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Merry Christmas: We've Been Bought
Recently, a 710-year-old copy of the Magna Carta, which has been very influential on our legal system, was auctioned off for $21.3 million. The copy was owned by Ross Perot, and was sold to the Carlyle Group, with which the Bush family is strongly associated. Casey Morris shared my outrage,and wrote about this a few days ago.
It seemed somehow symbolic somehow, in the Christmas season, when consumer spending is encouraged in order to prop up an indebted economy. It made me wonder, on a larger scale, what else has been bought and sold recently, behind closed doors?
As US debt has soared, foreign investment has also increased, particularly in the mortgage market (which turned out to be a time bomb). Just in the last couple of weeks Morgan Stanley sold almost 10% of itself to China. CitiGroup received a shot in the arm (sold part of itself) from Abu Dhabi. foreign companies own or lease many of our bridges and toll roads.
Here, the conservative Heritage Foundation makes a plug for foreign investment in America, but also reveals that 32% of American assets are now under foreign control. Reading between the lines, they also reveal that our budget deficit and low savings rate make this necessary. Foreign governments can easily invest in American assets, starting by going to an informative website like this). With the dollar so low, there are alot of bargains to be had. We are fairly desperate to deal, as our national debt currently stands at $9,136,418,062,457.29, we have a monumental trade deficit (import far more than we export), and in each of the most recent years we have had a budget deficit (which is cumulatively, our debt and its massive interest).
Congress has been discussing foreign investment in the infrastructure of the US since the controversy about Dubai acquiring control of some ports. Questions have been raised about how to balance economic openness with national security and how much control foreign companies should be allowed to have over U.S. infrastructure.
From their report:
The country with the most holdings in the United States is the United Kingdom, followed by Japan, Germany, the Netherlands, and France. At the end of 2004, the sum of all foreign assets in the United States had an estimated market value of $2.7 trillion, though only 2 percent of these holdings are owned by state-run companies. Foreign companies' holdings are most concentrated in the manufacturing sector, but they also extend into several of the eleven "critical" areas identified by the Bush administration.
In the energy sector, British Petroleum, Royal Dutch Shell, and Venezuela's state-owned Citgo all have holdings within U.S. borders. Finland's Nokia and Sweden's Ericsson are major telecommunications providers; French-owned Sodexho U.S.A. is the largest food service company in the United States, and even serves meals on Marine Corps bases; and the largest private security firm operating in the United States, Securitas, is based in Sweden.
Middle Eastern entities (excluding Israel) bore the brunt of the ire surrounding the Dubai Ports World purchase. These entities account for about 0.5 percent of foreign investment in theUnited States. However, these companies have some high-profile holdings, including New York's Plaza and Essex House hotels, the Caribou Coffee Co., and the aircraft manufacturer Cirrus Industries, Inc.
What is a consumer to think, at Christmas? As consumers, we depend heavily on foreign products and services. Eighty percent of our children's toys come from China, and parents and nonprofit agencies had a rude awakening this year, as many items contained dangerous levels of lead. Some of us work for foreign-based employers, or have our jobs sent out of the country, or people come into the country to work (a related but different issue). Then, there is Reverse outsourcing, where Indian (and other foreign) companies actually create jobs for Americans rather than the reverse.
Is it xenophobic to wonder where all this is leading, particularly as the government has recently spent billions to bail out some of our banks to cover for bad loans that were partially financed by foreign investors. This is an expensive undertaking, when we are simultaneously involved in wars largely financed through borrowing from foreign investors.
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xenophobia |ˌzēnəˈfōbēə; ˌzenə-|
noun
intense or irrational dislike or fear of people from other countries : racism and xenophobia are steadily growing in Europe (Oxford English Dictionary).
There is nothing irrational about having concerns for the economic security and future of this country. If we are going to talk about psychology issues we have to admit that we are living through a monumental "transference" of America's assets to, not only other countries, but large multinational corporations as well. I prefer not to think of myself as a xenophobe, but I may be paranoid when I consider the ultimate goal of the large multinationals. I believe I am a realist when I consider that it is the large corporations that have benefitted from our government's past (NAFTA, CAFTA, etc) and current policy decisions.
The problem is we have all been sold: a bill of goods, lies, up the river, and short.
As I get ready for the family gathering (we made bread and got coffee from the Backbone Campaign as presents this year), I ponder the strange last year. I felt far more empowered last year than I do this year. I keep getting the image of all the neocons stuffing their fat faces, while we mere citizens scratch our heads and wonder whatever happened to democracy, equality under the law, and the Geneva Convention.
I will write more but I want to say to all reading this: you have our love and gratitude this season. Without you, we would be truly alone: small planets wandering around a lonely universe.
OnCall
I think you are right and that the Americans who are benefitting from the current system and the richest ones.
The income disparity has grown incredibly!
Foreign Buyers Snap Up 2nd Homes in US
http://finance.comcast.net/www/news.html?x=http://www.comcast.net/data/news/2007/12/24/845562.xml
Excerpt:
Cosmopolitan cities like New York and Miami have long served as second homes for affluent and accomplished foreigners. But the trend is growing. One in five American realtors has sold a home to a foreign investor in the past year, according to the National Association of Realtors.
The events of 2007 have made the U.S. much more affordable for international home buyers. Severe dollar declines against the euro and pound have made U.S. homes much cheaper for Europeans. But even foreign buyers without that sort of currency advantage are benefiting from sharp drops in housing prices at a time when problems in mortgage lending are keeping many Americans out of the market.
