September 19, 2008
With the collapses on Wall Street this week and signs in the United Kingdom pointing towards a housing market crisis as well, it appears that the U.S. and the U.K. have left the door open for other world economies to step in and take over the global economy. Peston reports: “It's a world in which the Chinese state, if it co-ordinated the investments of its cash-rich institutions, could end up owning more-or-less the entire financial system of the US and the UK.” It is conservative institutions, he says, and those with simpler business models with a history of careful management of their funding sources, which will become the new superpowers.
Comments | 11 Total
September 19, 2008 at 10:57am by Rip Empson
Honestly, the U.S. is in such a troubled financial state right now, we could certainly benefit from a bit of help from Asia. But as ReportonBusiness.com tells us, China (and Asia) is far from coming to the rescue: "Burned by the flop of previous investments in U.S. finance, China, the richest new player in Asia, is sitting on the sidelines of the current crisis. Instead of rushing to snap up distressed Wall Street assets, its leaders are looking with growing concern at their own, increasingly troubled economy." For years, China has underwritten U.S. consumers, taking their giant earnings from exports and investing in U.S. Treasury Bills and other safe areas and with $1.8 trillion in foreign exchange reserves, China could be a life-saving pool of investment capital. But so far, no luck. China seems to be balking at the idea of U.S.-related investments.
September 19, 2008 at 11:03am by Michael Krakovskiy
They have money, the price is right.
September 19, 2008 at 11:59am by Michael Krakovskiy
Yes, and then it will be _their_ problem.
September 19, 2008 at 11:59am by Jason Pappas
As a Principal of http://entrequest.com, we work with some of these firms and I can't figure out if this is a good idea or not. In some ways the investment is needed desperately and there appear to be enough guardrails in the US financial system that will prevent foreign players from created unwanted chaos. Bottom line, ownership in regualted markets is somewhat irrelavent.
September 19, 2008 at 2:48pm by Dan Sargent
Of course... and the US/UK banks who threw REAL risk analysis to the wind have no one to blame but themselves...
September 19, 2008 at 5:13pm by Afam Edozie
Being the largest creditor to the US (and Europe) it could be argued that the Chinese already own the ranch. And they bought the the way the US did (prior to the age of debt) by being the largest onwer of Gold.
September 20, 2008 at 3:14pm by alan morgan
I agree with Rip and Afam. China is the largest holder of our US debt. At one time in the past we worried that China's army would march into the US -- now they won't have to. All they'll need to do is call in our debt.
When will we learn that purchasing on credit and running a national deficit is only going to hurt us in the long run.
September 20, 2008 at 5:41pm by david wayne osedach
If it's not already true it will be. Best start practising eating with chop sticks today!
September 20, 2008 at 7:13pm by Bailey King
Given the now status quo practice of outsourcing financial services to the lowest bidder and the economic downturn in both the US and UK, China has a clear advantage. In a capitalist culture, this competitive edge is part and parcel to a free economy. The ability to compete with this emerging global finance complex relies on fairer trade policies and a restructuring of financial currency (a large order for the WTC).
September 21, 2008 at 9:04am by Allen Laudenslager
The more they own, the greater their vested interest in the success of those institutions.
September 21, 2008 at 5:01pm by Michelle Moore
And the East shall rule the West...