Tuesday, November 27, 2007

Eating the Seed Corn

The oil sheiks are sure having fun with all their profits coming from $97 - $99 oil aren't they.

NEW YORK — The Abu Dhabi Investment Authority will invest $7.5 billion in Citigroup, offering the nation's largest bank needed capital to offset big losses from mortgages and other investments.

The cash from the sovereign investment fund of the Gulf Arab state, which has benefited from this year's surge in oil prices, will be convertible into no more than 4.9 percent of Citigroup Inc.'s equity. Citigroup characterized the investment as passive and said the fund will not be able to name any board members to the bank.

The Investment Authority's purchase, announced late Monday, would make it one of Citi's largest shareholders.

Does this make anyone else nervous? We currently owe trillions to China and now we are selling off significant interest in our largest bank to a foreign country. I try not to get paranoid over this kind of stuff but it just seems that we are eating the seed corn here. We have sold our manufacturing capacity to mostly China and huge chunks of real estate to foreign investors already. Pretty soon we will be rummaging through the closets to find something else we can sell for pennies on the dollar.
If you think this is the last of this type of transaction to happen as a result of the sub prime fiasco you are probably being naive.
This is all the result of the Bush and the rest of the GOP insisting that big business can regulate itself and that there is no need for government oversight. It is not going to get any better anytime soon.

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