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Dubious Dubai deal
Lawmakers are raising security concerns after it was announced that Borse Dubai will acquire almost 20 percent of Nasdaq and 28 percent of the London Stock Exchange. According to the Herald-Tribune, Dubai will become the first Middle East government to own a large stake in an American stock exchange and be the largest single investor in Nasdaq.
Sen. Charles Schumer (D-N.Y.), who raised concerns when Dubai-owned company, DP World, tried to buy a U.S. port operations manager, now asks the question: “Should any government own any part of a major U.S. stock exchange?” What’s your opinion?
Topic: Newsworthy, WorldMagBlog
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back to top34 Comments to “Dubious Dubai deal”
It’s interesting that a socialist democrat (Chuck Schumer) should ask that question. Hopefully, he continues asking questions like that. Then again, perhaps it’s just the Jew in him getting riled up. After all, he wants to bail out subprime borrowers and his top nine campaign contributors were financial institutions.
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Schumer, in questioning this deal and the DP World transaction, likely does more to keep our country safe than all the sanctimonious posturing on the right, such the resolution condemning the MoveOn . org ad.
Here’s a hint:
Ads aren’t dangerous or disloyal. Ceding control of US ports or financial infrastructure to Dubai, a major financial hub of the Islamic Arab world, for mere profit, likely is both dangerous and disloyal.
Krushchev is supposed to have said “You can trust the capitalist to sell you the rope to hang him with.” Seeing this sort of thing, his words ring very true.
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I’m not too crazy about the idea. I don’t care who asks the question, I’m glad they did.
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Arabians own 7% of the US. After Bush borrowed a trillion from China to pay for Iraq, how much of the US is owned by China? The question comes too late.
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In what I read above, I find myself in agreement with Krushchev, MakeItMan, and donato’s post-comma question. Wow!
Disclaimer: I have been wrong before.
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Sounds a little scary.
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It is scary. I’m ignorant about these things, so I wonder how we could stop it.
It seems to me that no government should be allowed to purchase stock in a private company, but how would you prevent it? Once the stock is on the stock exchange, I guess anybody can buy it.
Are there laws that address this situation? Could there be some kind of tax that would make it unprofitable for a foreign government to purchase stock on the American stock exchanges?
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China owns the bulk of Us treasury bonds and they are not even as friendly as Dubai is. This is the global marketplace. Schumer is grandstanding (again).
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“Once the stock is on the stock exchange, I guess anybody can buy it.”
Kyle, you make a good point. I really don’t think the solution is to prevent a government from buying stock at the exchange per se.
[And as an aside, would that restriction apply to our own government? At all levels, national and local, or just local? Effectively, if the government were to buy controlling interest in a company on the free market, they have nationalized that company - is that a bad thing if it's done through regular market mechanisms, as a voluntary transaction by the firms owners? LOTSA FUN QUESTIONS!
]
This is more unique than just buying stock in a company on the stock exchange, however – it’s buying the company that runs and operates the stock exchange itself.
I think you could make a reasonably good case that, like defense manufacturers, or possibly a few other designated industries or companies, we would want to limit foreign ownership of those companies.
Probably, we’d choose to limit foreign ownership whether by individuals or governments – I don’t see a reason to believe one is more or less dangerous than the other, since an individual could always be acting at the direction of his or her government.
This seems to be one of those rare cases, where conservatives and liberals are in basic agreement, that this deal is of questionable wisdom.
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“Schumer is grandstanding”
John,
Although I’m a liberal New Yorker, and happy to have Schumer as one of my state’s senators, I do agree that he’s very vocal, and tends as you say to grandstand.
I offer two first-hand, non-political cases where I’ve seen him do so here in Buffalo.
Case 1: At the annual Shakespeare festival here, they were performing Julius Caesar. Schumer was in town for something the night we went. He did a walk-on as a Roman Senator, and did a few corny lines along the lines of “Hail Caeasar – How’s the salad?”
Case 2: At my wife’s college graduation, the speaker was Senator Clinton. After the usual congratulatory and introductory speaches leading up to the introduction of the guest speaker, they introduced – not Senator Clinton – but Senator Schumer to introduce Senator Clinton. He talked for nearly half as long as she did!
