• AMERICA FOR SALE?

The New York times recently asked “Does the America for Sale sign require a warning label?” The implication being, should the U.S. warn the global financial community that there are certain conditions to buying American companies? In this writer’s opinion, the New York Times has it wrong. These days it is not America that should have a warning label… the financial opportunists should get their Brioni designed lapels branded “HOSTILE”. Here’s why...

With weakness in the dollar, the world is coming to purchase everything, attached or not. It appears there are almost no limits… everything is for sale, our companies, our financial institutions and our real estate. Who’s buying? Well now, there’s the rub.

First let’s put the size of this new wealth in perspective. The average person going about the daily business of earning a living and attempting to build a life is familiar with the meaning of “wealth” as it might pertain to certain names who regularly appear in the media as being amongst the wealthy or wealthiest. Most of us can probably quote Warren Buffet’s stated fortune. By any measure the aggregate of his assets are substantial. They pale, however, when compared to the size of the foreign funds that have been accumulating through this past decade of oil price runaway inflation and global economic boom. Whether from trade, as China has done, or from the sale of a critical resource like oil, foreign governments have accumulated colossal amounts of cash. Some of this bullion has been parked in so called sovereign wealth funds. To this potent wealth, add the existing large pools of capital in off-shore trusts and funds also controlled by foreign governments, desert princes, dictators, and inheritors, and you have potential for irrepressible influence and leverage. Little is revealed of these enormous stores of wealth. They are not internationally accountable and there are no visible audit trails. They provide no structural evidence or transparency and their influence in the North American economy and markets is substantial.

Historically, corporate America has viewed these large baskets of cash as usually non-interfering deep pockets. Until now, it has been considered discourteous, indelicate, irritable and absolutely ungentlemanly to ask probing questions. The “depth and breadth” of this new-found power will engender audacious influence on whatever elements might fit the policy interests of its “owners” in the moment. Trade secrets will only be a line item in their “influence and pressure” list of priorities. They will have bigger fish to fry. The disturbing challenge to both the U.S. and Canada is that in the majority, these funds represent foreign entities antipathetic to North America’s way of life, its social structures and mores, its political structures, its culture and most importantly, its freedoms. This new financial clout is in fact new-found political authority for foreign geopolitical forces. This should energize all North Americans to sit up and take sober notice.

Heads of North American corporations, regardless of the wealth they have been able to privately accumulate, are pawns in the larger scheme of the global movement of capital and influence. It is unfortunate that senior executives managing these companies too often demonstrate a dearth of common sense, and default to “self-service” instead of considering the greater national perspective. Only very occasionally an acquisition emits blinding optics that politicians cannot ignore. Out of Congressional or Parliamentary pockets come the admonishing waving fingers incarnating “national security” or “national interests” and investigations are launched. Rarely is an acquisition, even one jeopardizing national security, ever stopped in its tracks. For such occurrence, a glaringly abusive corporate capture would have to have received an overdose of public attention.

Let us not ever assume foreign powers can be implored to act in our best interest. We can barely influence our neighbors to act conscientiously. Ask the Ukraine if getting oil cut off in winter by Russia was for financial reasons, or was for offensive political coercion. To date any attempts to bring reason to the table, clarify motives, or establish parameters for investments (acquisitions), have been all but dismissed out of hand and rebuffs have come with subtle warnings from individuals representing foreign interests. The IMF and the World Bank cannot be expected to provide surveillance or even negotiate on our behalf.

Is the current methodology satisfactory? 3Com’s recent presence in the headlines is a perfect reminder of the too present proclivity for careless and self-indulgent influence affecting decisions by both sides of the equation - the executives as well as the acquisitors. Only slightly further back in memory reside the shadows of Oriental Steam Navigation Co. (P&O) and its six major U.S. ports. There were at least two sources of bewilderment for Americans. One was that the company’s sale to the UAE (a foreign government) was being touted by the U.S. President, and the second was learning that the biggest “port” authority in the world was Dubai Ports World. “What? Who? How was this possible?” When it was finally slapped down following very loud public objection, did the threats from the UAE about damaging relations etc. ever come to pass? Not a chance. We should file that for future reference.

Now let’s go to the other side of the globe and consider the enlightening attitude of the Chairman of the China Investment Corporation, Lou Jiwei, speaking of the U.S., “if any country receiving investments has misgivings, China may choose to leave or look elsewhere.” We must heed this feigned indifference, while emulating the dispassionate “who cares.” Let’s not be so quick to further lubricate the already slippery out-of-balance free trade system. Prudence and sound judgment absolutely have to prevail, and balanced rules applied and followed.

