Not good in my opinion either. I will be glad when the next election is over.

"This week President Bush said Thursday he was "fine" with foreign investors snapping up big stakes in U.S. banks and financial firms."

Why There's More Upside for Chinese Stocks
www.moneyandmarkets.com/Issues.aspx?NewsletterEntryId=1279

It's not going to make much difference to the average US investor whether the money comes from Shanghai or Dubai.

The scare headlines about China's US investments are no different than the ones 20 yrs ago about how Japan was going to own most of the US by now.

Anyone who has not done some serious study on how the Chinese culture influences their economy, should do so. China's the greatest Asian power, but is crippled by incredible corruption, growing ecological damage that is going to cripple their ability to feed themselves, and weak regulation that allows business to inflict considerable damage on the very consumers it serves - most of whom are internal, BTW.

And historically, they have always been both the greatest capitalists and yet the weakest at facing the price for their actions.

Chavez in Venezuela is a bigger threat to the US economy for running PdVSA into the ground to satisfy his Socialist agenda. There isn't enough oil to go around as all of Asia starts to ramp up into full industrialization. The real failure of our leaders in both parties in Washington is the failure to wean the US off imported oil and become energy-sufficient. Someday we'll regret this when oil not only breaks the $100/barrel level but starts to reach double or triple that.

The US economy is extraordinarily large. Foreign investment from all over the world comes here. It's what buys up our Treasury debt and has kept our economy from crashing. Basic economics 101, IOW. I have never understood the underlying prejudices people show about what color the money is that comes to our country.

Sorry for being sensitive about this, but as a Japanese-American married to a Chinese-Portugese from Hong Kong, this kind of news always carries a racial tinge to me. Nobody gets excited about Brazil investing here, or Canada, or France - but all three of those countries have US investments that vastly exceed China's.

MY concern has more to do with the indebtedness of the United States more than anything else. It just so happens the Chinese have been underwriting our mounting debt. Makes sense, their economy is rising, as is our DEBT.

It's the indebtedness that alarms ME. And it should scare the livin' daylights out of the citizenry... but they're too focused on "makin' the minimum payment".

JMO

I'm with chelone here. WHO we owe money to doesn't concern me nearly as much as the fact that we owe so much money at all. I abhore personal debt and I abhore national debt.

"Sorry for being sensitive about this, but as a Japanese-American married to a Chinese-Portugese from Hong Kong, this kind of news always carries a racial tinge to me. Nobody gets excited about Brazil investing here, or Canada, or France - but all three of those countries have US investments that vastly exceed China's."

jkom51, its not about race. I think no one gets excited about Brazil, Canada, France and Japan because these countries aren't run by Communist governments. I'm not pleased that our government wanted to sell a 20 billion arms package to Saudi Arabia as well as award control of our ports to a country that recognizes the Taliban in Afghanistan. If this is part of the "war on terror", then I'm confused.

"The real failure of our leaders in both parties in Washington is the failure to wean the US off imported oil and become energy-sufficient. Someday we'll regret this when oil not only breaks the $100/barrel level but starts to reach double or triple that."

I agree. The leadership in Washington (both parties) leaves much to be desired. I would much rather see our country develop more uses for solar/wind energy so we can reduce our reliance on foreign oil.

I personally don't care for anyone buying up America, but those are the facts. Communist China is different, because they are COMMUNISTS, something we are supposed to be fighting against. They have built up their military and bought up our debt, not a good combination. They pretty much have us over a barrel and the idiots in Washington could care less.

No, Springer, "the idiots" casting their votes in our general elections are the ones who don't "care" or "don't get it". Until the rank and file in the USA wise up and understand that you can't "spend your way out of debt" nothing will change. Until we, as a unified front, begin hounding our elected officials about this stuff nothing will change. We live in a democratic Republic, and that means we elect people to represent US. When they don't do that WE have the responsibility to VOTE THEM OUT OF OFFICE.

WE ARE RESPONSIBLE FOR THIS MESS, no one else.

