24 July 2007

Hypocrisy Reigns in Anti-Takeover Defenses

Bloomberg.com: Opinion
Hypocrisy Reigns in Anti-Takeover Defenses
By Michael R. Sesit
July 20 (Bloomberg) -- How's this for disingenuous?

For years, China, Japan, Russia, Saudi Arabia, Singapore, Norway and other countries have lent billions to Americans and Europeans. The money helped pay for the burgeoning U.S. trade deficit, funded consumers living beyond their means and financed budget shortfalls in the U.S., Germany, France and Italy.

Bloated with currency reserves totaling hundreds of billions of dollars -- in China's case $1.3 trillion -- many of these reserve-rich countries want to break open their piggy banks and invest the cash more profitably than just parking their funds in low-yielding U.S. and European government bonds.

Suspecting that this expanded appetite includes the acquisition of entire companies, Western countries, led by the U.S. and European Union, are already raising hackles -- signaling that the direct or indirect takeover of key companies or financial institutions is a no-go. And this is happening without anyone having made any offers recently.


Anonymous said...

Someone with education and brains living in the lostcoast region? Oh my gosh... let me pinch myself.

My understanding is that China was floating the housing market in the United States by extension of their capital (which they need to move out to keep their inflation from reflecting their 11% growth rate). Is this why the current shift in the housing market has happened? Did China move their target elsewhere?

ecoshift said...

Well, everything is relative. China has definitely been maintaining a high volume of US$ in their reserves.

Lately there have been a couple of direct requests that China purchase more MBS and CDO's. And, though I imagine Bear Stearns would be happy if they wanted to buy their securities, we will have to wait and see what they actually want to buy as Asian Sovereign Wealth Funds take shape. Perhaps another pulp mill? Or a little timber property? I wonder how that correlates to their current investment portfolio...

U.S. Urges China to Buy Mortgage Securities Amid Subprime Woes

July 13 (Bloomberg) -- The U.S. is urging China's central bank to buy more mortgage-backed securities after a surge in defaults by risky borrowers in the world's largest economy eroded demand for such instruments."