Monday, January 21, 2008

When Free Trade Feels Like Captivity

The mortgage market collapse is increasing our dependence on foreign wealth.

With a growing share of investment coming from so-called sovereign wealth funds — vast pools of money controlled by governments from China to the Middle East — lawmakers and regulators are calling for greater scrutiny to ensure that foreign countries do not gain influence over the financial system or military-related technology ....

Debate is swirling in Washington about the best way to stimulate a flagging economy. Despite divided opinion about the merits, foreign investment may be preventing deeper troubles by infusing hard-luck companies with cash and keeping some in business.

The most conspicuous beneficiaries are Wall Street banks like Merrill Lynch, Citigroup and Morgan Stanley, which have sold stakes to government-controlled funds in Asia and the Middle East to compensate for calamitous losses on mortgage markets. Beneath the headlines, a more profound shift is under way: Foreign entities last year captured stakes in American companies in businesses as diverse as real estate, steel-making, energy and baby food.
Is there a ceiling on how much American real estate foreign investors might scoop up and control with bottoming out real estate prices?

And talk about your absentee landlords. I heard a zoning official the other day say that land owners who live in other states are the most difficult to hold accountable for zoning violations. What about the landlords who live in Canada or Europe?

And while we're on the subject of this panacea of wonderful things that some keep telling us that free trade brings, let's go back to my old credit account with GE Money, which had its computer tapes containing 650,000 customers' social security numbers disappear. Aren't those tapes much harder to recover if they're floating around a black market in Indonesia or Thailand? The GE phone operator I spoke with the other day had an Indian or Pakistani accent, so chances are good that she was talking to me from Asia. How in the hell are investigations of this disappearance coordinated on a global level, and how hard would it be to pursue legal redress if I have to recover losses?

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