I'm 48 yrs. old and very fiscally conservative. While many may fancy me socially "liberal", I've been screaming into the wind for nearly 25 yrs. now about balancing budgets and PAYING DOWN THE NATIONAL DEBT (which is not only a disgrace, but an embarrassment to the founding principles of our nation). My Congressman and my state Senators have received several letters from me on this very subject over the years. I've made my opinion known repeatedly.

So, this is an election year... hold the candidates' feet to the fire. Drill them relentlessy on how they plan to balance the budget and PAY DOWN THE DEBT. Stop accepting their lame platitudes as "answers"!

So, based on all of the above postings, I think we can gather that economically for this country, it's going to get worse before it gets better. The country will get to the point where it is going to have to come up with the some serious money. Where will it come from? Since there are a lot more middle and lower class and they are stretched to the limit, will it have to come from the high income people?
I'm along a little in years and have my financial life set so there are very few problems or possibility of problems, but I don't know what to tell my kids. They are doing well, but I worry in 20 years that because of their hard work and what they will have accumulated, they will be some of the ones called on to come up with this money.
Should they be investing money outside of this country? But what country??

Clearly, with the UNfunded entitlement of the Medicare Drug Benefit, and other entitlements that are underfunded the answer is that taxes will have to go up and there will have to be people "cut from the rolls", and the age at which benefits may be collected will have to be raised. It's really that simple and that complicated. And EVERYONE is going to feel the pinch, IMO.

Naturally, I think it only fair that huge corporations need to pay more in taxes than they presently do. I understand the desire to move manufacturing off shore to minimize costs, but the reality is that such a move leaves greater UN and under employment in its wake... all of which translates to fewer tax dollars collected and greater use of social services/"safety nets". All of those costs are spread across the remaining tax base in the country.

My greatest concern is that the kids in our (tax funded!) schools are not being taught to think about the GREATER implications of the low prices we've been historically taught to seek. I am very concerned at the lack of understanding about debt and COMPOUNDING interest... and how "compounding" can help or how it can CRIPPLE you over time. I am not interested in a "nanny state", I believe in personal responsibility and accountability. But when parents aren't able to impart the basics of financial responsibility to their kids (and the amount of "average" personal revolving debt is evidence of this!) we have a PROBLEM and one that must be addressed immediately for the GREATER GOOD of our nation.

We have tough choices to make and the timeline for making them is shrinking. Pretending this is going to be OK hasn't worked very well, we need to "knuckle down" and get serious about this before it completely overwhelms us.

As for investing... this household has striven to minimize debt for several years now. The only debt we hold is a home equity loan for a new garage. We could pay it off if we needed to, but using an income stream from smart investment accounts and taking the tax advantage makes more sense. Still, though... we round up the payments and we pay to principal yearly. It's a good habit, one we've used to our advantage in the past. We save and invest FIRST and use the remainder to pay our bills. We are not afraid to say, "no, I can't afford that right now".

As for the future? I sure don't know! I know we've been investing regularly in "emerging" economies for many years now. Not a huge portion of our investment dollars, mind you, but enough that the volatility in those markets doesn't distress us too much. Mostly though? we keep the household expenses low, keep our noses to the grindstone, and find pleasure and joy in simple things. And we keep informed, work hard, and hope for the best!

"Nobody gets excited about Brazil investing here, or Canada, or France - but all three of those countries have US investments that vastly exceed China's."

I'm sorry; but can you provide data to back that up? I'm really, really not trying to be difficult; but I look at financial data on a daily basis, and have never seen anything to suggest that France holds more U.S. debt than China. Please show me your data on this.

I think the point is the potential (negative) political power that China could exert, vs the well intentioned neighbourly investing of the other countries.

As far as our jobs going "over seas"....we can bring them back, but are people willing to pay the prices for US manufactured goods? If a man buys almost any name brand of shirt...Arrow, Van Husen, etc..it is made somewhere in Asia. We pay $20-$25 for an Asian dress shirt. There are shirts made in the US but how many of us are willing to pay $65-$100 for a shirt. Apart from cars and electronics, things manufactured here will cost 2-3 times as much. As much as they preach about foreign goods, I dont' think the American public is willing to pay the higher price.

