The Story of 2007

The economic story of 2007 isn’t Facebook being worth
$15bn, its not the subprime mess and the resulting credit crunch, its not the
fact that the US economy seems eerily similar to where we were in 1975.

 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
.

Its been happening for a while, but we are seeing
it in droves now. If you need capital, lots of it, don’t look here in the US.
Money is tight and assets are cheap in the US these days. Go to China, Russia,
or the Middle East. That’s where the capital is and when they look at the US,
they see a bargain.

I could talk about the boneheaded economic polcies that
got us into this situation, but I am not in the mood. We are where we are.

Its time to admit that the US is a global superpower in
hock to parts of the world that should make us nervous. That’s the story of 2007.