Friday, January 11, 2008

The Drunken Sailor Approach To Government - Made Easy

When your banks are tanking from making bad loans and the credit card companies are taking a dive from extending credit to people they know cannot pay it back, who do you call to bail them out?

Answer: Nations that don't like you very much and would love to see you weakened.

Citigroup is putting the final touches to its second big capital-raising effort in as many months, seeking up to $14bn from Chinese, Kuwaiti and public market investors.

Under the proposal being discussed, the bulk of the money – roughly $9bn – would be most likely to come from China, people familiar with the negotiations say. The Kuwait Investment Authority would contribute about $1bn, while $2bn to $4bn would be raised through a public placement of shares.


Well, it's only a matter of time. When we get so far into these people, they are going to call these loans in. Mark it down. Meanwhile, they will own a significant amount of our financial infrastructure and control nearly all of the means of production, all because we export our factory jobs overseas.

In WWII, we succeeded partially because we converted regular plants that could manufacture the supplies we needed, to defeat a formidable enemy. But many of those are slipping away with a lot going overseas to nations like China. If the balloon goes up, does anyone think China will let us job that out to them?

This is what happens to a nation, when it spends way too much.

To state it in a Greek patriarchal manner much like Michael Constantine's character in the movie, My Big Fat Greek Wedding, "But nobody leesens to me".


4 comments:

Mustang said...

The “Drunken Sailor approach to government and business may give a clue to remediating this situation. Let us consider the following options for dealing with drunken sailors:
* Put him in a longboat till he’s sober
*Put him in bed with the captain’s daughter
*Pull out the plug and wet him all over
*Put him in the scuppers with a hosepipe on him
*Take him and shake him, and wake him
* Give him a does of salt water
* Give him a taste of the bosun’s rope end
* Stick on ‘is back a mustard plaster
* Soak ‘im in oil till he sprouts a flipper
* Heave ‘im by the leg in a running bow-line
* Shave his chest with a rusty razor

On second thought, the above suggestions may be remedies for politicians who have taken our country in a direction none of us wants to go. Offshore American industries should not benefit from tax laws. It is already true that many of the so-called defense industries have closed down, forcing highly skilled workers into fast-food chains, hacking cabs, or stumbling into the construction industry. Your overall assumption is correct, and as Bank of America attempts to buy out Countrywide Mortgage for $4.1 Billion, one wonders why the CEO for Countrywide is entitled to a $10 million bonus and benefits.

Using foreign capital to bail out failing corporations is only a crisis to American sovereignty when these investors call in their loans at the worst possible moment. This is exactly what happened to Germany in the early 1930s, when American investors called in their loans in following the Stock Market Crash of 1929.

These events are clearly beyond the control of any of us; we can only observe and write, hoping that people will read and communicate their concerns to members of Congress. That’s the way our system works — and of course, we should be prepared to spend tax money to pay off the loans to communist and Islamacist states — it is going to happen, sooner or later.

LASunsett said...

Mustang,

I didn't understand half of what you said in Navy talk (remember, I was a landlubber). But if you say so, I am ready to go with it.

Rocket said...

We've heard this argument before in the 70's and 80's but at that time it was against the "Yellow Peril" from Japan with Japanese car smashing in the heartland et al. If my memory recalls correctly they did not call in their loans in spite of nervous warnings from economists and lead stories on the news.

http://www.heritage.org/Research/labor/asb44.cfm

This time are you telling us that we are in danger from another "Yellow Peril" this time from China or even a "Turbaned peril" for fear of loans being called back sometime in the distant future.

"Well, it's only a matter of time. When we get so far into these people, they are going to call these loans in. Mark it down. Meanwhile, they will own a significant amount of our financial infrastructure and control nearly all of the means of production, all because we export our factory jobs overseas."

A bit pessimist no?

If you're worried about losing manufacturing jobs, worry no more. They're already lost. Last trip to the US I spent about $500 (so much less with my euros) on clothes (no designer brands for me) and nothing even came close to even being "Crafted with pride in the USA"

Comparison wide may I inform you that American pension funds own about 50% of the CAC40 equities.

It works both ways.

Let the market control.

PS - I marked it down.

LASunsett said...

Rocket,

//We've heard this argument before in the 70's and 80's but at that time it was against the "Yellow Peril" from Japan with Japanese car smashing in the heartland et al. If my memory recalls correctly they did not call in their loans in spite of nervous warnings from economists and lead stories on the news.//

Two points:

1. It's not about those from Asia owning stock or loaning money to American firms. It has nothing to do with that, but it has everything to do with an Asian nation that is in the midst of an arms build-up, with a bellicose attitude against the US. I do not recall Japan having either quality in the time frame you mention, as well as today.

2. The crux of the post is not intended ton be critical of foreign investment. As you say, the market should be the deciding factor. It is intended to point out that there would be less need for foreign investments in the form of corporate bailouts, such as this, if Americans would not spend so damned much. This includes individual citizens as well as government. There comes a time, when one simply must learn to live within their means.