The Chinese government has been quietly buying its stake in the bastion of America’s financial center through multi-billion dollar investments in our most prestigious financial companies. Morgan Stanley, Bear Stearns, Blackstone Group, and Britain's Barclays are eagerly taking money from China to help bail them out of recent financial troubles.
It brings back visions of “It’s a Wonderful Life” where James Stewart runs down main street of his home town that has become unrecognizable due to it all being sold to an entity that has no stake in the true town spirit but was bought up purely for its profit potential.
China is leading a surge of strategic investments from Asia and the Middle East that so far have sunk about $25 billion into Wall Street banks.
In selling out to the Chinese, these financial institutions are selling America’s right to remain American.
The subprime mortgage mess provided an ideal opportunity for foreign investors to buy a piece of America. And, slowly, piece by piece, we are losing our heritage.
In this new world order of global economy that Bush has been pushing, we are losing our claim as the richest nation on earth.
This is the early stages of a dramatic reversal of financial power on Wall Street, the cornerstone of the U.S. economy.
"Both Chinese private and government interests are controlling more and more of the U.S. economy, and this is a result of the big trade and budget deficits we have," said Alan Donziger, professor of economics at Villanova School of Business. "These investments will make the U.S. somewhat less independent, but this is inevitable when we live in a global economy."
U.S. business practices created this situation by opening credit to financially unsound home buyers, along with giving credit to anyone who asks for it. To be sure, Wall Street's current predicament is "our own doing," he said. Turmoil in the credit markets have been fueled by defaults on subprime mortgages, and that's caused the Federal Reserve to attempt a bailout of the industry through interest rate cuts.
The value of the U.S. dollar has fallen which makes investments in these financial institutions cheap.
China agreed to pay $5 billion for a 9.9 percent stake in Morgan Stanley, and those securities pay 9 percent a year until they convert to shares in 2010. That translates to a gain of about $450 million of cash next year. But this infusion of new stock will lessen the value of shares to Morgan Stanley investors this same factor affects every investment firm that sells to foreign governments.
By keeping investments under 10 percent, it does not trip an automatic review by the government. Bush, and others, believe the injection of foreign capital helps keep the banks competitive and restores faith in an industry beaten down this year. Bush is part of the problem, the thinking is that any new money is good money, especially for his buddies in the financial arena. But he fails to consider how America in general is affected in the long run.
The selling out of America holds little meaning for high stakes dealers. As long as their company can stay afloat they don’t care that they sell America.
The phrase ‘sell your own grandmother for a dollar’ comes to mind.
Banks don’t want to admit how much say these government-sponsored funds might get. And this is only the beginning. Merrill Lynch & Co. is on the hunt for a foreign investment to help cushion what could be a huge fourth-quarter writedown in January.
Financial power is moving dramatically toward China and the Middle East which will have significant impact over time.
Wal-Mart, the world’s largest retailer, buys most of its goods from China creating a one-way flow of cash to China. China buys Americas financial cornerstone providing a financial highway into China’s bank accounts. It doesn’t take a financial genius to see that America will soon be another Chinese province.
Make no mistake, America is being sold out.
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