posted
I have been thinking about the 21 ports that are soon to be taken over by The United Arab Emirates. There has been a lot of discussion in the news about the wisdom of selling our ports to an Arab government (vs a private company). The debate rages about national security, Islamaphobe, and racism.
I want to focus on "why" they are being sold. I believe the dollar is in danger of becoming very weak. With as much oil we purchase from the Middle East, we are flooding them with the dollar.
The problem is America's two biggest exports are agriculture and entertainment. What are they going to spend all of their dollars on? They can buy goods in China and other countries, but then those countries will be flooded with the dollar. I think it is possible the United Arab Emirates has Bush over a barrel (pun intended) and are demanding to spend their oil earned dollars on American assets.
Bush is needing to keep the economy propped up, so he is willing to encourage the selling of American assets to circulate more money into the economy. The global dollar is headed for a fall and Bush is between a rock and a hard spot. This deal will go forward.
I think we are going to see more of America's assets being sold to keep our economy afloat, but the end result is a possible recession with a VERY weak dollar. Inflation could be coming to stay.
As more countries buy America's last assets, I think we can expect to see inflation and a collective change of American lifestyle. That is just my thought and fear.
Am I out in left field?
Posts: 2445 | Registered: Oct 2004
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quote:The best quick analysis I've seen of the fiscal squeeze comes from New York University professor Nouriel Roubini, in his useful online survey of economic information, rgemonitor.com. He notes that with the U.S. current account deficit running at about $900 billion in 2006, "in a matter of a few years foreigners may end up owning most of the U.S. capital stocks: ports, factories, corporations, land, real estate and even our national parks." Until recently, he writes, the United States has been financing its trade deficit through debt -- namely, by selling U.S. Treasury securities to foreign central banks. That's scary enough -- as it has given big T-bill holders such as China and Saudi Arabia the ability to punish the U.S. dollar if they decide to unload their reserves. But as Roubini says, foreigners may decide they would rather hold their dollars in equity investments than in U.S. Treasury debt. "If we continue with our current patterns of spending above our incomes, by 2013 the U.S. foreign liabilities could be as high as 75 percent of GDP and an increasing fraction of such liabilities will be in the form of equity," he explains. "So, let us stop whining about the dangers of unfriendly foreigners owning our firms and assets and get used to it."
posted
Thanks Dag. That is a very interesting article. I liked :
quote: Here's how bad it is: The worst thing that could happen to the United States, paradoxically, would be for Arab and other foreign investors to take us at our xenophobic word and decide that America doesn't really want foreign investment. If they pulled out their money, U.S. financial markets would plummet in a crash that might make 1929 look like a sleigh ride.
I live close to Vegas, and it is very apparent how much of the land Chinese businesses are buying up. Block after block after block. America is in a catch 22--Be bought up or crash.
What alternatives are there for America's economy to be more secure? Maybe if we focus on alternative energy we could be the worlds leading export of solar and wind power.
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Blayne Bradley
unregistered
posted
a 75% reduction in military spending may help if redirected into the economy but thats begs the question how many jobs in the military will be lost and how many reaborbed back into the public economy?
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posted
The American people need to be encouraged to start buying back the country.
Buy American, even if it costs more (if you can find anything made in America).
Stop granting government contracts to any company that moves its headquarters out of the country to avoid taxes.
Conserve energy, buy less oil.
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Blayne Bradley
unregistered
posted
And your going to get the average American to do this how? Americans are too used to the idea of endless growth and endless spending its very much a part of your "frontier" history and during the cold war you had to encourage it as well inorder to increase affluance.
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posted
I've been working on this by buying either used or from local farmers/craftspersons whenever possible. Either way keeps the dollars in our economy, I suppose.
Posts: 14017 | Registered: May 2000
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posted
One of the problems is we NEED foreign investment to keep our economy strong. If they dry up, then we could hit a horrible depression. However, they only thing for foreign governments/companys to invest in is our core assets.
What we need is to produce something. Our last great production companies (the automobile industry) is in serious trouble. If you add up cheaper labor in foreign markets, expensive pensions, and a bunch of SUVs (which don't export well!), the companies are floundering.
We need a great American production boost. The only thing I can think of is alternative energy. However, I think it is too late. We will be bought up and the dollar will loose it's power.
Of course, if the dollar is weak, foreign good will be more expensive--but they will still probably be cheaper then the foreign counterparts. And with our assets in foreign hands, the American consumer will be facing a dark future.
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posted
I don't think it is too late, it just demands that the government stop burying its head in the sand, wake up and realize the problem, and then take some serious steps to start solving it.
