On Wed, 28 Nov 2007 16:56:52 -0600, dpb wrote:

There's clearly a lot that isn't as well, and to contend it is "only
ignorance" is such an obvious turning a blind eye as to make the attempt
to cover it over w/ statistics simply ludicrous.

Here's an early Christmas good cheer for you. Shoddy Chinese goods
ain't it.

==================================



Christmas is less than a month away. People's minds are not receptive
to bad news. While not exactly bad news the shift of ownership of key
American assets has already begun. By the time America wakes up after
the holiday season the world will have changed or at least started on
fundamental change and a realignment of global power.

The coming together in the same span of months of major domestic and
global events does not bode well for the US. First there is the
Iraq-Afghan war that is not going well. The wars bleed blood and
considerable treasure, causes division, dissention and distraction in
American society. This will continue until at least the new
President takes office on January 2009. A lame duck President can at
best hope that nothing untoward blows up in his face in his remaining
time in office. He can no longer effect let alone direct affairs of
his nation. In the meantime the US and western banking-financial
system is in for unknown but colossal losses of between 500 billion to
over a trillion dollars in toto. These three are already enough
calamities withiut having to dig up more.
=========================================

Selling the US by the dollar
By Julian Delasantellis
November 29, 2007
http://www.atimes.com/atimes/Global_.../IK29Dj01.html

Precisely as I have been predicting since mid-August, foreign
state-owned investment pools, sovereign wealth funds (SWVs), have now
commenced the process of riding to the rescue of the poor, weakened,
self-mutilated US financial system.

I hate to be smug and tell you "I told you so." Ah, come on, who am I
trying to kid? I absolutely love to be able to say that, just as much
as the next boorish preening pundit.

It was announced prior to the opening of trading on Tuesday that the
Abu Dhabi Investment Authority, the world's largest SWF, was paying
US$7.5 billion to buy a 4.9% stake in Citigroup, the largest financial
institution in the United States. Citigroup, facing what the markets
fear may amount to a $30 billion or more hit on its capital base due
to its problems with subprime mortgages and associated derivative
financial products, recently had its chief executive officer, Charles
O Prince, fall on his sword in an effort to satisfy the mobs of angry
shareholders. This did little to assuage the howling furies; they're
still lashing the company, with sell orders whipping off their
computer mice. The stock is down over 45% this year, almost 25% this
month.

Citigroup did rally on the news, but the price move was far from
anything all that impressive - the stock rose about 1.75%.

Citigroup's rescue did not come cheap. The deal was structured in the
form of convertible securities that will require the company to pay
junk-bond levels of coupon interest, reported by Barron's to be close
to 11%, for the privilege of selling part of America's premier
consumer financial institution into foreign hands.

For me, the most surprising, and possibly the most upsetting thing
about the Citigroup news was the absolutely orgiastic reaction to it.
The general media, of course, saw this only in the context of
something that would cause the stock market to go up, so it must be
good. (Dead white American suburban young women = bad, rising stock
prices = good; it's not that hard to be a US TV news producer these
days.) The Dow Jones Industrial Average opened strong, gave up most of
its gains midday, then was rallying into the close to finish up 215, a
fairly average price change these days.

If the electronic media are now history's first draft, then, to judge
by the reaction of the on-air personnel on business cable channel
CNBC, America has just had its best day since the famous New York City
Times Square victory celebrations at the end of World War II.

All day long the smooth and clean faces of CNBC shone happy and
bright, overjoyed that, just as the losses in the Dow in the past two
months had reached the psychologically important 10% level the
previous day, at last a savior had arisen. Surely, almost as if the
financial markets had become a sort of children's holiday pageant, the
Abu Dhabi Investment Authority was a modern John the Baptist,
proclaiming the good news of imminent salvation, namely, lots more
foreign SWF money to refloat America's sagging markets, economy and
spirits.

