Thursday, September 17, 2009

FDI plunges worldwide...

Greetings good citizen,

How many of you are genuinely ‘surprised’ to be reading a fresh post tonight? I was supposed to be in recovery from a cardiac procedure scheduled to be preformed this afternoon but, alas…here I am.

Yes good citizen, the mission was ‘scrubbed’ (for the second time) although this time it was a technical malfunction in the Cardio lab that caused the entire day’s production to be rescheduled for next week. (There had to be 50 people in the waiting room, although not all were ‘patients’. A third were ‘designated drivers’ and another third were folks brought along to keep the driver company as there is a seven hour ‘recovery period’ for each patient after the two hour (average) procedure. However, this is a huge improvement over the 3 weeks recovery period most patients required after having their chests ‘cracked open!’

Here’s to hoping that the ‘third time is the charm’ (as the damn pony sitting on my chest isn’t getting any lighter!) Anyway, we’re shooting for a Monday AM ‘re-do’. I’ll find out tomorrow.

What were we talking about? Oh yeah, today’s rather curious report about ‘F.D.I.’ a.k.a. ‘hot money’ and what it might mean to the global economy…

Overseas Investment Plunging

Published: September 17, 2009

PARIS — Foreign direct investment will fall more than 29 percent this year from 2008 as a result of the global economic crisis, a United Nations body forecast Thursday, keeping a lid on global growth.

Global inflows of F.D.I. — purchases of controlling interests in productive assets overseas — will fall below $1.2 trillion, from $1.7 trillion last year, the United Nations Conference on Trade and Development predicts in its annual World Investment Report. [Once again we see the…effect of expressing things in terms of ‘large numbers’, except a fraction of a trillion dollars is still hundreds of billions. Five hundred billion in this case.]

The decrease continues the downward trend of investment inflows, which fell 14 percent in 2008 from a historic peak of $1.98 trillion the year before.

The global economic crisis has hurt the capacity of transnational corporations to invest, the report found, because tighter credit and lower profits have reduced their financial resources for financing overseas investment projects. [It sure doesn’t help that there aren’t enough customers to absorb the capacity we already have, making building more ‘an exercise in futility’]

The agency forecast a slow recovery in 2010, with the level of foreign direct investment reaching no more than $1.4 trillion, accelerating to nearly $1.8 trillion in 2011. Business investment is essential for economic recovery, so the weak performance suggests global growth will remain capped for some time.

The United States, which remains the preferred destination for foreign investors, experienced a 42 percent decrease in the first quarter of 2009, to $33.3 billion, compared with a year earlier. [Er, could this be interpreted as ‘sovereign wealth funds’ trying to trade their dollars for ‘hard assets’?]

Investment inflow to the European Union fell a similar 43 percent during the first quarter, to $109.5 billion. [Compare those two statements and tell me there isn’t a direct contradiction there.]

Britain was an exception. Investment inflows there rose 17.6 percent, to $63.2 billion, during the first three months of this year. [This is as ‘screwy’ as investors buying Fannie/Freddie and AIG shares!]

Among developing countries, inflows to India fell 56 percent in the first quarter, China’s fell 21 percent and Brazil’s declined 39 percent. In Africa, after a record $88 billion in 2008, inflows dropped by 67 percent in the first quarter.

About 85 percent of the 240 transnational companies surveyed for the report said the economic downturn influenced their investment cuts; 58 percent of large transnational corporations said they intended to reduce their foreign direct investment expenditures in 2009.

Cross-border merger and acquisitions activity, which had been a big driver of F.D.I. growth in recent years, fell from $673 billion in all of 2008 to $123 billion in the first half of 2009. It had fallen 35 percent in 2008 from a year earlier.

Investment in agriculture and the mining, oil and gas industries held up “relatively well,” the report said “compared with business-cycle-sensitive industries such as metal manufacturing. In addition, there is a better outlook for F.D.I. in such industries as agribusiness, many services and pharmaceuticals.

The agency found that government policies since the onset of the crisis “have so far been mostly favorable to F.D.I.” But it warned that “a more restrictive” approach had emerged in some countries with “growing evidence of ‘covert’ protectionism.”

Hmmn, it seems everywhere you look these days, the GD forces of ‘globalization’ are seeing ‘closet protectionism’ in all of their ‘trade partners’. Bizarrely, here in a nation nearly picked clean by ‘globalization’ we are constantly being accused of ‘protectionism’ (would that it were!)

One would be hard pressed to find another nation that has, er, ‘sacrificed’ more of it’s wealth producing potential than the US. Those jobs had to go to save the shareowners from high US wages and pension obligations…never mind providing all of those employees with ever more expensive health care!

Yes good citizen, the ‘more for me’ crowd has indeed made good on it’s threat to ‘abandon the US’ and leave all of us ‘worthless people’ to our own ‘devices’.

Naturally, they didn’t ‘announce’ their intentions, they just did it and nobody has held them accountable for their actions, which is the scary part good citizen. Just who the hell is looking out for the ‘welfare’ of this nation? Sure looks like nobody.

Which is another can of worms entirely but one problem at a time.

Sleep tight!

Thanks for letting me inside your head,


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