(snip)
The currency advantage is greatest for British citizens, given that each pound is worth well over $2. By contrast, the euro currently is worth about $1.45 while the Canadian dollar in recent weeks is hovering near parity with its U.S. counterpart.
"At this point the English are more actively looking in Manhattan than American buyers," said Ivan Hakimian of New York's Itzhaki Properties.
(snip)
The expansion of foreign real estate investment in the U.S. also means that areas that once were not popular with international buyers are now receiving interest. Doug Aitkin, who works for North Carolina's World Trade Center, said the Research Triangle area _ comprising the cities of Durham, Raleigh and Chapel Hill _ is now getting inquiries from French and Scandinavian home buyers, a new phenomenon.
(snip)
In Los Angeles, demand from wealthy South Koreans for attractive condo towers and mid-level rise buildings has helped revitalize the once forlorn downtown neighborhood, according to Johanna Gunther, a senior vice president with the Ryness Co. there. "Downtown has not been an attractive urban residential market until recently, but Korean demand has been a big factor in the change," she said. In recent years, the South Korean government has loosened restrictions on foreign exchange transactions, facilitating a large rise in Korean purchases of U.S. properties.
And Scottsdale's phlegmatic residential real estate market reportedly is getting a boost from Canadian buyers eager to enjoy Arizona's dry warm climate.
The National Association of Realtors found that 7.3 percent of the houses sold last year in Florida were sold to foreign buyers.
(snip)
"Relying on foreign real estate investors is fundamentally as risky as relying on subprime mortgages," he (an expert) said, noting that both phenomena distort demand and can conceal the depths of the problem U.S. home buyers and sellers face. "Foreign buyers aren't going to save the U.S. housing market. They're just a temporary fix like a finger in the dike. Fundamentals matter."
Here you see four banking/investment companies that are staying afloat only because of foreign "sovereign wealth" funds - Merrill Lynch being further bailed out (bought partially) by Singapore government.
http://www.forbes.com/markets/2007/12/24/merrill-lynch-update-markets-equity-cx_er_1224markets14.html
$28,000,000,000 in foreign investments for just these four banks - they partially own them now and are keeping them going for the moment.
"Sovereign wealth" funds free to be invested in the assets of other countries occur in companies making money, exporting more than importing, not at war, etc.
We are not one of them. Well, a few (very few) of our citizens are.
There's no question in my mind that we are moving towards a world in which national borders will be less boldly drawn than in previously centuries. But I'm not at all clear that this latest wave of foreign investment is a good thing - especially given the causes that are driving it.
My guess is that we're going to see a push back against multi-national conglomerates over the next two-to-three decades. These multi-nationals are essentially amoral. Their primary concerns may well be out of alignment with those of the citizens of the countries in which they operate - and increasingly, attempt to shape important political and economic developments.
I think the elite media and its representatives often slander the alleged “nativist” movement in America. There may be indeed xenophobic components to this movement, but my guess is that a majority of these people, the Lou Dobbs audience, have more tangible real-world concerns - like what their children's lives be like in a 21st Century where the "magical arm of the market" has steered more and more of their jobs to lower wage nations, while their earning potential in America is continually undermined by the unrestrained flow of economic refugees. If our trade policies are indeed spreading poverty in the developing world, then perhaps we should be calling every undocumented worker an economic refugee?
Moreover, this question need be asked: if you consider yourself an “American”, then what are your responsibilities to your countrymen? If someone’s loyalty is primarily to capital, rather than his or her countrymen, what does this mean for the legitimacy of nationalistic modes of thinking in the 21st century? Is it all simply propaganda, shamelessly paraded before us whenever the need arises to get the rabble to support the latest power grab of the economic elite (or war)? Or is there something that indeed unites us as Americans, some set of defensible shared ideologies and experiences that endure to this day, and can guide us in the century ahead? Let me submit that what I am posing is much more than a rhetorical question. It is, I would argue, the soul of this entire issue. Where is one’s real loyalty? To money, to a religious or economic ideology, or to continued participation in a bold experiment about the limits of self-government, and the validity of those propositions set out in the Declaration of Independence? Which is it?
If it is inevitable that foreign investment become more and more the rule, and this ownership's primary focus is the continued well-being of a tiny group of international investors, then perhaps the time has come for "the little people" (to borrow a phrase from Leona Hemsley) to forge international alliances as well. We have a WTO, but why not a WWO - a world workers organization, an organization that would begin by simply establishing enhanced communications among blue and white collar workers throughout the developed world, with the intention of ultimately using the enhanced stature that this collaboration would bring them to also protect the rights of workers in the developing world. If were going to have a global economy, then we need a trading system that protects workers everywhere across the planet. Workers in China, Vietnam, and Mexico need to be theoretically be able to afford American, British, German, and Japanese products. It’s just that simple. Protecting the rights of capital and intellectual property is not enough. If were becoming a global economy, then there has to be a global middle class.
I personally wouldn't envision this organization as socialist - since I accept that some significant percentage of human beings are inherently selfish, and those people will want to receive the fruits of their labor in more-or-less equal proportion to the effort that they put in. I pride myself on being a card-carrying member of the realist school of human nature. As James Madison wrote in Federalist 51: “if men were angels, no government would be necessary”. But men are not angels – even those men (and women) who pretend to think only of God’s law or the best interests of humanity. History should be our teacher in this regard.