As the dollar continues it's collapse, which has now reached 45% over the past 6 years, US assets have become relatively less expensive for foreigners. China, all by itself, lost $24 billion in about a minute after the FOMC announcement Thursday. Before you laugh, in the last 6 years, foreign holding of $US have lost $2.84
trillion in value. In short, we effectively aren't paying for our imports or paying off our debts, and this administrations fiscal policies have created tremendous animosity towards the US throughout the world. We always have been viewed as something of a deadbeat, but now, with the current fiscal policies, we have become much more obnoxious and a bully that keeps stealing the world's lunch. We need to send our politicians to a couple Dale Carnegie courses.
Holding onto $US is flat out stupid for foreigners, so they are spending those $US on things that could be purchased with $US. How about some US-manufactured products? Oops, there aren't any! Rather than just hold onto ever more worthless $US, they they have to buy other things, such as our defense contractors, financial markets, and other companies. The despicable Carlyle Group has been buying up several companies, such as defense contractors Standard Aero and Piedmont Hawthorne (who was our #2 general aviation facility) and them selling them to the UAE. Both of these companies are now wholly owned by Dubai Aerospace. Standard Aero is now providing services on US-made military aircraft in Iran. And, as thank-you gesture, the Carlyle Group accepted a $1.35 billion kick-back yesterday.
With that quick-and-dirty background, take a look at yesterday's Middle East acquisitions, which, as no surprise, includes the bribe/kick-back to the Carlyle Group (they didn't purchase any voting shares with this "investment," just lined the pocket of those who do own the voting shares):
Gulf states buying overseas assets at a record rate
(Bloomberg)
22 September 2007
DUBAI — The Gulf states, flush with cash from burgeoning oil revenues, are buying overseas assets at a record rate and countering the paucity of acquisitions hampered by the summer's surge in corporate borrowing costs.
Abu Dhabi agreed yesterday to pay $1.35 billion for 7.5 per cent of Carlyle Group, the world's second-biggest private equity firm. Dubai and Qatar took competing stakes in Nasdaq Stock Market Inc., London Stock Exchange Group Plc and Nordic bourse OMX AB. Qatar also won approval to examine the financial records of J Sainsbury Plc, the second-largest UK supermarket chain.
All told, the deals are worth $25 billion, according to data compiled by Bloomberg. The pace of international investments by Gulf states, which earn $1.2 billion a day from oil exports, is quickening as they seek to diversify beyond energy. The nations have already spent a record $68 billion on overseas acquisitions this year, the Bloomberg data show.
"They are not just putting their money in bank deposits and government bonds any more," said Eckart Woertz, chief economist for the Gulf Research Centre in Dubai.
"They are after strategic assets."
The record pace of global mergers fell in August to the slowest in two years as rising costs for credit eroded investor confidence. The three-month dollar London interbank offered rate, a lending benchmark, rose to 5.73 per cent on September 7 from 5.36 per cent at the end of July. The rate fell to 5.21 per cent yesterday after the Federal Reserve reduced interest rates for the first time in four years earlier this week.
Slowest month: About $188 billion of deals was announced last month, the lowest amount since July 2005, according to data compiled by Bloomberg. The value of deals dropped after losses in subprime mortgage bonds contaminated debt markets, prompting a sudden increase in corporate borrowing costs and a slide in stocks.
Not in the Gulf. The pace of takeovers may accelerate as oil trades at a record high and Dubai and Qatar race to lure international banks, asset managers and brokerages. Oil reached a record $83.90 a barrel in New York yesterday.
Based on the share prices of LSE, Nasdaq, OMX and Sainsbury on September 19, Dubai's investment would be $2.5 billion and Qatar's would be $21.5 billion.
Borse Dubai said yesterday that it agreed to buy 28 per cent of the London Stock Exchange from Nasdaq and stopped competing with the US electronic market for control of OMX. Dubai also got a 19.99 per cent stake in Nasdaq and 5 per cent voting control of the company.
Clone of Dubai: The Qatar Investment Authority countered later in the day, by saying it bought 20 per cent of LSE shares and acquired 9.98 per cent of OMX.
The Qatar Investment Authority said yesterday it doesn't currently'' intend to make an offer for LSE. Buying the stake in Stockholm-based OMX is "a key step" to "take supportive holdings" in European exchanges, the authority said.
"Qatar is a clone of Dubai," said Haissam Arabi, a Dubai-based managing director of asset management for Shuaa Capital PSC.
