flint is already in a depression.(trb)

Our Country is on the brink of economic instability.(trb)

The perceived problem of inherent instability takes on further importance insofar as it is a principal cause of the next structural phase of the system. The new phase is often described as state capitalism because its outstanding feature is the enlargement in size and functions of the public realm.

In 1929, for example, total U.S. government expenditures—federal, state, and...

The surge of foreign money has injected fresh tension into a running debate about America’s place in the global economy. It has supplied state governors with a new development strategy — attracting foreign money. And it has reinvigorated sometimes jingoistic worries about foreigners securing control of America’s fortunes, a narrative last heard in the 1980s as Americans bought up Hondas and Rockefeller Center landed in Japanese hands.(Nyt012008)

State capitalism is a popular term to denote the state’s encroachment on free market capitalism. ....“The difference between free-market capitalism and state capitalism is precisely the With a growing share of investment coming from so-called sovereign wealth funds — vast pools of money controlled by governments from China to the Middle East — lawmakers and regulators difference between, on the one hand, peaceful, voluntary exchange, and on the other, violent expropriation.” The problem is that most people do not realize the differences when using the term capitalism, and incorrectly lump all capitalism as one or the other. ..(Sc)

are calling for greater scrutiny to ensure that foreign countries do not gain influence over the financial system or military-related technology. On the presidential campaign trail, the Democratic candidates have begun to focus on these foreign funds, calling for international rules that would make them more transparent. (Nyt012008)


Debate is swirling in Washington about the best way to stimulate a flagging economy. Despite divided opinion about the merits, foreign investment may be preventing deeper troubles by infusing hard-luck companies with cash and keeping some in business.(Nyt012008)

Okay that may be good.(trb)

The most conspicuous beneficiaries are Wall Street banks like Merrill Lynch, Citigroup and Morgan Stanley, which have sold stakes to government-controlled funds in Asia and the Middle East to compensate for calamitous losses on mortgage markets. Beneath the headlines, a more profound shift is under way: Foreign entities last year captured stakes in American companies in businesses as diverse as real estate, steel-making, energy and baby food. (Nyt012008)

Well this is bad ! They use the phrase captured state, this will be soon replaced with control. They could then break up our remaining corporations, nothing will be left that American! Is that good or bad? (Trb)

The influx is the result of a confluence of factors that have made the United States both reliant on the largesse of foreigners and an alluring place for opportunistic investors. With American banks reeling from the housing downturn and loath to lend, businesses are hungry for cash.(Nyt012008)

Yeah and a drug addict may be hungry for cash from a loan shark with out looking at the ramifications long term only to days fix.(trb)

The weak dollar has made American companies and properties cheaper in global terms, particularly for European and Canadian buyers. Even as Americans confront the prospect of a recession, economic growth remains strong worldwide, endowing oil producers like Saudi Arabia and Russia and export powers like China and Germany with abundant cash.(Nyt012008)

As the German company ThyssenKrupp Stainless broke ground in November on what is to be a $3.7 billion stainless steel plant in Calvert, Ala., its executives spoke effusively about the low cost of production in the United States and the chance to reach many millions of customers — particularly because of the North American Free Trade Agreement, which allows goods to flow into Mexico and Canada free of duty.(Nyt012008)

After a shake out..will we offer incentive of low cost of production? That means low income disappearing middle class , good for corporations and their owners bad for us working stiffs!(trb)

“The Nafta stainless steel market has great potential, and we’re committed to significantly expanding our business in this growth region,” said the company’s chairman, J├╝rgen H. Fechter, according to a statement.(Nyt012008)

Foreign giants like Toyota Motor and Sony have been sinking capital into American plants. Investment in the American subsidiaries of foreign companies grew to $43.3 billion last year from $39.2 billion the previous year, according to the research and consulting firm OCO Monitor. “This is a vote of confidence in the American economy, the American marketplace and the American worker,” the deputy Treasury secretary, Robert M. Kimmitt, said. “These investments keep Americans employed and keep balance sheets strong.”(Nyt012008)

Bushes people argue this is a good thing, foreign purchase of America!(trb)

Five million Americans now work for foreign companies set up in the United States, Mr. Kimmitt said, and those jobs pay 30 percent more than similar work at domestic companies. Nearly a third of such jobs are in manufacturing, which explains why Rust Belt states have been wooing foreign investment.(Nyt012008) Its almost sounding like a good thing, boy I am confused now(!trb)

“We’ve lost 400,000 manufacturing jobs,” said Michigan’s governor, Jennifer M. Granholm, a Democrat, who has traveled three times to Europe and twice to Japan in pursuit of investment since taking office in 2003. “I’ve got to get jobs for our people.”(Nyt012008)

Ah..our friends are selling us.(trb)

Some labor unions see the acceleration of foreign takeovers as the latest indignity wrought by globalization.(Nyt012008) Where has the union voice been? (trb)

“It’s the culmination of a series of fool’s errands,” said Leo W. Gerard, international president of the United Steelworkers. “We’ve hollowed out our industrial base and run up this massive trade deficit, and now the countries that have built the deficits are coming back to buy up our assets. It’s like spitting in your face.”(Nyt012008)

Its more like digging you own grave!(trb)

Other labor groups take a more pragmatic view. (Nyt012008) “We need investment and we need to create good jobs,” said Thea Lee, policy director for the AFL CIO in Washington. “We’re not in the position to be too choosy about where that investment comes from. But it does bring home the consequences of flawed trade policies over many, many years that we’re in this position of being dependent.”(Nyt012008)


