A nice geopolitical summary of our present economic condition.
By the way, does anyon know why we need to have military bases in Japan and Germany 50 years after defeating them? Or in Korea? They can all defend themselves, and are doing quite well, thank you.And on top of that, have long wanted us out of their countries.
If the WW II generation is known as the "greatest generation" ala Brokaw, no doubt in my mind the Baby Boom generation will go down as the worst generation in American history.
We are thus in the position of having to borrow from Europe to
defend Europe, of having to borrow from China and Japan to defend
Chinese and Japanese access to Gulf oil, and of having to borrow from
Arab emirs, sultans and monarchs to make Iraq safe for democracy.
We borrow from the nations we defend so that we may continue to
defend them. To question this is an unpardonable heresy called
"isolationism."
And the chickens of globalism are coming home to roost.
We let Europe to get away with imposing value-added taxes averaging
15 percent on our exports to them, while they rebate that value-added
tax on their exports to us. Thus, the euro has almost doubled in value
against the dollar in the Bush years, as NATO Europe begins to bail out
on Iraq and Afghanistan.
We sat still as Japan protected her markets and dumped high quality
goods into ours and China undervalued its currency to suck jobs,
technology and factories out of the United States. Now, China and Japan
have $2 trillion in cash reserves. The Arabs have an equal amount of
petrodollars. Both are headed here to spend their depreciating dollars
snapping up U.S. assets -- banks, ports, highways, defense contractors.
America, to pay her bills, has begun to sell herself to the world.
Its balance sheet gutted by the subprime mortgage crisis, Citicorp
got a $7.5 billion injection from Abu Dhabi and is now fishing for $1
billion from Kuwait and $9 billion from China. Beijing has put $5
billion into Morgan Stanley and bought heavily into Barclays Bank.
Merrill-Lynch, ravaged by subprime mortgage losses, sold part of
itself to Singapore for $7.5 billion and is seeking another $3 billion
to $4 billion from the Arabs. Swiss-based UBS, taking a near $15
billion write-down in subprime mortgages, has gotten an infusion of $10
billion from Singapore.
Bain Capital is partnering with China's Huawei Technologies in a
buyout of 3Com, the U.S. company that provides the technology that
protects Pentagon computers from Chinese hackers.
This self-indulgent generation has borrowed itself into unpayable
debt. Now the folks from whom we borrowed to buy all that oil and all
those cars, electronics and clothes are coming to buy the country we
inherited. We are prodigal sons, and the day of reckoning approaches.
like Citigroup. I gotta believe this is a company to buy on the cheap under $20. Am I wrong here? Intel hasn't spent much time under $20 since 1997. It's now basically flat over the last 10 years. Crazy. P/E moving into the mid-teens. But I guess everything that isn't growing wildly is getting whacked these days. There is no leeway.
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