Only a vigorous and impervious stance can be effective. It is a rare negotiation that is effectively concluded from a position of weakness. Since all acquisitions cannot be reviewed, foreign governments aren’t about to restrain themselves and executives will push boundaries whenever possible, what policy will protect the home front interests?

Answer: RULES. Congressional rules, not negotiated rules. The rules should include transparency of structure and control. The U.S.’s Committee on Foreign Investments should be dragged out of its closet and a more public vehicle installed for oversight.

This is at odds with the current approach of placating out of fear or out of misguided spirit of gentlemanly co-operation or perhaps ulterior motives or even backdoor inducements. Endless objections would surface, “we fear retribution” and “don’t we want their money?” and “our economy is in a downturn” and even “we can’t afford to right now, we need foreign investment” and “we can’t annoy these foreign governments” etc. Where else would they place their vast pools of capital? Will Saudi Arabia, Kuwait, Norway and Singapore switch a few trillion dollars to China's corporate sector? Or will Qatar, Bahrain and the UAE pull out of U.S. treasuries and markets, and perhaps invest in Russia’s unrecognizable version of democracy? Is there even another continent that the world’s largest pools of cash will move to? For the crumbs (risk capital) maybe. Not for the large cash. Owners of this new-found wealth and power may resent America, but they are not fools.

The U.S. remains the most stable and safe place for the world’s capital. PERIOD. No need to be arrogant – just confident.

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• REBOUNDING THE U.S. ECONOMY

The solution is infinitely complex and infinitely simple. STEP 1: Get out of Iraq. Now, not next year.

Some estimates place the cost of the Bush misadventure into Iraq at over $3 trillion dollars. The full cost will take years to fully conceive and appreciate. By any perception and judgment this is aberrant. Endless analysis and debate over democracy in the Middle East or whether there will be a complete breakdown between all factions in Iraq or even whether Iran and the Saudis will more directly get involved, is extraneous to America’s priority – stop the hemorrhaging. The U.S. treasury needs some respite. U.S. taxpayers, their children and grandchildren are going to bear an already oppressive burden.

You cannot help your neighbor if your home base is unstable. Retrench, recoup, take a year or two off from foreign battles requiring more than 10,000 troops. Reestablish international confidence in the U.S. as the world leader with some vision tempered with occasional wisdom.

Other countries will be forced to enter the frey in the Middle East in a more serious way to fill the void. Even Russia isn’t so sure anymore that it wants its neighbor Iran sitting on nuclear arms.

Paying attention to the home front will also rebuild any deterioration of foreign confidence that might have eroded the dollar’s strength. Return to confidence and ignore the machinations of multiple heads of state clamoring to denigrate the image of America and deface its currency. There is ample reason for Europe to be concerned with the rapid rise of the Euro and the resulting impact on its exports. Russia which has shifted away from its momentary pretence at democracy, is now taking aim at the dollar through the Euro. Could we suspect that the Rubble is the world’s reserve currency of choice in Putin’s fanciful long term dreams. Dream on. Nor is any other country likely to become a safe haven for the world’s cash.

Since WWII the U.S. has been the safest and most stable place to store capital. The world acceded for 3 generations. The U.S. hasn’t just been a military power, it has been respected and admired for its form of government and its technological prowess. Some of that respect has only been temporarily tarnished by a misguided administration, driven with a dogmatic determination that debt was its right.

OK, so STEP 2: Tighten the belt. No, really, really tighten the belt and promote more tightening. Forget about spending that tax rebate as Bush suggested. Do without where possible.

STEP 3: Save. Reverse the trend of the past decade and put away those nickels and dimes. They add up to dollars, eventually. They’ll ultimately accumulate to a return of Confidence. We’re dealing with a change in general attitude here. Let’s energize a broad reversal of disposition, and a reversal of “fortunes”.

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• MINIMUM WAGE – Where's The Confusion?

It is regretable to observe the fact that CEO's of America's 1,000 largest corporations have demonstrated little restraint on their personal accumulation of wealth while too many of their own employees or subcontractors earn below subsistence wages. In the face of such minimal display of reason or wisdom, the answer defaults to “legislation” to minimize devastation at the bottom of the income spectrum.