Ask your presidential candidate how they will mend these flawed trade policies.(trb)

At the center of concern is the growing influence of sovereign wealth funds, which invested $21.5 billion in American companies last year, according to Thomson. Analysts say they could skew markets by investing to improve the fortunes of their national companies or to pursue political goals. (Nyt012008)

Foreign money pursuing American domestic political goals, is this a good thing? (trb)

“This is a phenomenon that could be called the growth of state capitalism as opposed to market capitalism,” said Jeffrey E. Garten, a trade expert at the Yale School of Management. “The United States has not ever been on the receiving end of this before.”(Nyt012008)

Bush will go done in history as being the American steward that allowed this to happen.(trb)

emblematic of national ambivalence, in an appearance on CNBC last week, the voluble market analyst Jim Cramer spoke in menacing terms about the growing role of state investment funds from the Middle East and China.(Nyt012008) A spokesperson!(trb)

“Do we want the communists to own the banks, or the terrorists?” Mr. Cramer asked. “I’ll take any of it, I guess, because we’re so desperate.”(Nyt012008)

Its not the communist stupid, it’s the foreign rich kids graduates of Harvard and Yale that are the enemy on our shores.(trb)

Proponents of investment from overseas note that finance from sovereign wealth funds is a mere trickle of the overall flow from abroad. Indeed, the bulk comes from Europe, Canada and Japan. Just as Americans have scattered investments around the world in pursuit of profit — with holdings of foreign stock and debt exceeding $6 trillion in 2006, according to the Treasury Department — foreigners are looking to the United States, with their capital generating economic activity, proponents say.(Nyt012008)

Ahh. Look this is just my stream on consciousness..somebody please explain this last paragraph.(trb)

If fear of foreign money now inspires Americans to erect new barriers, that would damage the economy, said Todd M. Malan, president of the Organization for International Investment, a Washington lobbying group financed by foreign companies.(Nyt012008)

The representative of the horses we let out of the barn now argue the door should not now be shut.B.S!!(trb)

“The policy choices on the negative side would have enormous economic implications that would make the current situation look like a bubble bath,” he said.(Nyt012008)

Just who are we to believe?(trb)

Tensions spawned by foreign investment hark back to the 1980s, when Japan snapped up prominent American businesses like Columbia Pictures, and some intoned that the American way of life was under assault. The new wave of foreign money is washing in at an even more important time, analysts say.(Nyt012008)

The United States has lost more than three million manufacturing jobs since 2001, with foreign trade often taking the blame. Foreign-made goods now account for roughly one-third of all wares consumed in the United States, roughly tripling their share over the last quarter-century. The soaring price of oil and a widening trade deficit underscore how the American economy is increasingly vulnerable to decisions made far away. (Nyt012008)

Sucks to be us!(trb)

In 2005, Congressional opposition scuttled a bid by the state-owned Chinese energy company Cnooc to buy the American oil company Unocal. The following year, furor on Capitol Hill prevented DP World, a company based in the United Arab Emirates, from buying several major American ports.(Nyt012008)

Who in congress led these fights and what were the vote of all the presidential contender?(trb)

No such outcry has greeted the purchase of stakes in major Wall Street banks by state investment funds in the United Arab Emirates, Kuwait, China, Singapore and South Korea. This is largely because the banks sold passive slices and ceded no formal control, which would have set off a federal review of the national security implications. But the silence also reflects the imperative that these enormous institutions swiftly secure cash.(Nyt012008)

its all about money.(trb)

“It would be good if these companies didn’t need all this capital and better if the capital was available in the United States,” said Senator Charles E. Schumer, Democrat of New York, who was a vocal opponent of the DP World deal. “But given the situation that these institutions find themselves in and the fact that there’s a pretty strong credit squeeze, there’s only two choices: Have foreign companies invest in these firms or have massive layoffs.”(Nyt012008)

The rock and the hard spot creates a test of leadership. Do we have any?(trb)

In years past, particularly when Japanese money washed in, many foreign purchases proved not to be so prudent in the end. This time, with the dollar weak and troubled American companies in a poor bargaining position, the prices really do seem cheap, some economists say.(Nyt012008)

“They’re buying financial assets at well under book value,” said Gary C. Hufbauer, a trade expert at the Peterson Institute for International Economics.(Nyt012008)

This is code for they are stealing our stuff right under the presidents nose.(trb)

Trade experts assume tensions will rise as developing countries — which tend to have more state companies — continue to expand their share of investment in the United States. (Nyt012008)

Canada still spends the most money buying stakes in American companies — more than $65 billion in 2007, according to Thomson. But other countries’ purchases are growing rapidly. South Korea’s investments swelled to more than $10.4 billion last year from just $5.4 million in 2000. Russia went to $572 million from $60 million in that span; India to $3.3 billion from $364 million. (Nyt012008)

But even if political tension increases, so will the flow of foreign money, some analysts say, for the simple reason that businesses need it. (Nyt012008)

“The forces sucking in this capital are much bigger than the political forces,” said Mr. Garten, the Yale trade expert. “If there is a big controversy, it will be between Washington on the one hand and corporate America on the other. In that contest, the financiers and the businessmen are going to win, as they always do.”(Nyt012008)

What do you think?(trb) Posted here by Terry Bankert Posted also to other sites

–where did this stuff come from...


New York Times, Business 01/20/08 By PETER S. GOODMAN and LOUISE STORY ---

(Sc) State Capitalism ---

(trb) Comments of Terry Bankert

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