America for Sale, Can it be stopped?

America is currently for sale. Not the government, or its leaders (that would be another thread), but its corporations and businesses. Right now, while our US$ is weak our corporations are still strong. Because of this they are being purchased or are receiving foreign investments at a record pace. I am not saying that this is a bad thing for our country but I do feel that it definitely weakens us. Some of the investments or take overs hould be outright prevented due to involvement with certain technologies that could be detrimental to the defense of the country. What can be done to prevent such investment, when cash starved companies with strong products are looking for help?

I recently came across an opinion piece on an investment site I frequent and thought it was worth sharing. Its not a long piece so I will quote it here.

www.247wallst.com...

A Sovereign Fund For The US Government?

The Dubai International Capital fund has $15 billion to invest. Temasek Holdings, Singapore's state-owned investment company, just put $2 billion into a new investment vehicle in China. According to the IHT "the China Investment Corporation is preparing to spend roughly two-thirds of its $200 billion on deals related to Chinese banks."

Overseas funds have put money into Blackstone (BX), AMD (AMD), Citigroup (C). It may turn out that these were bad ideas and that the investments will lose money. But, foreign entities have capital to put to work, sometime for strategic purposes. With word that China steel interests, backed by the government, may buy huge metals company Rio Tinto (RTP), the trend is continuing.

The US Congress has shown concerns that it does not want foreign investors to buy US companies which could compromise the US advantage in some global industries. An investment in the Nasdaq (NDAQ) has been questioned. A deal which would give Huawei Technologies a piece of US tech company 3COM (COMS) may be killed because the US company has advanced tech for the telecom industry.

Without money to put into these companies, it becomes fairly hard for the US government to pick the pockets of investors in firms which may be attractive to foreign interests by blocking deal after deal. But, Congress can put its money where it mouth is. To do that, the US would need to have an investment fund of its own.

A sovereign US fund could not only invest in "strategic" interests in this country, it could put capital abroad just as overseas companies are doing in America.

Where would this money come from? The Treasury would have to float bonds, the same way it does to raise any other capital. It might be a very attractive investment for institutions. Ironically, investors from overseas may want to put capital into the fund as well. The government could certainly raise $100 billion or more without a great deal of difficulty.

The problem with a fund of this sort is who will decide where the money is invested, Giving it to some part of the federal government would create too great a bureaucratic problem. But, giving management to someone like Henry Paulson and a team of investors might well work. Paulson would have to leave Treasury, but a position investing for US strategic interests is probably more attractive than being in the Cabinet of an administration that is one its way out.

The US government can put up, or shut up about overseas sovereign funds putting capital into American companies.

Douglas A. McIntyre
24/7wallst

Other countries are using investment vehicles to further expand their own business. The only problem I see is that The largest corporations in Mid Eas and China are all partially or outright owned by the government. As we do not have any Companies that are directly owned by the US Governement (although their are a lot of affiliated companies) how could we go about doing this?

One example of this is GE Plastics. GE recentlu sold this unit to a Saudi Company called SABIC, Saudi Basic Industries Corp.. This Company is Saudi Arabia's largest non-oil related company and is 70% owned by the Saudi Government and and 30% owned by Mid-East investors (private equity). GE Plastics had a large amount of US government contracts they were forced to sell at a loss in order for the deal to receive justice department to approve the merger. As the article notes, a lot of foreign money, mostly from the govenments or their investment vehicles in the Middle East and China had made equity purchases of some othe largest hedge funds and private equity firms here in the States, giving them a broad investment into the US Economy. This gives them access to a lot of new trading partners, and outlets for foreign goods. These foreign countries now have corporations to sell their wares by investing in them indirectly.

Another example is China's Lenovo. They wanted to begin selling products in the US, so they purchased the PC division from IBM, instantly making them the world's 4th largest computer manufacturer. Lenovo is 42.4% owned by Legend Holdings, which is in turn owned 65% by the Chinese Government. Therefore, the Chinese government owns 27% of Lenovo.

I am going ot have to agree with the article writer here. Its high time the US create an investment vehicle itself. One to protect their own industries.