I understand what coolvt is saying.

Here's the "equation" as I see it (very simplified but I don' believe in obscuring the bottom line with experts bs oops I mean details:)

Past and Present: In an effort to keep consumer costs down and profits up - manufacturing moves to foreign countries and the U.S. loses manufacturing jobs.

(a) This works because (1) labor is cheap (2) manufacturing costs are cheap because of a huge number of reasons one of which is lack of environmental regulation (3) the cheap cost of oil for moving goods back and forth

Future: (1) Foreign countries start to worry about environmental impacts and change their manufacturing process' (starting to happen in China) increasing costs of goods (2) people get tired of working dirt cheap and demand more pay and protection from environmental hazards (starting to happen in China) (3) the cost of oil goes up enough to start to impact the cost of moving goods around the world.

Future plus: Globalization continues. Manufacturing moves to places like Vietnam and Africa to keep costs down and profits up

Future Plus Plus: We run out of "cheap" due to oil prices, no new places etc.

Result - we end up paying 100.00 for a shirt and still don't have any jobs in the U.S.

Possible Future Plus Plus Plus Plus: Globalization and some sort of genius innovators bring about new industries in the US that we export. At least that's what "they" are trying to sell as a rosy picture.

Ppeople are short sighted but even if they weren't how do we go back? People making 10.00 an hour can't start buying American, they just can't afford it. Not to mention there is very little to find to buy.

But what are "hidden" costs of the $25 shirt? how much tax revenue is lost because someone isn't working, the large manufacturing firms are no longer paying taxes, and the social services in our own country are being called upon more and more... all services and agencies being funded by a dwindling tax base.

Nothing is really quite as simple as it appears on first glance.

Marys1000, do you own stock in any US companies? Either by direct ownership or thru mutual fund ownership?

Yes, Chelone, the voters are to blame. I am 51 and have voted in every election since 1975, so what?? We no longer have the choice that we had when I started voting. The parties don't give us a choice. We have a few hundred people voting next week and then after a few more thousand vote in NH, the Parties will weed out the ones who are running low on money and by the time they get here to PA, I will have no choice no matter what party I'm voting for. Money should be taken out of the election, but it never will be. I will most likely vote for neither party in the election this year and nothing will change. This country has to hit bottom and won't even do that for a few decades, because the FED & the government will try to keep everything propped up. Jobs going overseas, workers being imported legally and illegally to take down wages. I am still fighting, but I don't see much of a rosy future for my two sons. We don't buy much, but when we do we buy American as much as possible including $100 shirts. Sick of people like my SIL who has to shop at Walmart, to make ends meet, while living in a house they redid for hundreds of thousands and driving two financed vehicles, yea right. Mr. & Mrs. American are way to engrossed in what they have and trying to pay for it to even realize where we are headed.

The $25 shirt is an illusion. That shirt costs a great deal more than $25, but somewhere along the line the ACTUAL price of that shirt has been "hidden" from the dupes who line up to buy it. How and why that occurs are the tough questions that need to be answered. And we must educate our children and our populace to at least begin ASKING for answers to those questions before things will really begin to change. I am saying that the USA is at a crossroads, we have tough choices to make and we require good, honest information, and smart, thoughtful people to "stew on it" and make their wishes known.

I share the same frustration with the apparent lack of change (it's glacial, at best), but change occurs when we throw our collective weight behind the candidate most likely to prevail in an election. Personally? I have often "held my nose" and cast my vote. I don't honestly think I've ever cast a vote for someone I actually BELIEVED in. And that makes me sad on one hand, but the grim reality is that in a democratic Republic you must often set aside personal belief for the sake of expediency. You often have to satisfy your own beliefs by selecting the candidate most LIKELY to build coalitions and make choices that fall most into line with your own. Only a toddler believes he can have it "his own way".