Defying any and all naysayers, CNBC anchor Dylan Ratigan summed up the
Good News for modern traders:
At the end of the day, though, we could spend four hours talking about
all the terrible things that could potentially still happen, today's a
good day - $7.5 billion for the banking system came in, for better or
worse. Granted its only 1% of all the money in Abu Dhabi, granted that
there could be future writedowns, but at the end of the day, $7.5
billion is a lot of money.
Of course, what's going out as the $7.5 billion comes in is the
shining jewel called ownership. The origins of Citigroup go back to
the founding of the City Bank of New York in 1812. Over these past 195
years, the institution has been carefully built and nurtured, and its
prosperity has enriched countless thousands of American stockholders.
That wealth creation, as it circulated around and across the American
economy, also enriched the American community as a whole.

Then comes the first decade of the 21st century. Citigroup goes for
the gusto, grabs for the brass ring, reaches out for the fat,
seemingly riskless returns being offered by a new generation of
subprime mortgage derivative products. This experiment goes horribly
wrong for Citigroup, as it has for much of the US financial system.

Citigroup then has a choice, as does the rest of the financial system,
as does the rest of the country. Accept a year or two of diminished
earnings, dividends and prosperity, until the entire subprime thing
works its way through and out of the financial system, or sell out and
attempt to once again live the good life that much sooner.

The cost? The cost, of course, is that in the future commensurately
fewer Americans will be enjoying the fruits of ownership that have
accrued through the hard work, enterprise and ingenuity of this
two-century-old venture.

As has been proven so many times in the recent past, from America's
budget and trade deficits to its crumbling infrastructure, its
appallingly dysfunctional primary and secondary school system, its
non-existent savings rate, and the total diffidence with which it
approaches the global environmental impact of its prosperity, this is
a country that looks at the prospect of any pain or inconvenience in
the present with such boundless levels of abhorrence that it is more
than willing to satisfy its heroin-like addiction to immediate
gratification with sales of any or all of its national heirlooms.

A comparable absurdity would be Americans selling their houses and
forever being renters in order to gain the requisite funds to, in the
newly sacrosanct modern tradition, line up at big box electronic
retailers in the cold early hours of the morning after Thanksgiving.

Wait a minute. As a matter of fact, that's precisely what the
Americans who took out home equity loans to spend away the appreciated
wealth locked up in their homes have done. It's no wonder that
Citigroup doing the same thing looks so normal.

In essence, in commencing the process of selling away America's
remarkably innovative and profitable financial system, the country
will now be paying a rent, in the form of the profits accruing to Abu
Dhabi and the other SWF buyers that must surely follow its lead, equal
to what it once collected for itself.

A recent survey of students at New York University revealed that two
thirds of them were willing to sell away their right to vote in
exchange for next year's tuition (which is over $47,000 for tuition,
room and board - at least the youngsters are not selling themselves
cheap); half said that they'd be willing to forever forfeit their
franchise for a cool million dollars.

Middle-aged power pundits and basic cable savants were aghast, oh
dear, what has become of the values of the young?

But in reality, weren't the little tykes at New York University just,
as children are wont to do at any age, imitating their parents, in
that everything timeless and hard-won, sacred and cherished, can and
should eventually be bartered away for a current comfortable price?

One thing about Abu Dhabi's investment that seemed to particularly
please the pretty CNBC on-air faces was their speculation that
Citigroup's stock dividend, worth currently about 8% of the stock's
market price, might now be that much more safe from a possible cut.

Well, there's good news. It means that America's legions of
coupon-clipping Paris Hilton wannabes will thus be more likely to be
spared the soul-extirpating experience of shopping at Rodeo Drive
rather than Macy's this holiday season.

Take care, wherever you are. Even if Paris Hilton still hasn't got her
driver's license back, by any means necessary America is getting its
money back; the practical effect is just about the same.

Julian Delasantellis is a management consultant, private investor and
educator in international business in the US state of Washington. He
can be reached at