So yes, although I like him as a senator, he definitely likes the sound of his own voice! :/
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Excellent observation, John, that this is indeed a global marketplace we’re living in today. If you don’t like someone else buying something, then you better darn well get the money to buy it yourself!
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Welcome to Globalization folks
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I just realized that it’s not acutally the Dubai government but Borse Dubai. They are a holding company for the two Dubai stock exchanges, so it might as well be the government, because indiretly it is.
Roy, thanks for explaining that they plan to buy part of the “company that runs the stock exchange.” I didn’t understand that part.
This is a very, very scary deal.
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Last week it didn’t make the evening news when Halliburton relocated senior vice president, Ahmed Lotfy, to Dubai to run their new corporate headquarters.
We might as well give them our our ports and stock exchange too.
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Alternative fuels? We don’t need no stinking alternative fuels. Me and my Sa-udi buddies ‘ll take care of y’all just fine. Trust me, I used to run an oil company.
-’lil George
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Krushchev is supposed to have said “You can trust the capitalist to sell you the rope to hang him with.” Seeing this sort of thing, his words ring very true.
Oh, and how are Kruschev and his USSR doing today?
Did they hang the capitalist USA with its own rope? Or maybe his words don’t ring so true after all.
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WWGD
What would Greenspan do?
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trr – Based upon recent publication of his book, the big G might do something expedient and then point figers at others later.
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The quote is from Lenin and theortically he is right however this is premised on a communist state maintining the New Economic Policy orginated by Lenin which saw a huge influx of western capital in the Soviet Union. Whereas Lenin gave the peasants their own land, Stalin practise forced collectivization since the peasants were too successful. This and other differences led the Soviets into a different direction ultimately dieing a slow death under Brezshev.
The news article refering to Dubai as a transfer point in terrorist funds is slighly unfair as Dubai is a transit point in almost all Middle East transactions. Its preferred because its western oriented, safe, stable and for the most part free of the croynism and corruption that plagues the rest of the Middle East.
Ever since the OPEC shock in the early 70s, OPEC nations have invested their money into the US. By allowing the Arabs to invest their US$ in the US, the vast oil payments are returned to the US economy. In part this was part of an informal understanding between OPEC and the US where high oil prices would be tolerated if denominated in US$ and invested in the US. More conspiratorial persons believe the rumour Saddam was planning to switch his pricing system from dollars to euros is the real cause behind the Iraqi invasion. The NASDAQ arrangement is part of this by now traditional return of US$ into the domestic economy.
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hrw: “informal understanding” “traditional”. Translation: We are at their mercy. They and the Chinese can pull the plug on our economy almost at will.
But promoting and mandating alternative fuels and raising money by taxation instead of borrowing it???
Trust him, he used to run an oil company.
Incidentally, with most US investment going abroad into Chinese and other factories these days, tell me again how trickle-down is supposed to work?
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I’m hearing the word “Blackwater” so I do a search on the internet. Blackwater is primed to become the biggest scandal yet. Type in Blackwater into an internet search engine and see what comes up.
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at their mercy is correct. Iran is switching to a basket of currencies including the euro and the yen, the saudis have de-peg their currency from the US dollar and Venzuela will trade oil for any currency. And the US dollar continues its 5 year slide. Yesterday, the Canadian dollar achieved parity for the first time in 30 years.
trickle down doesn’t work
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Sometimes I have to chuckle when I see some of these posts and the rumors they spread that are not well….quite factual in the least.
The Chinese do not own a majority of any US debt. They do not own a trillion dollars of US notes. They don’t even have a trillion dollars worth of dollar currency reserves. Surprise – The Japanese own much more than the Chinese. The Japanese are the second richest country in the world and the Chinese are a very poor one.
NASDAQ, who owned 30% of the London Stock Exchange until yesterday, has been trying for years to buy a majority stake in the LSE, or all of it, in order to gain more exposure to European stock trades. Their attempts were stupidly rebuffed by the majority owners of the LSE. So the NASDAQ came up with a cunning and stunning end run to get what they wanted anyway.
NASDAQ sold 28% of LSE shares to Borse Dubai (Middle East stock exchange owners) keeping 2% by selling it to a group that is in their pocket by contract. The Qatar government investment arm also bought 21% of the LSE on the open market, also announced yesterday. Who knew? So the Arabs own 49% of the LSE and NASDAQ owns 2% by proxy making a majority. The silly, ego maniacal LSE was scared to death of NASDAQ owning it all by itself and now they no longer control their own exchange anyway.
