What does buying groceries at Stop and Shop or A&P, filling the car tank at Amoco, going for a jog in Addidas running shoes, turning on your RCA television to watch your favorite soap or quenching your thirst with a 7UP have in common? If you guessed that all of the above mentioned companies are owned by non US firms then you have my admiration. But does that change anything? Of course not. But if so many of the most common corporate names are not American owned then what was all that hullabaloo about when Dubai Port World was to consummate a transaction of becoming the owner of the UK company O&P that is in charge of running six US ports? The short answer is racism, protectionism, partisan politics and short sightedness.
As we have discussed in an earlier post the United States runs on its current account an annual deficit of over $800 billion. This simply means that the US can go on running this deficit as long as we can generate a capital inflow of $2.5-3 billion each and every day. Our most two popular tools to accomplish this recycling of dollars are the sales of our treasury securities that carry a relatively low interest rate and the sale/export of equity in US based corporations. If that capital inflow is interrupted then we have no choice but to curtail our appetite for imported goods or else the excess dollars on the world market could trigger a major financial crisis. There you have it, was the move by the Congress to stop DPW from running six ports in the national interest or was it a move that is best characterized as killing the goose that lays the golden egg? You decide.
1 comment:
I couldn't agree more. And it may be the only time I have ever agreed with Bush. The country simply cannot afford to be isolationist, we carry too much debt and are too globally integrated, financially and otherwise. The U.S. economy is global, it doesn't just stop at the border.
Post a Comment