Punishing tax evaders is a good start, we need to keep American business in America, though for that matter, a change in taxes altogether shouldn't be out of the question.
Start campaigns to "buy American." All over that should be what people think about first. Support our country, and stop being cheap. Sure, something from China might cost 10 dollars less, but so what? Support your country and spend the extra 10 dollars.
The main problem is awareness. People don't know and don't care and that's how the government wants them to be. But we know from past problems that when the problem is made public, and they are convinced of its severity, the American people can and will kick it into high gear, it just takes some pushing. As of yet, they haven't even been nudged.
Side note: Aren't the ports that are being sold to the Dubai based company owned already by a British company? Thus, not really selling off American assets, but rather foreign companies are moving American assets around.
Posts: 21898 | Registered: Nov 2004
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quote:Aren't the ports that are being sold to the Dubai based company owned already by a British company? Thus, not really selling off American assets, but rather foreign companies are moving American assets around.
Yes, but my contention that the United Arab Emirates is putting pressure to buy assets in America because they have so much American Dollars with nothing to spend it on because of our poor exports remains valid.
How is that for a run along a down way down a hill where there are many trees along the way and a nice pool at the bottom of the hill next to the little house run on sentence?
Posts: 2445 | Registered: Oct 2004
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posted
I'm not sure that's true lem. Correct me if I'm wrong, but the reason Dubai Ports World is to be taking over US ports is because they are buying the British company who is currently running them. I thought that the buyout deal included Dubai Ports taking over operations from the British firm in other cities in other countries, not just the 6 American ports. In that case, I'm not sure that your contention about an excess of American dollars holds up.
quote: . Correct me if I'm wrong, but the reason Dubai Ports World is to be taking over US ports is because they are buying the British company who is currently running them.
quote:The money goes to Britain.
I did some more research and I believe you are right! Darn you! I was so proud of my analysis.
posted
It's ok lem. I happen to agree with the larger point that the dollar is weakening, and at a much higher rate than most people are thinking. Things are going to start going downhill before we are ready for them, economically.
But hey, thanks for laying down in defeat. I like to win sometimes.
posted
I'm guessing the Pensito Review is a liberal Blog?
This is the only actual quote from the Pentagon that they provide, and I totally agree with it.
quote: “The terrorists want our nation to become distrustful,” England said. “They want us to become paranoid and isolationist, and my view is we cannot allow this to happen. It needs to be just the opposite.”
EDIT: I feel I should add that the way the Democratic Party is responding to this is making me sick. It's like the party's new policy is "We hate discrimination, except when we can get political points from it."
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posted
Well, it's an interesting point they are raising.
Bush for years now has been saying "the sky is falling the sky is falling!" telling us to be vigilant and that terror lurks around every corner, and then when something comes about that hands port control over to a company in a nation with known ties to terrorism he literally tells us not to worry about anything. It's contrary to what he's always been saying and I think that would give anyone pause.
Posts: 21898 | Registered: Nov 2004
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You might be interested to know that foriegn investments in the US will probably top 110 billion dollars this year, but that most of that investment has come from and will come from US allies, not China. 70% of that investment is European firms, 12% from Japan, and 9% from Canada. Only .2% comes from the Middle East and even less from China.
Granted, this isn't the same thing as the mass buyout of US assets, it's actually a strong sign of globalization. Eventually when Chinese markets are opened to the US, things can only go one way, and that is a massive increase in US exports. They've already cornered their share in our market, we can only go up in theirs.
But for the moment, foreign investments, most of them from safe and trustworthy allies are driving the economy at the pace it's going, and that isn't a bad thing.
posted
blackwolve, the quote comes from a CNN article:
quote:Deputy Defense Secretary Gordon England told the Senate Armed Services Committee that blocking the deal could ostracize one of the United States' few Arab allies.
"The terrorists want our nation to become distrustful," England said. "They want us to become paranoid and isolationist, and my view is we cannot allow this to happen. It needs to be just the opposite." (Watch: Can the UAE be trusted?)
England joined several administration officials in defending their approval of a deal in which DP World, which is controlled by the government of the United Arab Emirates, would take over British-based P&O. The transaction reportedly is worth $6.8 billion.
This quote alone isn't particularly alarming, but it is an extension of the same "if you question us, you're helping the enemy" mentality.
The issue here is not discrimination between which particular foreign nation should have control over our ports. There's only one country that should have control of them, and it's us. (I was uneasy with the idea of a British company controlling our ports in the first place.) As it is, port security is terrible, and less than 10% of shipping containers are inspected. I doubt it could get much worse...