Next thing you know it is announced that Borse Dubai bought 20% of NASDAQ and NASDAQ bought a similar portion of Borse Dubai. So, NASDAQ has put together a consortium that owns a controlling share of LSE, their goal that was thwarted, which they can use to approve the purchase of the rest of it if they wish.
NASDAQ has now built an unprecedented collection of exchanges with access to America, Europe, Asia and the Middle East. NASDAQ can now buy the 48% of outstanding LSE shares and gain majority control of the LSE with 51% and have 49% of LSE owned by their Arab partners that own a piece of each other too.
It is the greatest coup that NASDAQ could ever dream to achieve. The deal was to get our US exchange going global by buying up foreign exchanges and gaining access to foreign markets not that the Arabs were buying part of NASDAQ. Who knows what other European exchange the NASDAQ also bought yesterday? Imagine, taking control of two of them in one day – again unprecedented.
I am amazed that Americans can’t think geopolitical and believe things that are not at all true. This was a NASDAQ power play to take the English out of play globally not an Arab one to take the US out. America is by far the richest country in the world and no one can compete it it financially globally.
The oil potentates of the Arab world have one military and financial friend and partner. They can count on and trust the US to keep Islamofascists like Ossama from taking their monarchies down from within – as Ossama is trying to do and is sworn to do along with the USA and Israel.
The Dubai take over of US ports, that was quashed by Democrat isolationists was stupid on their part. Did these idiots thing that US Union Stevedores would be replaced with rich folks from Dubai who don’t and will never do manual labor? What idiots they are but lefties aren’t known for their economic prowess now are they?
Dubai and Qatar are some of America’s best friends in the world because of the war on terror – they are just more scared of Islamofascists that we are and need American military protection. We need oil and they can guarantee it. What’s the problem again?
Whack jobs will go berserk over anything that interferes with their insane isolationist nature. They don’t want Arabs buying US companies. They don’t want China buying a tiny amount of US debt. They see conspiracies everywhere.
Pay no attention to them. They will make you dead broke and then get your throat cut too.
NASDAQ stock has been one oif the very best US investments too by the way. Now you don’t hav eto wonder why. They be real smart puppies.
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Continued
NASDAQ stock has been one of the very best US investments too by the way. Now you don’t hav eto wonder why. They be real smart puppies unlike lefy isolationists.
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NASDAQ has now built an unprecedented collection of exchanges with access to America, Europe, Asia and the Middle East. NASDAQ can now buy the 48% of outstanding LSE shares and gain majority control of the LSE with 51% and have 49% of LSE owned by their Arab partners that own a piece of each other too.
I guess that’s the key, llama. They still have to buy the additional 48%. Until then, the NASDAQ doesn’t own the LSE.
You need a math lesson.
And I’m sure you saw no national security issues with a foreign Arab company running our ports.
Ladies and Gentlemen, beware what businessmen like Llama tell you. They care about money only – not safety or security. They will sell you and all you care about for a few extra bucks.
Almost as bad as a lefty.
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I’m hearing the word “Blackwater” so I do a search on the internet.
Awesome Doobie Brothers song, donato. You should check THAT out!
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It’s a dang free market, Lester. If you don’t like who’s buying something, buy it yourself!!!!!!
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llama is right in one respect. the Arabs and the US are mutually dependent upon each other. As long as oil is priced in dollars and arab investment continues, Arab leaders will want to maintain a stable US economy and of course the US needs the oil. Keeping the oil flowing and the Arab investment safe requires military muscle. The Arab ruling class doesn’t work let alone soldier thus the US provides the armed forces necessary. In effect, the US has been reduced to providing the global muscle so others have a safe and stable investment.
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Blackwater is a fine old song by the Doobies, but it is also one of the problems with running awar with mercenaries whose sole motivation is profit.
WASHINGTON – Federal prosecutors are investigating whether employees of the private security firm Blackwater USA illegally smuggled into Iraq weapons that may have been sold on the black market and ended up in the hands of a U.S.-designated terrorist organization, officials said Friday.
http://www.news.yahoo.com/s/ap/20070922/ap_on_go_co/us_blackwater_probe_8;_ylt=AgDaYxCSuHn7_RIHtdf89BQE1vAI
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but its a free market if you don’t like who’s buying the arms you should buy it yourself.