The shrewd and thinking of the populace learn that compromise is what moves policy. And changes are often incremental and slow to take root.

coolvt; I'd argue that American's ARE paying the higher price; you just don't see it in the price at the store.

I have been voting for the "lesser of two evils" and working toward the slow change for over 15 years and I'm not going to do it anymore. The only way we will ever get real change is to not vote for either of the established parties unless they have a candidate that can make a difference and right now that ain't happening! Of all the candidates on both sides of the aisle, there may be two I could cast a vote for and if they are not on the ballot come November, I will write in someone else. I will no longer give the political parties what they want, tacit approval. I am sick to death of hearing the rhetoric while America goes down the tubes. The next few years are critical and I don't see a movement at this time.

We all fear 'the stranger'. China scares because it is so BIG. Just look at a globe.

Now, look LEFT of China on the globe...see where it says "Russia"? Get out an old globe and look again. See "USSR"? Check out Time's Man of the Year. See Mr. Putin? (Well, for a little while we'll see his puppet, but don't forget the KGB puppeteer.)

Look at Africa and the Middle East -- all 'strangers' and all changing.

We tend to believe that Canada, Eastern Europe, GB, Ireland and Scandanavia 'think like we do'. There are a lot of other 'emerging' nations that don't. (No longer sure who 'we' are; The USA continues to change with huge immigration.)

I'm thinking about FOOD and WATER as the next Big Things. I'n talking trade, not overpopulation, BTW. Maybe I should include MEDICINE?

Interesting thread. I'm not an economist so this thread also makes my head swim a bit. Like jkom51, I'm of Asian descent so I am also a bit sensitive to potential China bashing. Unfortunately, jkom51 isn't right about Brazil, Canada, France and Japan although s/he is close.

From what I can tell, there is direct foreign investment where entities from foreign countries ( I'm not sure it's the government per se) invest in US industry; foreign holders of US securities; and finally, the US account balance with other countries.

Canada, France and Japan are major countries with direct investment in the US although Germany and UK are much larger stakeholders. China invests very little in the US. (http://www.bea.gov/international/datatables/fdipos/fdipos-06.htm).

The top five foreign holders of US treasury securities are Japan, China, United Kingdom, "oil exporters" (talk about worrisome!) and Brazil. (http://www.treas.gov/tic/mfh.txt)

Finally, the CIA (https://www.cia.gov/library/publications/the-world-factbook/rankorder/2187rank.html) has a list of countries in rank order by current account balance. I'm not sure if this is debt or trade deficit. Here the top country is China, followed by Japan, Germany and Saudi Arabia and Russia.

From what I can gather, the dollar has to fall quite a bit against the Chinese currency before our trade deficit becomes manageable (the Chinese have been artificially setting their RMB currency low so we have a high trade deficit - I think I got that right). That would make their goods more expensive - thus wiping out any benefits to Chinese goods.

Chisue, I'd be more worried about energy (oil) than water or food.

I'm as white as the new snow outside my windows. I'm a WASP from a long established "hive". I'm not afraid of China, the Middle East, or Africa. I have no reason to be afraid of other countries. I am a decent, kind, fair, honest person and I hope the day never comes when I fail to give other peoples of our world the respect our humanity requires. Ethnicity deserves no place in this discussion, in my opinion.

As I see it, this is about good, solid economic policy that benefits all. We may all benefit but only if we work together! I agree with Chisue that water and food will be the "new" commodities... do any of you worry about huge agri-business corps. PATENTING genetically modified seeds? I sure do... when genetic diversity is minimized/controlled by corporations where does that leave the most impoverished, let alone the outright ignorant (the people who don't even cook for themselves anymore)?

I am, however, grossly offended by a government that glosses over debt and continues spending as if the bill will never "come due" (for them it WON'T!). I understand Springer's desire to cast his/her vote for principle. I respect that. I ceased doing it in 1988. And the helpmeet was overcome with guilt in 2000.

What's interesting, though, is the concern voiced here. And that gives me hope!