As much as everybody says it's still the Coast Guard's responsibility to provide security, the Coast Guard itself never approved of the deal:
quote:Citing broad gaps in U.S. intelligence, the Coast Guard cautioned the Bush administration weeks ago that it could not determine whether a United Arab Emirates-based company seeking a stake in some U.S. port operations might support terrorist operations.
As far as approving UAE specifically to operate these ports, there are huge problems with that as well. Before 9/11, money was transferred to the hijackers from UAE. Many of them had their passports stamped there. Dubai is a hub in the world heroin-smuggling network, and with post-invasion Afghanistan producing more opium than ever, this is a concern. (In fact, the current UAE president is the son of the founder of BCCI, the bank that was so discredited for drug and gun running, as discovered by the Kerry Commission)
Also, President Bush DID know about the deal before it came to the attention of others, as confirmed by Karl Rove on Fox News:
quote:ROVE: Well, the president did know about it. He was -- the chief of staff, Andy Card, alerted him before the press kerfuffle. There was a process called the Committee on Foreign Investment in the United States. And there's a process. And they review a number of these transactions a year -- some years, as many as several hundred. Last year, there were 65 of these that had to go through this process. And there is a process by which these are reviewed and carefully discussed among the departments. If there is disagreement about it, it rises to another level. If there continues to be disagreement about it, it rises to another level. This went through the normal order of things. "
posted
And if we DID hit a major depression what would be the worst of it? Horrible things, yes, but you forget, if the U.S. collapsed economically, so would tens of other nations. The UAE, China, Japan and other such nations with lots of treasuries and sales to the US, would be economically screwed. Eventually, just like WW II, some nation who didn't expierience a collapse would take advantage and buy out others and cause war. Then, WW III would ensue, and the U.S. would join, and get their money back.
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posted
A worldwide economic collapse isn't automatic in a US depression. Though certainly the entire world WOULD suffer.
However, the US isn't going to suffer as badly as it did in the crash at the early part of the 20th century. The banking reforms put in place after that crash would save millions from the banktrupcy that was suffered by others. Further, millions more are employeed by the service industry, and even if the service industry employees were the only ones out there buying stuff (which in itself would never happen), there's still billions of dollars being moved around.
The situation isn't the same as it was 80 years ago.
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posted
I don't think the sudden onset of a major depression is what people should worry about. A far more likely event is a gradual march downward, resulting in a general depression of the American standard of living.
posted
O, I don't think that will happen. Mostly, I'll bet many things will be set astrait with the next President.
Posts: 2121 | Registered: Oct 2005
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posted
It is my opinion, Reticulum, that the problems we are currently experiencing which will lead us down that road are not problems that can be solved by any president.
It is my further opinion that the field of candidates currently being considered as presidential hopefuls for 2008 are about as likely to fix these problems as the guy who fixes my pipes when they break.
Presidents do not have enough control over the markets, in particular the markets outside of our country and our control, to make a meaningful difference.
posted
True, ya'd hafta get rid of the rest of the drunken Republicans PARTYing by running up debt on the taxpayer's credit card.
Posts: 8501 | Registered: Jul 2001
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posted
Well, I think in 20-30 years the situation will be much better. For example: When Clinton was Presidnet, the budget was around a 69 Billion suprplas. Infact in 2001, the Bush administration projected a surplass of twice that. It fluctuates, you see.
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posted
Simply put, the trade deficit is not a bad thing. Furthermore, the port deal would be a step towards reducing the trade deficit, as it represents an increase in local foreign investment, which provides capital for us to make things to export.
As for it being somehow a national security risk, I'm perfectly willing to trust our over-paranoid military when they say it isn't. All the security (what little there is on the ports no matter the owners) will continue to be determined by our laws and provided by our national agencies.
True, they can't control market forces and in general the international market and global economy. But they can make sure that the US is fiscally sound and stable, and has money in the bank ready to deal with whatever is thrown our way. And they have incredible sway over trade policy. NAFTA and CAFTA both do, and will, effect change in the US economy, and they were idea born in the Oval and trumpeted on capitol hill.
The next President can drastically change the state of our economy by cutting down the debt, eliminating the tax cuts that are putting us further in debt and giving more control of the debt we already have to potential enemies, and boosting spending on R&D. The next president can also simplify the tax code. Right now it costs millions for foreign investors to bring their business here, and that money is spent on just trying to understand the tax code, before they even actually invest anything here.
There's plenty the next president can do to change the downward spiral we are in.
Posts: 21898 | Registered: Nov 2004
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Does that article still hold true even though the deficit from the time that was written has more than tripled to what it is now? I'll admit I didn't read the whole thing, it was long, and my eyes glazed over a bit during parts of it, but the gist of what I got was that a trade deficit isn't bad, and that it can really mean lower prices for goods in America, so on and so forth.
