This week, more and more people are waking up with the credit crunch hangover and realizing that the financial pillars of the US economy are indebted to foreign lenders. This is something we alluded to earlier, mentioning how China and Saudi Arabia were controlling the purse strings in the USA.

But joining the Chinese and Saudis, Singapore in entering the fray, too. Turns out they might inject some money into Merrill Lynch. They’re not alone: according to Fred Wilson, a prominent VC blogger whom I mention frequently on our business blog over at HipMojo.com noticed the trend, too:

The economic story of 2007 is where the money is coming from. The capital that is propping up our companies and economy is coming from China, The Middle East, and Russia. On Monday we learned that middle east capital was required to shore up the balance sheet of Related Companies, one of NYC’s largest real estate developers. Today, we learn that Morgan Stanley is getting bailed out to the tune of $5bn from China Investment Company.

The point is: it’s not the first time “someone else” owns the US, but look at the following losses of American banks and you wonder if this is a body blow of a mortal, fatal blow?  The US banks don’t think it’s a light blow, if you consider the sale of stakes to foreign groups:

- Citigroup sold a 4.9 percent stake to Abu Dhabi’s investment arm
- UBS sold stakes to the Singapore government and an unidentified Middle Eastern investor
- Morgan Stanley sold a 9.9% stake to China Investment Company for $5B
- Merrill Lynch sold a stake to a Singapore fund.

Is this healthy?

Tags: Dollar, Empires, Finance & Investments, USA, World Trade & Currencies|
Posted By: froosh | Dec 21st