The world will run out of oil one day. (Or, maybe not, if you believe the oil-eaters.LOL) Which leads me to...

...You can't eat oil, or drink it. The Middle Eastern nations with oil need to import food. The emerging African and Indian states do too.

Some nations have both oil and food, Canada, for example. Lotsa crops in South America with both, but I don't admire many of those nations.

If global warming continues, I may be considering a move north. Sure like their international policies better than ours, eh?

Did anyone see this article from the republican presidential candidate Ron Paul? Interesting information. I wish other candidates would post info about China. It is a very scary thing about China and our economy.

Here is a link that might be useful: Ariticle on China and USA Taxes

Whatever I personally believe in, the one person I would not necessarily believe regarding such issues is a politician running for office right now. They are known far and wide for skewing figures and ideas all out of whack and if you really want to learn about something, research it somewhere else. BTW, I'm not even from the U.S. and know nothing about Ron Paul at all otherwise.

Much of the stuff that you are buying from China is stuff that is consumed soon, that wears out quickly.

And they, as the Middle Eastern Oil Giants, have used the money to buy capital assets - hotels, mines, oils wells, etc., that'll produce for a long time.

The folks who got tthe big tax cuts in the U.S. were the well to do ... and the corporations ... partly because they can be footloose. Threaten to tax them highly, and they'll say, "'Bye, bye", taking off for elsewhere.

We need to ensure that our kids have a quality education, for they are in world-wide competition now, with the added problem that folks elsewhere will do the same work for a lot less income.

And many of our youth, having lived comfortably, have developed a sense of entitlement. They lack the fear of hunger and the consequences of failure that motivates many of the youth in developing countries, who are tuned to running hard in the economy.

While oil was the important liquid in the past century, and will continue to be so, one of the major liquids in the coming century will be water, for it's scarce in many areas and becoming increasingly so, what with increasing populations wanting to use it, and more of it becoming polluted due to each individual using more (and polluting more).

Guys who bought Canadian dollars three or four years ago and traded them back now would be getting US$1.50 for each originally invested dollar.

I don't have grandkids - I'm rather glad.

ole joyful

OK -- just to give you guys a little hope. Yesterday, I attended a Democractic caucus in Iowa. The deficit was talked about over and over again. Medical care is incredibly important to many of us in Iowa -- because health costs are breaking the middle class. But we were talking about programs that were funded -- not "gimmes". People do care. And I think that will be reflected in November.

Other hot topics .......... oil prices, energy conservation and our old friend NAFTA. Actually, NAFTA might have defeated Hillary. Not sure on that one.

Cathy

Hey, Cathy, you're a "real live" caucus-er?! Good for you.

I live in one of those many "meaningless" states and the Iowa caucus and the NH primary are important because they reflect the views of voters in places, "that don't matter". If it weren't for those events the wishes of small states would never receive much attention.

My hope is renewed. Could it be that FINALLY the deficit (not the same thing as the DEBT, btw) is finally getting the attention it should have? we can only hope...

This along with the unemployment rate rising is hard.

If the link doesn work its from MSNBC, Business, Career

Here is a link that might be useful: Your Fired now often comes from Strangers

Try this article for a more balanced global outlook. I repeat, the biggest investor in the US is Canada. But I guess since they're the right "color" nobody gets excited about condemning them.

Overseas Investors Buy Aggressively in U.S.
January 20, 2008 NYTimes (excerpt only; article is over 3 pgs long)

Last May, a Saudi Arabian conglomerate bought a Massachusetts plastics maker. In November, a French company established a new factory in Adrian, Mich., adding 189 automotive jobs to an area accustomed to layoffs. In December, a British company bought a New Jersey maker of cough syrup.

..Last year, foreign investors poured a record $414 billion into securing stakes in American companies, factories and other properties through private deals and purchases of publicly traded stock, according to Thomson Financial, a research firm. That was up 90 percent from the previous year and more than double the average for the last decade. It amounted to more than one-fourth of all announced deals for the year, Thomson said.

