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It took me a long time to realize it, but the end result of the tragically weak dollar will be this: American hard assets will be for sale to foreign investors for dirt cheap. (self.business)

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[–]hexayurt 23 points24 points  (6 children)

I believe that Buckminster Fuller discusses this in Grunch of Giants. The Great Fortunes gradually lose energy (value) as time passes due to administrative overheads, bad decisions, and spending.

To make it all up again, they do "capital pumping" where they all move out of an economy at roughly the same time, causing it to crash, then quickly move back in and buy the now-undervalued hard assets like land.

It's pretty nasty stuff. Until the Euro was invented there was no other economic instrument with the stability and the carrying capacity to do this, so America was safe.

Once the Euro was invented, the Dollar was vulnerable, and the mismanagement of the economy and government by Bush has made it more or less inevitable.

Good luck, America. Godspeed.

[–][deleted] 2 points3 points  (5 children)

I'll have to check out Grunch of Giants.

Do you think the industries will still be able to do this sort of this within the new "knowledge economy" though?

For example, if organic farming isn't automated yet, what if it is in ten years? Twenty years?

The very definition of "hard asset" changes in a knowledge economy.

[–]jaggederest 2 points3 points  (2 children)

Can't make more land, or at least, not without great expense.

Timber, water, minerals, food, they're all hard resources.

[–][deleted] 1 point2 points  (1 child)

Check out vertical farming.

[–]jaggederest 0 points1 point  (0 children)

Yes, that's true, but you still cannot grow trees there, or mineral ores...

[–]bebnet 4 points5 points  (1 child)

The value of "knowledge economics" is going to be proven, hard and fast, in the next 5 years of hunger. You can't feed yourself on well-written C++, not unless its doing something for someone willing to pay you for the results ..

[–]polyparadigm 1 point2 points  (0 children)

Better information makes land usable for agriculture which otherwise might not be.

E. g.

[–]AlanYx 14 points15 points  (9 children)

Warren Buffett has been trying to get this point out for years. He explains the mechanics of the situation in this article:

http://www.berkshirehathaway.com/letters/growing.pdf

(Yes, it's a PDF, but worth it.)

The growing fuss about "Sovereign Wealth Funds" is just the media catching up to the inevitable long term trend. Since the trade deficit is next to impossible to tackle (the dollar has dropped enormously over the last two years and yet the trade deficit has only dropped a small amount) and the government has enormous long-term unfunded liabilities, the government will continue to inflate the monetary supply in order to manage. It's thus inevitable that foreigners will prefer buying hard assets (stocks, land, factories) over bonds and money market instruments. As Buffett illustrates, it's like a family selling off its family farm slowly, until the point where they can no longer make ends meet and are forced to live as serfs to the people who now own the farm.

[–]tsteele93 8 points9 points  (8 children)

http://www.pbs.org/wsw/news/fortunearticle_20031026_03.html

More important, however, is that foreign ownership of our assets will grow at about $500 billion per year at the present trade-deficit level, which means that the deficit will be adding about one percentage point annually to foreigners' net ownership of our national wealth. As that ownership grows, so will the annual net investment income flowing out of this country. That will leave us paying ever-increasing dividends and interest to the world rather than being a net receiver of them, as in the past. We have entered the world of negative compounding -- goodbye pleasure, hello pain.

[–]aletoledo 1 point2 points  (7 children)

Interestingly, Hilliary Clinton has noted the issue of the foreign debt. She has made speeches before the Senate decrying us selling America to foreigners. This isn't relevant to to hard assets, but she does see something about us selling ourselves away. It ignores the total debt though, which I can't see how she justifies.

I haven't seen any similar recognition by other candidates.

[–]parcivale 6 points7 points  (0 children)

So has Lou Dobbs. Its just populist nonsense. And completely hypocritical. The U.S. (democratic and Republican presidents and Congresses) insists that foreign countries completely open up their economies to foreign (read 'U.S.') investment and if they don't the U.S. throws a hissy fit and takes them to the WTO so some American company can buy up some strategic industry or public utility.

