The other shoe is dropping.
The first shoe is the enormous dollar flow to China and other countries, which results from our monstrous trade imbalance.
The other shoe, illustrated by the proposed Unocal purchase by China National Offshore Oil Corp. Ltd., for $18.5 billion, is the purchase of US corporations and means of production by countries to which we owe so much money.
From the SF Chronicle:
"It will become increasingly difficult for U.S.-based companies to compete for scarce energy resources on the world market against China's state- owned and/or controlled energy companies,"...... Unocal's board agreed to Chevron's $16.4 billion takeover bid in April but received a waiver from Chevron to talk with the Chinese firm after it announced its offer Wednesday.
MORE BELOW THE JUMP
The Chinese have developed enormous leverage. from New Ratings
Several airline industry experts said that if the US blocks CNOOC's bid, Boeing would lose its market share to Airbus in the fast growing Chinese market.
tries to pooh-pooh some of these deals, suggesting that China is buying some crappy stuff that no one else wants.
Some cringing began earlier in the week, when the Haier Group, one of China's biggest companies, bid to acquire the Maytag Corporation, the appliance maker, for about $1.3 billion, surpassing an offer from a group of American investors. Add to that Lenovo's recent $1.75 billion acquisition of I.B.M.'s legendary personal computing business, and some would have you believe that we should be in full panic mode.
While there are clearly important foreign policy and trade questions raised by China's emergence as a deal maker in the United States, it is less clear that these deals - and others that will surely follow - are as problematic as they may appear at first.
Many deals with Chinese companies - and, by extension, the Chinese government - may actually help the United States economy, just as China has helped prop up the nation by buying Treasury bonds en masse.
Indeed, so far, the businesses in which China has taken an interest could be categorized as "least likely to succeed." And the Chinese may eventually revive them.
Certainly the Chinese are not yet "smart K-mart shoppers." But the fact remains, they are coming to buy our industries, and they have certain proved themselves to be quick learners. As China and other countries begin to convert our debt into their ownership of our economy, corporate profits, as well as interest payments, will flow overseas.
The sky is not falling, and I am not Chicken Little. Unocal is not a huge player. But we are heading pell-mell in the wrong direction, and the questions cannot be easily dismissed, until we turn around our balance of payments picture. The Republicans, the Wall Street Journal, and the Fauxers are all touting the strength of the economy. They are not willing to force the near-term sacrifices which are necessary to lessen the inevitable hard landing. Eventually, deals like Unocal are gonna amplify that sucking sound you can already hear.
Think about this scenario: The Chinese start buying US credit card companies....ARARRRRRRRRRRRHHGGGG !!!!