During the first two weeks of this year, foreign businesses agreed to invest another $22.6 billion for stakes in American companies  more than half the value of all announced deals. If a recession now unfolds and the dollar drops further, the pace could accelerate, economists say.

Â..The influx is the result of a confluence of factors that have made the United States both reliant on the largesse of foreigners and an alluring place for opportunistic investors. With American banks reeling from the housing downturn and loath to lend, businesses are hungry for cash.

The weak dollar has made American companies and properties cheaper in global terms, particularly for European and Canadian buyers. Even as Americans confront the prospect of a recession, economic growth remains strong worldwide, endowing oil producers like Saudi Arabia and Russia and export powers like China and Germany with abundant cash.

As the German company ThyssenKrupp Stainless broke ground in November on what is to be a $3.7 billion stainless steel plant in Calvert, Ala., its executives spoke effusively about the low cost of production in the United States and the chance to reach many millions of customers  particularly because of the North American Free Trade Agreement, which allows goods to flow into Mexico and Canada free of duty.

"The Nafta stainless steel market has great potential, and weÂre committed to significantly expanding our business in this growth region," said the companyÂs chairman, Jürgen H. Fechter, according to a statement.

Foreign giants like Toyota Motor and Sony have been sinking capital into American plants. Investment in the American subsidiaries of foreign companies grew to $43.3 billion last year from $39.2 billion the previous year, according to the research and consulting firm OCO Monitor.

"This is a vote of confidence in the American economy, the American marketplace and the American worker," the deputy Treasury secretary, Robert M. Kimmitt, said. "These investments keep Americans employed and keep balance sheets strong."

Five million Americans now work for foreign companies set up in the United States, Mr. Kimmitt said, and those jobs pay 30 percent more than similar work at domestic companies. Nearly a third of such jobs are in manufacturing, which explains why Rust Belt states have been wooing foreign investment.

"WeÂve lost 400,000 manufacturing jobs," said MichiganÂs governor, Jennifer M. Granholm, a Democrat, who has traveled three times to Europe and twice to Japan in pursuit of investment since taking office in 2003. "IÂve got to get jobs for our people."

Â..Proponents of investment from overseas note that finance from sovereign wealth funds is a mere trickle of the overall flow from abroad. Indeed, the bulk comes from Europe, Canada and Japan. Just as Americans have scattered investments around the world in pursuit of profit  with holdings of foreign stock and debt exceeding $6 trillion in 2006, according to the Treasury Department  foreigners are looking to the United States, with their capital generating economic activity, proponents say.

Â..The United States has lost more than three million manufacturing jobs since 2001, with foreign trade often taking the blame. Foreign-made goods now account for roughly one-third of all wares consumed in the United States, roughly tripling their share over the last quarter-century. The soaring price of oil and a widening trade deficit underscore how the American economy is increasingly vulnerable to decisions made far away.

Â.."It would be good if these companies didnÂt need all this capital and better if the capital was available in the United States," said Senator Charles E. Schumer, Democrat of New York, who was a vocal opponent of the DP World deal. "But given the situation that these institutions find themselves in and the fact that thereÂs a pretty strong credit squeeze, thereÂs only two choices: Have foreign companies invest in these firms or have massive layoffs."

Â..Trade experts assume tensions will rise as developing countries  which tend to have more state companies  continue to expand their share of investment in the United States.

Canada still spends the most money buying stakes in American companies  more than $65 billion in 2007, according to Thomson. But other countries purchases are growing rapidly. South KoreaÂs investments swelled to more than $10.4 billion last year from just $5.4 million in 2000. Russia went to $572 million from $60 million in that span; India to $3.3 billion from $364 million.

But even if political tension increases, so will the flow of foreign money, some analysts say, for the simple reason that businesses need it.

"The forces sucking in this capital are much bigger than the political forces," said Mr. Garten, the Yale trade expert. "If there is a big controversy, it will be between Washington on the one hand and corporate America on the other. In that contest, the financiers and the businessmen are going to win, as they always do."