Even the middle class has seen no increase in its real income for over 20 years, while the income for the top 5% of earners has been skyrocketing. The millions of low income earners don't need to read the current Forbes list of the wealthiest to know there is a fast growing imbalance. Let's pay attention.

Heeding that imbalance and reducing it will ensure there isn't a complete breakdown in our social system and our social contract. All arguments presented in opposition hold little logic, common sense, or reason. They also demonstrate an absence of compassion. Such assertions are usually misinformed and proffered by individuals too busy cashing monthly checks higher than the average annual Income to care. We all deserve what we get, after all, don’t we? Perhaps not.

Are we truly concerned that most of our goods are produced by people earning poverty level wages in distant foreign backwaters? Not much really, pass the ketchup. We're just thrilled to get our furniture or designer jeans at cheap prices. Are corporations making sure that the goods they import are made in safe conditions or assembled by people earning a reasonable wage? Nope. How can such companies know such things . . . they use sub-contractors, don't they? The rationalizations are endless.

Let's make sure that the minimum wage enables at least the human beings at the bottom of our own food chain to rise above the level of an indentured class. Slavery is neither legal nor politically correct . . . so why is it so present and pervasive? The statistics are overwhelming. Let’s not ignore them.

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• AMERICA’S CHINA QUANDARY

While America’s attention, and too many dollars are directed at the Middle East, a looming giant in the Far East is evolving into a potentially more formidable antagonist on the world stage. The average American should be more preoccupied with current and future events in China than with any present or future embrace of democracy in Iraq, or anywhere else in the Middle East for that matter.

North America’s lifestyle has become dependent, even addicted to cheap imported goods from Asia. Practically every product we purchase at our local mall is manufactured in China, with only a few manufactured by its neighbors. The telephone call you make for service on those products goes to a bank of service reps in the Philippines who can instantly call up your private information. Manufacturers are providing us goods we might otherwise have to do without, or wait longer before acquiring. How much more would we pay for those goods? No one knows. That depends on too many variables, including existence of monopolies, company market presence, competition etc. Meanwhile, WalMart has become the standard bearer for free trade.

In the almost 166 years since the Treaty of Nanking when trade was opened up across the wider Chinese landscape, the West’s relationship with China has rested delicately on uncomfortable trade and not much else in acquiescence to the political and cultural divide. In the nineteenth century Britain positively counter-balanced its purchase of silk, tea, gold, silver and porcelain from China by becoming its principal opium supplier. The Treaty of Nanking obligated China to accept more opium grown on plantations Britain controlled in India. Some accounts of this period suggest that up to one quarter of the Chinese population became addicted. In the context of such history including the contemptible Opium Wars, it is not surprising that even after much time passed, attempts to admonish China for human rights violations are falling on deaf ears. Meanwhile, over a century later, the tide of goods leaving China for U.S. ports in 2007 was $321 billion. Only $65 billion worth floated in the other direction. Strangely, that inequality in movement is in and of itself, not an insurmountable problem, yet its optics cause unease on this continent.

Forecasts suggesting China will emerge as the world’s largest economy within one generation are likely accurate given China's propensity to remain pragmatic and maintain the status quo. It will do deals with anyone and any country that will serve its needs. It makes deals with oppressive dictators in Africa for natural resources and doesn’t meddle with local politics. It evidently does not see itself as an international policeman.

Congress is unlikely to take dramatic action other than uphold the concept of “free trade” although there is really no possibility of mutually beneficial free trade if there is not broad based balance between the partners. Trade sanctions would do little to repatriate jobs. Multi million dollar bonuses are too much incentive for heads of corporations to ignore . . . product manufacturing and the provision of services will continue to move off-shore. China has shown that it will move at its chosen speed in all affairs, including the devaluation of the yuan. It’s almost as if the corridors of power in Beijing are resonating with whispers saying “Global instability? What instability? We’re good. So what if we have mountains of foreign exchange? Did you manipulate the currency? … Nope. Did you?”

We all witnessed Matel apologize to China for shipping defective toys. Corporate America apologizing? By any other term, this is Fear. Fear that they won’t manufacture your toys for you if you don’t pull a mea culpa. Matel suggested that they hadn’t been careful enough with their quality control. That’s called confusion. Confusion because is shows lack of confidence. Such confusion was also present when Yahoo turned over names of dissidents to the Chinese government. Confusion and fear… that’s when stupidity sets in, and it did.

