Why is the U.S. Worried Now?

Thursday, July 07, 2005
There has been some hub bub about Chinese based Cnooc's bid for Unocal. My question is why now?

Do people not realize that the U.S. has mortgaged its future anyway to the Chinese? The U.S. has a GIGANTIC trade defict. The U.S. runs a deficit of $57 billion PER MONTH! The largest portion of that goes to China. It's not like the Chinese are just giving away the things they make. It's like your credit card. The U.S. can only feed its current excessive consumption by paying for it later and paying with interest, mostly in U.S. Treasurey bonds.

But now the U.S. is worried about China buying all these U.S. assets (like Maytag) and for what reason? The Chinese already own a very big portion of U.S. assets which is just getting larger by the day. It is only because these assets are tangible that there is complaining but in reality its the exact same thing.

It's like those people who think using your credit card is free. Let me tell you something, it isn't. You can ignore your monthly statement now, and pay the minimum, but sooner or later, they want their money and they will come collect.


Ryan said...

Very good point. The US is in somewhat of a strange situation being the only major economic power in the West of which a significant portion is owned by non G8 nations such as China and Saudi Arabia. What's scary is that the bulk of foreign ownership is in critical economic areas like the financial district and energy production.