"They have taken their lead from Dubai on most fronts. Dubai had Emirates airline, then Qatar set up Qatar Airways. Dubai established itself as a tourist destination, and then Qatar tried to position itself as such. And now as financial centers, Dubai moved and Qatar followed."
Dubai and Qatar are overshadowing Bahrain's traditional position as the Gulf's financial hub. The six Gulf Cooperation Council states are the UAE, Bahrain, Kuwait, Qatar, Oman and Saudi Arabia.
Cooperative takeovers: Mubadala Development Co., an investment company owned by the government of Abu Dhabi, will buy a 7.5 per cent non-voting stake in Carlyle. Sainsbury, based in London, yesterday softened its opposition to a takeover bid by Qatar after the emirate said it would borrow less to fund the deal.
The Gulf states sometimes cooperate on acquisitions. Shaikh Hamad bin Jassim bin Jaber Al Thani, the Qatar Investment Authority's CEO and since April Qatar's Prime Minister, said in February the country may buy as much as 10 per cent of Airbus SAS parent European Aeronautic, Defence & Space Company because the shares are undervalued.
When Dubai International Capital LLC bought 3.12 per cent of EADS in July, some of its money came from Qatar, according to Chief Executive Officer Sameer Al Ansari.
The Gulf's overseas acquisitions haven't always succeeded. Qatar in December lost out to a group led by Macquarie Bank Limited in its bid to buy Thames Water Utilities.
A different issue: Dubai-owned container port operator DP World last year agreed to buy London-based Peninsular & Oriental Steam Navigation Company for $6.8 billion, only to be forced to sell P&O's US port assets under pressure from lawmakers who threatened to block the takeover on the grounds of security.
Dubai's Nasdaq deal is "a different issue from the port," House Speaker Nancy Pelosi said yesterday.
"That was a security issue. This is a marketplace issue." The accord didn't raise "any alarm," said Massachusetts Democrat Barney Frank, chairman of the House Financial Services Committee.
"There was a physical security element" in the port deal, he said.
President George W. Bush and some lawmakers, including Senator Charles Schumer, said the agreement still must be scrutinised.
"We're going to take a good look at it, as to whether or not it has any national security implications involved in the transaction," Bush told reporters.
Biggest gas field: Qatar has about 850,000 residents spread over 11,000 square kilometres, making it the smallest country by size and population in the Organisation of Petroleum Exporting Countries. Owner of the world's biggest gas field, Qatar earned $28,576 per citizen from oil and gas exports last year.
Dubai generated three per cent of its gross domestic product from oil last year and has a population of about 1.5 million. As oil wells run dry, the emirate is building the world's tallest tower, offshore islands in the shape of palm trees, and a leisure park three times the size of Manhattan.
It's also earmarked more than $82 billion for investment in aviation, including construction of the world's biggest airport.
Khaleej TimesPelosi and Barney Frank (who, every time he speaks in a Financial Services Committee Meeting reaffirms that he is the most inept person to ever hold a membership there - and he's its freakin' chair), as usual, go out of their way to display their ignorance. We aren't going to be beaten militarily, but are extremely vulnerable economically. Unfortunately, they aren't the only two economic morons in Congress, there are 532 others (Ron Paul is the sole exception). Pelosi and Frank are, unfortunately, are in the positions of being the mouthpieces for a gang of fools.
Remember all the concern about our ports coming under control of Dubai's DP World in March of 2006? Guess what, subsequent to some fervent lobbying and political contributions of and to congress, all cargo ships coming into Miami and Ft Lauderdale, and all cargo ships going into the Gulf of Mexico from the east, have their security inspections in the Dominican Republic - by DP World. The same lawmakers that protested the DP World take-over of our ports, after meeting with lobbyists for DP World, approved this little deal three months later.
Here is a still-living link to that under-the-radar story.
On the good news side, while not building a new refinery, the refinery in Port Arthor, TX is more than doubling its capacity. This is, effectively, our first new refinery in about 30 years. The bad new? It's owned primarily by Saudi Arabia.
Saudi Arabia, Shell to spend $7 billion on Texas refinery
(Bloomberg)
22 September 2007
London/Singapore — Saudi Arabia and Royal Dutch Shell Plc will spend $7 billion to more than double the size of their Texas oil refinery, the biggest US expansion in fuel production in three decades.
The joint venture, Motiva Enterprises LLC, will boost capacity at the Port Arthur oil refinery by 325,000 barrels a day, making it the largest in the US, by 2010. The facility will process 600,000 barrels a day of crude oil, Motiva said yesterday in a statement. In April last year, the cost was estimated at more than $3 billion.
Khaleej Times