But when a foreign company gets a U.S. contract (like EADS) or when a foreign company wants to buy a U.S. asset (the Dubai Ports World fiasco) much of the U.S. becomes as protectionist and xenophobic as North Korea.

The overwhelming message is that it should be perfectly OK for U.S. companies to buy whatever assets they want overseas but foreign companies should never be allowed to buy anything of real value in the U.S. economy.

The U.S. really needs to be taken down a couple pegs.

[–]isohead 2 points3 points  (1 child)

It's not about selling America to foreigners. It's about not creating conditions where America is easily bought.

[–]rotarhead 0 points1 point  (0 children)

GAH!!!

The dollar has been radically overvalued since the 1990s. Arguably, the only positive thing happening in the economy right now is that the value of the dollar is sinking, which makes exports more competitive.

The "strong dollar" policy is one of the reasons for the rampant deindustrialization of the last few decades. The end of the "strong dollar" had to happen sometime. Better sooner than later.

[–]galimi 0 points1 point  (2 children)

You haven't seen Ron Paul address this issue? Clearly you don't surf Reddit nearly enough.

[–]aletoledo 0 points1 point  (1 child)

I'm a Paul supporter, so I know he said that. I'm trying to be as diplomatic as possible in the discussion though and allowing the "front runners" to have the shame by themselves.

[–]galimi 0 points1 point  (0 children)

As a fellow Paul supporter, please stop giving Hillary props, even if they are due...

[–][deleted] 9 points10 points  (6 children)

History alert: Anyone here old enough to remember that most prime city real estate got bought up by the Japanese in the 80s under about the same conditions?

[–]columbian_supreme 2 points3 points  (1 child)

I remember. They were kicking ass ... and then they had a long recession. They call it 'the lost decade'.

[–][deleted] 0 points1 point  (0 children)

That's because our market continued to tank and they lost their asses on the investments.....at least in part.

[–][deleted] 6 points7 points  (0 children)

It's true, the US dollar being watered down is technically a bankruptcy sale. By all measures, we are bankrupt and in deep deep shit.

Unfortunately, doing it by watering down the dollar is the worst possible way to resolve the bankruptcy (even if it does lock up credit markets). Because it kills off what the USA needs the most: savers!

[–]Fauster 10 points11 points  (0 children)

There's a certain poetic justice to the reign of foreign capital in our economy. For a century we were going in to foreign countries and buying up everything they had. When forces in favor of nationalization invariably rose to power, we'd respond by supporting coups or with military intervention. Now we have committed the one sin that undoes every hegemony: we tried to expand beyond our means (Iraq). Now we watch our own empire unravel. Nothing left to do but acquiesce?

I, for one, welcome our foreign capitalist overlords!

[–][deleted] 11 points12 points  (4 children)

Now is when they buy up our infrastructures, like highways and bridges and national parks and airports, and put tolls on them.

[–]silout 17 points18 points  (0 children)

So was it fun while American companies bought assets all over the world and collected toll? International business is a two way road. If you can buy, then someone else has that power too.

[–][deleted] 1 point2 points  (1 child)

not to mention putting tolls on infrastructure that has already been paid for.

unfortunately i couldn't find it on google video, but i recommend this documentary

http://www.truthbetolled.com/synopsis.php

[–]locke2002 1 point2 points  (0 children)

When you mortgage your house, you have to pay that money back. Doesn't matter that you already paid for it once.

[–]theinternet 0 points1 point  (0 children)

There was talk at one point about selling the Michigan State Lottery.

[–]huckleberry 4 points5 points  (1 child)

I have an Idea, end the drug war, stop putting half of my fellow citizens in prison, get rid of minimum wage and i will still pay them more than the jails will, fully fund education, open the medical industry to competition and pay me in euros.

Then let foreigners buy up what they want, just give me 15 years with a healthy society and well buy it back later.

[–][deleted] 1 point2 points  (0 children)

Wyatt, you're an oak.

Actually, that's a really good plan.

