That's right, the US is on sale and what's more, at a discount if you account for the falling dollar.Fears of recession and lack of credit are forcing companies to look for money elsewhere. The sovereign wealth funds controlled by the governments of the Middle East and China along with some state controlled enterprises from other major developing countries are buying up shares, in fact being invited to pick up stakes in the most blue chip of American companies, which include among others, names like Citigroup and Merill Lynch.These foreign investors bought shares worth over $400 billion in 2007 in a host of US companies, dealing in a variety of businesses.
So sharp is the slowdown in domestic investment that states are pursuing a development strategy based on attracting foreign capital.Fears are growing that control over hi-tech companies, whose products could have military applications, may fall into foreign hands.These apprehensions are real and may become an issue in the forthcoming Presidential elections. Some candidates, particularly the Democrats, are already calling for greater transparency in the functioning of the sovereign wealth funds.
The US economy is weakening by the day, hit by the subprime crisis and the war in Iraq, but other economies remain strong, especially those which export oil and other commodities. What better place for them to invest their surplus cash than in the US.
The debate on whether this is a desirable trend or not will continue.The fact is that it marks a victory of sorts for state capitalism over free market enterprise, and has the potential to be used for pursuing political goals. The US is slowly but surely becoming exposed to financial decisions taken far beyond its national borders.