The U.S. is for sale – and foreign investors are buying
The dollar's slump makes scooping up US businesses and real estate a financial bargain.
The United States has become a bustling bargain basement for world investors. Using excess dollars earned as a result of the massive US trade deficit, foreigners are buying up big chunks of the nation's businesses and properties. The latest shoppers: Abu Dhabi for New York's Chrysler Building and a Belgian-Brazilian brewery for Anheuser-Busch.Skip to next paragraph
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"It's the single biggest transfer of wealth in the shortest period of time in the history of mankind," says Auggie Tantillo, executive director of the American Manufacturing Trade Action Coalition, a group of mostly small manufacturers worried by their loss of business to foreign companies. "We can't continue to transfer US wealth at this rate."
In 2007, foreigners bought $255 billion of the worldwide existing assets of US businesses, up 72 percent from 2006. They spent another $22 billion, up 29 percent, to establish new enterprises in the US.
In a sense, America is for sale.
Foreigners have put $2 trillion into US plant and equipment ("foreign direct investment," in economic language) since 1992. Of this, $1.8 trillion, or 90 percent, is for buying up existing worldwide assets of US-based firms, notes Charles McMillion, chief economist of MBG Information Services in Washington. In other words, foreigners are purchasing not just the domestic assets of American business corporations and properties, but US assets abroad as well.
And they are getting the dollars to continue this shopping binge.
Despite the dollar's sharp devaluation against many currencies over the past five years, the Commerce Department reported last week that the global US trade shortfall for commercial goods and services reached $60.9 billion in April, up from $56.5 billion in March. The cost of imported oil is hurting.
"We are basically selling off the furniture to pay for Thanksgiving dinner," says Peter Morici, a professor at the University of Maryland's business school in College Park. He roughly calculates that at the present rate of deficits, foreigners could own in a decade more than a fifth of the nation's total $35 trillion or so in assets of every kind – corporations, businesses, and real estate.