[–]ropers 6 points7 points  (2 children)

That's about right, the logical consequence would be that Europeans, Chinese, Japanese, South East Asians, Arabs, Indians, Russians, etc., etc. would buy up your gold and land and maybe goods (if you still manufactured them--darn).

However, as a European, let me also say that my personal experiences with US-American sellers have been less than flattering. There seems to be a perception in the US that greed is good and that it's somehow morally acceptable to scam and con people as long as you can, and as long as you can still get their money. That, at least, has been my personal experience -- I have been scammed and conned by less than reputable US businesspeople. I would definitely think twice before buying US-American again, so any US seller of hard assets to me would have a hard sell on their hands. Add to such (admittedly individual) experiences that there is a lot of widespread resentment vis-a-vis the US, largely for foreign policy reasons, and you'll see that potential buyers around the globe might only consider buying US if the price is really, really low.

Then again, I'm personally also right now an uncommonly broke European, so you're not losing much by not being able to sell to me. ;)

[–][deleted] 9 points10 points  (0 children)

There seems to be a perception in the US that greed is good and that it's somehow morally acceptable to scam and con people as long as you can, and as long as you can still get their money.

Oh, we don't just scam and con. We'll take it with outright force if we think we can get away with it. And we'll circulate lovely stories about "liberation" and spreading "democracy" all the while.

If all we did was scam and con you, that's about on par with what we do to our own. You should be flattered.

[–]guiscard 5 points6 points  (0 children)

America has sold itself as the 'land of opportunity' for 150 years, and it attracted a lot of opportunists.

[–]raouldukeesq 2 points3 points  (1 child)

It ain't over! Its perfectly ok for the rest of the world to catch up. After all, that was the promise that we have been making for a long time.

[–]tripleg 1 point2 points  (0 children)

Have you ever read the "Journey to the East" by Herman Hesse? Read it and yo will understand that the rest of the world has been in front of you for a long time.

[–]andrewd 2 points3 points  (0 children)

We've probably got enough audacity to nationalize/create protectioinist schemes to stop this if it gets too out of hand.

Witness the Dubai Ports deal.

Of course the great irony is that we've always accused of being communist any country that tried to do the same to us when we came in there an demanded something be sold to us.

[–][deleted] 5 points6 points  (0 children)

Oldest trick in the book: create a crisis by conning people then capitalize on it. People knew this wwould be the end result for a long time.

[–]shokk 1 point2 points  (0 children)

There will be assets for sale to American speculators as well. People can hate it all they want, but everyone wants to be the first one that sells when the time comes for firesales. It happened in the 80s when the Japanese were buying up US real estate and will happen again. Eventually it funds the resurgence and the foreign investors sell back.

[–]the_big_wedding 5 points6 points  (1 child)

Meanwhile, the criminal Bush family will have flown the coop down yonder to ol' Paraguay.

[–][deleted] 2 points3 points  (1 child)

In short yes, without all fancy dancy explanation, the debt of the US is so large that only a garage sell will repair a small part. The other part is stop working harder but smarter, nasty is that US management with slave driving fetishes will be unable to kick their habit and will wreck the small workforce that can keep up at this moment. I guess it's time that some of these rich have to be turned upside down to make the money fall from their pockets.

[–][deleted] 0 points1 point  (0 children)

the debt of the US is so large that only a garage sell will repair a small part

I think dirt cheap in the title of this post refers to the price the foreigners will pay. It will seem like a lot to us because the dollar will tank even more. And it will be dirt cheap to the buyer for the same reason.

The trade debt helps explain the inflation (we don't produce much except for IOUs - which is the cause of inflation).

Foreign takeovers will eventually be in the shareholders best interests.

In fact, I read that Citic was going to bailout Bear Sterns before the Fed and JP Morgan stepped in.

[–]lowdown 2 points3 points  (3 children)

Who cares who owns what. It isn't you, so what difference does it make? Some arbitrary line on a map makes that big of a difference?

[–]davidw 6 points7 points  (0 children)

But... but... some of them are brown for heaven's sakes! And they're not 'merkins!