The problem being......how do we find someone to run the whole thing? How do we find a qualified candidate? I would offer my services, but I am pretty sure there are lots more people out there more qualified to run the company. Any ideas????

By the way, on a side note. I am still a big believer that the US$ is in the process of bottoming, and fully expect the trade to have corrected completely by the end of January. Personally I have begun to get long on the US$, but have not unwound all my short positions yet. Technically I am hedged by the new long positions, but once the short ones are unwound, I will be fully long in early January.


Edited to add the link

[edit on 5-12-2007 by traderonwallst]

I'm not ready to take a long dollar position yet. Day trading is one thing, but for the long term trend...I'm not so sure it's over yet. I do feel we'll have a stronger dollar for the elections, but I'm beginning to think more like early spring before the short term trend changes.

America is definitely for sale and while the corporations are the first big investments especially for MidEast and Chinese investors, I think the secondary investments will be when they start buying up land and houses while we go through our housing fallout. That's going to be the bargain basement sale..

Oh I forgot...

How can it be stopped?? Other than writing laws to prevent foreign investments, I don't see how it can be. We're already in debt to our eyeballs, so in order for these companies to grow, they have to accept the foreign investments.

It is somewhat shocking to realize that the very thing that gives a country strong independence and sovereignty -- wealth -- is being used to divide the U.S. into global slices, economically-speaking. Whoever has the gold makes the rules, so what happens after more stock is foreign-owned and presiding owner(s) decide they no longer like doing business the way Americans are used to doing business? Would the Constitution be the deciding factor in legal decisions regarding potential business-related disputes, or would the national charter of the non-domestic parent company?

I've experienced "the customer is not always right" syndrome a time too many, already, and what if there's no recourse as this intensifies down the road? Where is this economic trend actually headed, I wonder.

As I currently work for a Company with a foreign owner, (Japanese) there is one more thing I can add. In Japan they do not like the people of the country investing money. They feel it is better served if their people were a people of savers. Without the need for higher returns from a stock market, the number 1 investor in Japanese companies has been the Japanese government themselves or industures have formed what is called a Kieretsu.

A keiretsu (系列, keiretsu? lit. system or series) ("ei" pronounced as in "weigh") is a set of companies with interlocking business relationships and shareholdings. It is a type of business group.

en.wikipedia.org...

The Company I work for belongs to such a group. I wil lnot name the companynor the industry. But how it works is we support each other through differnet ways. A bad note for a company is a bad note for an industry. We defend each other like we would defend ourselves. This leads to a lack of competition from within, but the group would be more than willing to compete with other companies outside the Keiretsu. if a company is in a weakened position and needs a loan, another company will often float such a loan even at 0% interest in order for the industry to save face.

Now I don't agree with this kind of business, as its not really capitalistic. Bad companies...should go out of business. I feel thats what makes an industry strong.

But if other countries take such a defensive stand on their industries, or the industries do so themselves, why doesn;t America have the same stance here????

wouldn't it be unethical for companies to practice business that way? Also wouldn't it lead to more insider trading, speculation, monopolies, etc? Like you said not very capitalistic. I think there would be greater chances of Americans being swindled by companies investing in each other on paper when technically they're all in the same boat with the dollar weakening.

Maybe laws to prevent foreign companies from being able to purchase a majority stake in a company is the best solution. America needs the income.. and as you noted, we're not savers like the Japanese and a large percentage of Americans is heavily invested in our stock markets.

We should keep investing globally while we still can and hope to buy a bigger slice of their pie before they buy ours.

Are the keiretsu's public knowledge? meaning is it transparent all the companies involved with each other?

Keiretsu's have been around for a long, long time. It is completely legal and highly reputable in Japan.

Here is another link. All I will tell you is that in the grid labeled the "One Set Policy of the Keiretu" the Company I work is listed, but I won't tell you which one.

www.sjsu.edu...

I must say. I am very disappointed by the lack of responses to this thread. No one has an opinion about America's corporations being bought up by the rest of the world? No one finds it important??