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Foreign Investors Buy Stakes in US
NEW YORK - In 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.
For much of the world, the United States is now on sale at discount prices.
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. 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 into the world's largest market.
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 Thomson Financial, a research firm. That was up 90 percent from the previous year and more than double the average for the past decade. It amounted to more than one-fourth of all announced deals for the year, Thomson said.
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.
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 Hondas proliferated and Rockefeller Center landed in Japanese hands.
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 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.
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.
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 underway: Foreign entities last year captured stakes in American companies in businesses as diverse as real estate, steel-making, energy, and baby food.
Five million Americans now work for foreign companies set up in the United States, and those jobs pay 30 percent more than similar work at domestic companies, said Deputy Treasury Secretary Robert M. Kimmitt.
© Copyright 2008 The New York Times Company
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9 Comments so far
Show AllI love it, bring em on! Everything, including our government is, or has been, for sale. We are officially a third world nation; failing schools, a health care system in crisis, a naion of people that refuse to revolt, and a government that just doesn't, or refuses, to function or give a damn. A nation of sheep on the cheap.
Global capital must invest in itself cuz nobody else will. Localism renders global capital irrelevant.
Haha. People are so easy to fool. All they have to do is wave the flag a lot and thump on the bible and they will vote for sell outs every time.
No wonder we'll never attack saudi arabia, even if 17 of the 19 hijackers of 911 are from there financed with Saud money, Saudi Arabia is a major investor in the U.S. This year they bought up a huge part of defaulting mortgage exposure that citibank and chase had, IIRC. Even though it was bought at firesale, the amount of future mortgage failure is likely to double.
Nobody else would buy this crap. Now they have a seat at the corporate table and our hopes of getting off oil are remote.
Say goodbye to the poles, say goodbye to Florida, New York .....etc.
I could be wrong, but the way I see it the coming human migration away from the flooding shores is going to be much worse than the New Orleans Katrina experience.
The unknown question is whether we have a few years or a few decades before the paper-thin greenland ice cap breaks up. It's going to be heartbreak hotel once that happens. Fortunately the bush compounds at palm beach and maine will be underwater!
I'd call that a bit of poetic justice, wouldn't you?
This whole phenomena sounds like "what goes around comes around". After profiting for decades by sucking resources out of third world countries looks like we may start hearing a giant sucking sound right here. WalMart has always seemed like a giant conduit for our money flowing straight to China (rather than to our neighbors who owned the local stores downtown- now gone), now it will be flowing out from big leaks everywhere! Third world here we come......
"Five million Americans now work for foreign companies set up in the United States, and those jobs pay 30 percent more than similar work at domestic companies, said Deputy Treasury Secretary Robert M. Kimmitt."
Interesting that foreigners are willing to invest in American companies that pay high wages, but American investors, apparently, are not.
Interesting too that Mitt Romney promised Michigan to bring back all the jobs that have been sent overseas. Isn't that the way he made his millions? Leveraged buyouts, downsizing, vulture capitalism and outsourcing?
If a serious recession in the U.S. means the violent war-mongers in the White House can't afford to invade any more countries, it may be worth it for the sake of the whole world.
It might even convince voters, FINALLY, that trickle-down economics does not work, that deficits do matter when they will take decades to reverse, that the welfare/health care/education of all is important if we are not to become the two-tiered have-and-have-nothing society we had in the 1890s. In short, that the whole right-wing Republican "philosophy" is a sham covering a culture of greed.
Naw! It will take a lot more to convince us.
When we no longer have the money to fix our roads, we can sell them to private interests who run them for profit.
The government is only there to transfer your taxes into their accounts. (privatization)
Tired and frightened of the empire's homicidal (and suicidal) behavior, maybe other nations are adopting the strategy "If you can't stop the Beast, buy it". The US is bankrupt in more than the economic sphere, which is why I'm advising my grown children that they ought to look into a move to another, more civilized place.