McQ, this morning, looks at the Citibank investment yesterday: [1]
Soren Dayton [2] says this [3] may be the “Defining news story of the cycle”…
Citigroup Inc., the biggest U.S. bank by assets, will receive a $7.5 billion cash infusion from Abu Dhabi to replenish capital after record mortgage losses wiped out almost half its market value. … the state-owned Abu Dhabi Investment Authority
I’m skeptical that it will be. The Dubai/Ports issue was a big PR problem…the Dubai/NASDAQ issue wasn’t. Do people really care that much about preventing or discouraging foreign investment in US companies? Should they?
I respond, over there:
One of the things that has been noticed in the past by the left in the past about the buying habits of wealthy Arab leaders is that so very little of that money ends up showing up being invested in the region. This, it is said, is how ideologies such as that of Usma BinLaden take hold, among the poorer classes.
Indeed, if we are to believe the hype, all of the excess that the American left likes to attribute to the top 1% earners here in America, are far more easily attributable to the type of people who bought up a large chunk of Citibank yesterday. The whole thing tends to make Saddam Hussein look like an average Joe.
Instead of that money being used to refocus the energies of the working classes within their own country so as to prevent extremism, it gets used instead to buy a part of a bank, or a few Rolls Royces, or another flying palace.
I’m happy that they’ve chosen to invest here as opposed to somewhere else. I wonder, however, if the purposes of the world would be better served by redirecting some of those profits for the betterment of the people within their own regions, as opposed to snapping up American financial infrastructure.
I propose no solution for the problem, because frankly, I can’t think of one that doesn’t involve use of the power of government, which is something I’m rather not see happen. (There’s that principle thing, sticking up again.) But I won’t deny that I’d be a lot more comfortable, seeing those dollars invested in their domestic improvement, because frankly, there is the greater need than a moment in terms of the needs of the world.
To extend my comments there…
When I raise these objections, I am speaking within the framework of the kind of Pan Arabism that is voiced by some in the region. (It is quite true, that Abu Dhabi is apparently quite different in this regard from some of the more extremist states such as Iran, or Syria.)
Certainly, there is the underlying concern about how much power over world affairs (And, specifically, our affairs) radical Arab states have, anymore, by means of those petrodollars. (Yes, arguably, Abu Dhabi isn’t one of these, but let’s not make the mistake of thinking that all who live and operate there are of some kind of monolithic mind about their goals here in the west. Smiling faces, sometime….)
However that may be… Unfortunately, we signed on for that, when we allowed domestic environmentalists to shut off our access to our own energy supplies, which as we pointed out recently, we have more of than anyone else in the world. At the moment, because of the environmentalist movement, we have restricted access to something like 85% of our available stocks. So, not only are such people causing us concern from an energy and financial standpoint, there also causing us to buckle under to pressures from Arab extremists.
I see that as a domestic issue, (And most certainly a security issue) …not as one to be dealt handled with the Arabs directly. But I wonder if government policy here in terms of what we allow into the country as investments from this country or that would not positively affect countries in the Arab sphere of influence. I suppose that could be best answered by asking the question “if we didn’t allow them to invest here, where would the money go?”