Royalty and China
Jun. 25th, 2005 10:08 pm![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
peterbirksThe FT this morning had a couple of interesting articles (plus an interview with Annie Duke, for some strange reason).
One was a piece of Prince William, where he said that he wanted to spend some time inthe City (I believe that the term of a month was mentioned - well, wow, that should be long enough to master splits, derivatives and collateralized debt obligations). But what was interesting was the justification -- that it could be useful for his charity work.
Wouldn't it be nicer if he had said something like "well, basically, I'm bloody rich, and I want to hang on to it or, if possible, increase it so that I make as much cake as possible. And I reckon that getting the hang of finance would be a smart way to go about it". For a start, it would indicate the first bit of sense in the royal family for several hundred years -- that money doesn't grow on trees.
Of more importance is the furore in the US at the thought of the China National Offshore Oil Corp taking over oil & gas company Unocal. Now I could write thousands of words on the irony of this -- in that Unocal has lots of non-US shareholders and that much of its oil exploration is in, yes, Asia. One could argue that America's commitment to capitalism seems to mysteriously disappear when it looks like the Chinese are getting too good at it.
But I'll step past all that. Because the interesting thing is that, for the past, ooohh, 10 years, the Americans have said not one word about the Chinese spending their dollar surpluses on US bonds, thus allowing Americans to live so far beyond their means that the $19bn bid by CNOOC for Unocal covered roughly the first 10 days of June when it comes to the amount of money the US is effectively spending without earning. Yep, China could buy two Unocals a month and still have enough change to buy the Bellagio.
But this money in the past has gone into T-Bonds, which is just government debt. It's a kind of invisible loan that the Americans have conveniently ignored (except the Sage of Omaha, of course, who warns about it every year these days, but is still ignored). But make this visible, as in the purchase of an American oil and gas company, and all hell lets loose.
But, suppose the Chinese say, well, if we can't have your companies, we don't want your bonds, what will happen to the dollar? Carnage, obviously. Or will they support the US property market by buying up all the real estate? One day America will wake up and realize it has sold itself off. I guess it will then change the rules again and renationalize it, under the aegis of "national security threats".
Compulsory purchase by the government at a knock-down anyone? Welcome to capitalism (not) at work. When push comes to shove, governments the world over are very similar.
One was a piece of Prince William, where he said that he wanted to spend some time inthe City (I believe that the term of a month was mentioned - well, wow, that should be long enough to master splits, derivatives and collateralized debt obligations). But what was interesting was the justification -- that it could be useful for his charity work.
Wouldn't it be nicer if he had said something like "well, basically, I'm bloody rich, and I want to hang on to it or, if possible, increase it so that I make as much cake as possible. And I reckon that getting the hang of finance would be a smart way to go about it". For a start, it would indicate the first bit of sense in the royal family for several hundred years -- that money doesn't grow on trees.
Of more importance is the furore in the US at the thought of the China National Offshore Oil Corp taking over oil & gas company Unocal. Now I could write thousands of words on the irony of this -- in that Unocal has lots of non-US shareholders and that much of its oil exploration is in, yes, Asia. One could argue that America's commitment to capitalism seems to mysteriously disappear when it looks like the Chinese are getting too good at it.
But I'll step past all that. Because the interesting thing is that, for the past, ooohh, 10 years, the Americans have said not one word about the Chinese spending their dollar surpluses on US bonds, thus allowing Americans to live so far beyond their means that the $19bn bid by CNOOC for Unocal covered roughly the first 10 days of June when it comes to the amount of money the US is effectively spending without earning. Yep, China could buy two Unocals a month and still have enough change to buy the Bellagio.
But this money in the past has gone into T-Bonds, which is just government debt. It's a kind of invisible loan that the Americans have conveniently ignored (except the Sage of Omaha, of course, who warns about it every year these days, but is still ignored). But make this visible, as in the purchase of an American oil and gas company, and all hell lets loose.
But, suppose the Chinese say, well, if we can't have your companies, we don't want your bonds, what will happen to the dollar? Carnage, obviously. Or will they support the US property market by buying up all the real estate? One day America will wake up and realize it has sold itself off. I guess it will then change the rules again and renationalize it, under the aegis of "national security threats".
Compulsory purchase by the government at a knock-down anyone? Welcome to capitalism (not) at work. When push comes to shove, governments the world over are very similar.