Tightening the belt on this side of the Pacific and internationally promoting the rule of law might have some influence on America’s long term peace of mind. That should include promoting full disclosure and transparency for Chinese companies that American firms take public. Can we expect that to happen? Not really. Wall Street has set up camp in China to raise capital for Chinese firms. Will they turn a blind eye to the lack of internationally accepted reporting procedures we have come to expect here? Will Wall Street firms defy common sense to make hundreds of millions in fees anyway? Will they attempt to rectify concerns pertaining to such trade apprehensions as subsidies, piracy and protected intellectual property violations? Past behavior suggests not. Anything goes, under the rationalization “We want to be in position to tap this burgeoning market. If we don’t, somebody else will. Why should we take a position on such elements, we’re not in the politics business.” Those are rationalizations, of course, for not doing the right thing.

It is left to the U.S. government to exert pressure. Unfortunately, threatening protectionism is no leverage at all when you’re admonishing a country holding over one and two third trillion dollars in U.S. government securities. Holding so much of America’s debt impels some moderation on China's part and we can be grateful that it requires economic stability as much as we do. At least for now. Let’s not create an even bigger power than the one we now face. Balance of power nurtures constraint and moderation.

America, cut back … way back, and save. Lousy time to be suggesting this, but is there a choice? It's time for America's middle class to become selfish.

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• OBAMA, A SOCIAL PHENOMENON?

Pundits in every media are tripping over themselves to explain the dearth of Republican votes in the current primaries while the Democrats are apparently showing up in droves. It is perplexing that the media isn’t deciphering and proffering why a man with little experience, and little national recognition prior to just a few months ago, is making a bee line for the White House.

We are witnessing an unusual confluence of events. The American economy is slowing while the vast percentage of Americans are coming to a realization that the opportunity they’ve believed in, is not turning out as professed. As I’ve noted previously in these articles, the most consequential element unconditionally required for the long term health of a society is broadly available education. It all starts there. An educated society understands its needs and how to meet them. It is capable of achieving what is required for its own long term harmonious, and reasonable, well being. An educated society also understands its values, aspirations, and culture within the context of the broader global community. An educated society has a sense of evolution and remains sanguine in the preponderance of its opportunities. When greater and greater numbers are unable to achieve education to the maximum of their capabilities, hope evaporates. When such numbers reach significant percentages of the population, that society strains. Evaporation of opportunities accentuates any resentments that may be simmering.

We have all accepted that our free market system will produce prosperity for the greatest number. If any such system is to function adequately and serve the greater good over the long term, balance and reason should, and must, prevail. Today’s America faces a rapidly spreading divide between the proverbial “haves” and a much too large segment of the population struggling each day to achieve sustenance and shelter. While the burden of through-the-roof medical care costs is literally breaking families, and an avalanche of mortgages are sliding into foreclosure, and cars are being repossessed in unprecedented numbers, national headlines tell the newly displaced that the Head of America’s largest oil company has paid himself $400 million. He did it, not because he was smarter or more talented than millions of others, but because he could. His board members are in on the game and endless others at the top of the financial food chain are abusing their positions like the hedge fund manager who paid himself $2 billion in compensation last year. It is accepted because it would be inappropriate to say anything against such abuse, since that would imply denigration of the sacrosanct concept of “free market.” Unfortunately, there is nothing “free market” about such abuse. When the head of one the world largest internet based companies, who after receiving almost a billion dollars in company stock, proceeds to take shares in different new public offerings, adding another hundred million or two to the personal pot, something is rotten in the system. The fact that “others did it” is hardly a proper or moral rationalization, yet the media stayed silent. There was absolutely nothing free market about this abuse of position. No abuse is reasonable and rampant abuse only serves to break the system.

During the coming election voting booths will see millions of faces the booths won’t recognize. The Democratic candidate will likely be Obama, and he could become the next President, not because of his track record, but because he has been able to deliver speeches that resonate with millions who are feeling left behind in the opportunity sweepstakes. His addresses actually promise very little and provide little insight into the man. Their delivery evokes an unsettling sense reminiscent of proselytizations déja-vu. There is something discomforting about someone appropriating the power of the Presidency with so little experience and obscure intent, yet it is his appearance of “detachment” from the imperious top of the food-chain that is creating such broad based support amongst those feeling disenfranchised. Although one hopes that he takes this trust seriously and meets the monumental expectations, the national debt of over $9.2 trillion and the total U.S. combined debt at over $50 trillion provide almost overwhelming constraints to the restoration of broad based opportunity.

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