Blog > US Stocks and Markets > Blog article: Global Perspective: Foreign Investors Slip in Through Backdoor
 | Email This Article Email This Article  | 

Global Perspective: Foreign Investors Slip in Through Backdoor

Posted December 26, 2007

"No longer can these oil rich countries sit on the sidelines and watch their revenues, which are denominated in the collapsing dollar, depreciate. At the same time, they cannot afford to allow the U.S. economy to keel over into free-fall – making such investment deals all the more attractive. " — Stephen Oakes .
 

by Stephen Oakes (from the TFN financial video 60-Second Buzz filmed on December 19, 2007).

Baltimore — (TFN): As business opportunities expand across the global network, net saving nations in the Middle East and Asia are beginning to make use of their overflowing coffers. Protectionist policies cannot hold back our inevitable thirst for monetary stimulus forever. Every day it seems that we read about some loophole or backdoor deal.

On November 27 of this year it was announced that Abu Dhabi had agreed to purchase a $7.5 billion stake in the stumbling banking giant Citigroup, representing a 4.9 percent ownership position.

No longer can these oil rich countries sit on the sidelines and watch their revenues, which are denominated in the collapsing dollar, depreciate. At the same time, they cannot afford to allow the U.S. economy to keel over into free-fall – making such investment deals all the more attractive. 

No time to read? Watch the financial video…

Just over a few days ago it was announced that UBS wrote down approximately $10 billion from its own subprime mess. Again, it’s not the government, but foreign companies stepping in to pick up the pieces.

UBS is now forced to raise the necessary capital by selling substantial stakes to Singapore and an unnamed investor in the Middle East. More specifically, the government of Singapore Investment Corp., or GIC, is investing $9.75 billion and the investor in the Middle East is contributing an additional $1.77 billion.

As the largest single shareholder, GIC stated that they have no intention of controlling the business of the bank.

In my opinion, they do have a controlling interest, which I’m sure will eventually play out over the long-term. When the U.S. economy spills over into a severe recession or finds itself in a financial crisis, whoever has the money will eventually secure its false sense of passive power. This time it won’t be the United States pulling the strings.

****Make sure you sign up for our FREE TFN News Feed for breaking news, special reports and new financial videos. Click here to pick your favorite reader. If you prefer to have the feed delivered to your email, just click here. 


Related Articles


Posted by Stephen Oakes · Filed Under US Stocks and Markets 

Comments

close Reblog this comment
Powered by Disqus · Learn more
blog comments powered by Disqus