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Lester,
My math was good but my typing bad. NASDAQ now has a controlling interest that will allow them, if they wish, to buy the remaining 49% of the LSE and take a 51% majority interest if they buy back the 2% they pocketed with friends. The beauty is that they solved the problem of not being able to gain this option by crafting a solution that did so but also created additional opportunities worldwide while buying an additional European exchange at the same time. I love triple benefits in one solution. The thing is that isolationists folks didn’t realize that this solution solidifies the use of Us financial power worldwide – not reduce it.
Well, some isolationists fear the Arabs owing the operations of US ports is bad but they fail to think it through properly and make assumptions that are not true that lead them to bad conclusions and misplaced fear.
First off the ports are still owned by the USA. Operations of the ports could be disrupted in many ways. Security at the ports is firmly in Homeland securities hands no matter who owns the ports or who owns the operations of the ports.
If the port operations are disrupted in any way detrimental to the US, then the solution is always the the same. The US government would take over port operations. It doesnt matter who owns the operations or who disrupted them, the US government would step in as they have many times before.
The Union Stevedores could go on strike and shut the port down. If the shutdown became detrimental to US security the government would step in and force them back to work as they have on occasion in the past.
Some people think that if Arabs owned the operations they could more easily sneak a nuke in on a container or ship. This is hardly the truth. Homeland Security searches 5% of containers at the port and even more overseas as the containers are loaded on the ship. They either catch nukes or they don’t and the Arabs don’t control what will be searched.
Islamofascists could load a nuke up today on any container ship in the fold and have a 90% chance of having it arrive and be unloaded undiscovered in any American port today. If they owned the operations this would not change.
But, Islamofascists know that the best chance they have at getting a nuke into a US port and exploding it, a 95% chance (5% better odds), is to blow the nuke up at the dock in America before Homeland Security searches the 5% of containers they will search on that ship. Islmofascists still would have to get past the 5% of containers that would be searched overseas. We can’t control that anywhere in the world regardless of who operates a US port.
So it makes no difference who operates the US port. The place to search is overseas and if you are afraid and want feel safer you need to get more containers searched in foreign ports. Once it gets her it is too late. it will be exploded before any searches are done here.
Not allowing the owners of US port operations to sell their business to Dubai is unnecessary isolationism and socialism that is based on bad logic and bad ideology.
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FROM #23: The oil potentates of the Arab world have one military and financial friend and partner. They can count on and trust the US to keep Islamofascists like Ossama from taking their monarchies down from within – as Ossama is trying to do and is sworn to do along with the USA and Israel.
I hate to have to break it to you, but all the Middle Eastern governments are, “Islamofascists like Ossama”.
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Always thinking like a businessman with little concern for national security. Since you are a businessman with no background in military or national security, then I understand why it would be a blind spot.
Let me tell you why it’s bad: UAE, Saudi Arabia and the rest of the Arab monarchies are in a precarious position: they are rich, but fear being deposed. They know that the common Arab in their country despises them and their wealth.
Let’s say the UAE sheikhs lose control in a coup or junta. You would then have a nationally controlled UAE company managing several US ports. While terrorists might not use these UAE companies to smuggle atomic weapons into a US port (and this is where your lack of national security background shows – where are they getting this weapon? How are they smuggling it?), a new, radical UAE government could use their presence in US ports for more nefarious, subtle forms of terrorism, or more likely, economic espionage.
Why not sell blueprints of the port to another terrorist group? Why not sell confidential US designs to other foreign companies for a profit?
Bottom line – it’s best if the US controls its ports, security and otherwise. If it’s not “cost efficient,” then find another US company who can do it. Why does it have to be a foreign one?
If these UAE port companies are so great, then why isn’t their economy better?
It’s not. They just have a lot of petrodollars looking for a home. No one wants US CDOs and SIVs anymore, so they are looking for companies to buy.
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Get your facts straight llama:
http://news.yahoo.com/s/afp/20070923/wl_mideast_afp/britainqatardubaimarketsinvestcompanylse
Money quote –
The US-based Nasdaq, which was the LSE’s biggest shareholder with a 31-percent holding, said last month that it wanted to sell up after a failed hostile takeover attempt.
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