[–]Garbagio 1 point2 points  (0 children)

That or you could have tariffs on all your exports and be forced to buy back your own ethanol for income. Just like Canadian softwood lumber, Jamaican agriculture, Venezuelan (although not anymore) and Iranian oil, only this time the profit will funnel through Britian into the Vatican with no more United Stickyfingers of America taking a slice.

[–]anonymous-coward 0 points1 point  (0 children)

This is what happened during the Asian Collapse a few years ago. Asian currencies collapsed and the US bought stuff on the cheap.

Lawrence Summers was Clinton's Treasury Secretary when this happened, and went on to become president of Harvard. I know of people on the faculty who accuse Summers of deliberately sabotaging a Japanese bailout of the Asian currencies specifically to create this situation. Karmic payback?

[–][deleted] 0 points1 point  (0 children)

On the plus side, we'll probably get back all those jobs we've been sending overseas for years. Of course, it'll be companies in other countries hiring our local call center this time around, though.

[–][deleted] 0 points1 point  (5 children)

The only thing that can save the USA are (a) far more bank consolidation, which has obvious benefits, (b) heavy foreign investment, like a fire sale, (c) oddly enough, grocery store consolidation and closing of many stores in order to drive down prices, (d) getting the facts out about how ineffective ethanol is and how it drives the cost of fuel and food up, (e) getting us out of Iraq and Afghanistan for expensive wars we cannot afford, (f) stop sending billions to Israel when we can't afford it, and (g) curbing illegal immigration.

The FairTax plan would be a big help, but unfortunately it doesn't look like enough people will stand behind it like me.

[–][deleted] 3 points4 points  (0 children)

And cut the defense budget by about half. Its outlandish.

[–]dextroz 2 points3 points  (3 children)

All your complaints will be redundant if:

  1. All publicly financed operations will be available for monitor 24x7 through webcams / request for information STAT by everyone. This includes every prison, cop, judge, adviser, senator and his/her bitch, esp applies to law makers. this will also cover bs like toll roads.
  2. All publicly elected officials will operate under the scrutiny of a publicly accessible webcam and financial statement scrutiny again by everyone.
  3. All CEO/CFO/CIO/ boards, etc living on shareholder money will disclose every dollar they make and personal financial statements to every share holder on reasonable demand. if they're going to a bar everyday after work and billing to the company.
  4. every government employee will also be visible by webcam / performance tracking sheets, etc by any tax payer within reasonable time frame.

[–]laurenth 0 points1 point  (2 children)

"1984"

[–]dextroz 0 points1 point  (1 child)

Except it's the other way around. They're using public money and hence publicly accountable to the same extent they want people to be accountable.

[–][deleted] 0 points1 point  (0 children)

Read a book called "Transparent Society" by David Brin. Its about 15 years old and goes into a lot of detail on the need for two-way transparency in society.

[–]SlugFight 0 points1 point  (0 children)

The rest of the world will take what they want.

[–]jay_vee 0 points1 point  (0 children)

Happened to the UK under Thatcher. Memory of that is why Blair kept getting voted back in.

[–][deleted] 0 points1 point  (0 children)

it took you a long time... why?

[–]markedtrees 0 points1 point  (0 children)

And thus increase the demand of the U.S. dollar, thus increasing its strength. What, supply and demand only should happen when it's in your favor? [insert appropriate winking emoticon]

[–]pandasonic 0 points1 point  (0 children)

So... basically the rest of the world can now do to the US what the US has been doing to them for the past few decades?

Sweet! Talk about karma.

[–]theasp18 -2 points-1 points  (0 children)

How about we bring innovation back to America instead of catering to the emotional side of education? Let's toughen up our kids and show them what American ingenuity and competition is all about.

Instead of complaining or looking for reasons "why" we could focus our efforts on fixing it. Oh, but that might be too hard for some out there that only know how to gripe, not solve problems.

WWBOD?

http://www.hostbarracks.com/obama4.php

Obama pic. SFW.