But that article said nothing about whether or not hundreds of billions of dollars was still good. Is there ever a point where the trade deficit becomes TOO much?
Posts: 21898 | Registered: Nov 2004
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posted
Basically, no, at least not because of the quantity involved.
Or more specifically, a trade deficit is never bad, but sometimes one is caused by things that are bad.
In this case, the trade deficit is caused by two things: our relatively low savings rate and the huge sums our companies are investing abroad. The former might be cause for some concern, the latter is emphatically not.
However, these things are somewhat self-correcting. For instance, countries such as Japan with far higher savings rates are seeing savings rates fall, currently. Similarly, as our interest rates edge back up, savings in the US will rise.
Now, I don't think that's going to eliminate our current acccount deficit. Due to a variety of factors, I see American investment abroad remaining strong for some time to come, meaning we'll continue to have a current account deficit (unless savings grow stupendously, which they won't).
Posts: 15770 | Registered: Dec 2001
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posted
Heh. Lyrhawn, I would love to see every one of the things you just said happen. I guess I am just too cynical to believe any of them will be done. Take "eliminating tax cuts" for example. Eliminating tax cuts = raising taxes, and Americans hate raising taxes, even when it is needed. When I look at the spineless politicians vying for the oval office, I see no hope of that happening. As for "giving more control to potential enemines," I was beginning to think that I am the only person who ever harps on that, thanks.
quote:The American people need to be encouraged to start buying back the country.
Foreign investors are no inherent problem to the American economy, unless we truly are xenophobic and think foreign investors are going to act less rationally than American ones. Both foreign and American investors could suddenly decide to take all their investmanets out of America and put them elsewhere, but presumably both will only do so if it makes economic sense to do so.
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quote:As much as everybody says it's still the Coast Guard's responsibility to provide security, the Coast Guard itself never approved of the deal:
Wow. That is so wildly taken out of context I don't really know what to say. From the very same article you cited:
quote:The Coast Guard said the concerns reflected in the document ultimately were addressed. In a statement, the Coast Guard said other U.S. intelligence agencies were able to provide answers to the questions it raised.
"The Coast Guard, the intelligence community and the entire CFIUS (Committee on Foreign Investments in the United States) panel believed this transaction received the proper review, and national security concerns were, in fact, addressed," the Coast Guard said. That multi-agency government panel reviews foreign purchases of vital U.S. assets.
quote:Later, the Coast Guard said in a statement that the excerpts of its preliminary evaluation "when taken out of context, do not reflect the full, classified analysis" that eventually concluded "that DP World's acquisition of P&O, in and of itself, does not pose a significant threat to U.S. assets in ports" in the continental United States.
quote:The President can exercise this authority under section 721 (also known as the "Exon-Florio provision") to block a foreign acquisition of a U.S. corporation only if he finds:
(1) there is credible evidence that the foreign entity exercising control might take action that threatens national security, and
(2) the provisions of law, other than the International Emergency Economic Powers Act do not provide adequate and appropriate authority to protect the national security.
...
Information provided by companies contemplating a transaction subject to Exon-Florio is held confidential and is not made public, except in the case of an administrative or judicial action or proceeding.
It's not a case of some agencies "approving" the deal. They have to find a reason to disapprove it - otherwise it goes through.
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quote:Originally posted by prolixshore: Heh. Lyrhawn, I would love to see every one of the things you just said happen. I guess I am just too cynical to believe any of them will be done. Take "eliminating tax cuts" for example. Eliminating tax cuts = raising taxes, and Americans hate raising taxes, even when it is needed. When I look at the spineless politicians vying for the oval office, I see no hope of that happening. As for "giving more control to potential enemines," I was beginning to think that I am the only person who ever harps on that, thanks.
--ApostleRadio
It's true, we need the next president to be able to work with Congress to more or less take on the American public. The last six years haven't been worry free, but the current administration has the public believing they don't have to give anything back to the nation to help fix the problem we're in. If the next president explains the problems we are in, and then tell the American people that we're in for a rough time for the next four years or eight years or whatever, but that at the end of that time we'll be much better off, I think a lot of people would go along with it. If all the benefits are explained, I think most Americans would understand and approve.
As for potential enemies, just don't say that around Blayne. Posts: 21898 | Registered: Nov 2004
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posted
I really don't see how this gives the 'potential enemies' any control. I mean, the ports are physically in the US, right? What is the UAE going to do in the event of a conflict - match its security guards against the US Army on its home soil?
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