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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Crimson Ghost who wrote (64945)	3/31/2007 12:14:00 AM
From: regli	Respond to of 116555

Reverse globalization rgemonitor.com ... But it goes beyond that. When a private equity firm borrows dollars in London (or borrows dollars in New York that the New York institution borrowed from someone in London) to take a US firm private (something that is happening rather frequently right now), the private equity shop is often effectively borrowing Gulf or Chinese savings to help leverage up their returns. At some point, investors in Gulf and in China might decide to try to play this game themselves. Rather than lend their money out to American and European investors -- or take a stake in US private equity firms, as some Gulf families are known to do -- some emerging market economies might use their own funds to go shopping for American and European firms. It isn't hard to find signs that the big emerging market creditors want to try their hand at getting some of really big returns that have accompanied the “global asset shortage.” Or at least try to get a better return than they have been getting lending out their funds on the cheap. And rather than hire American or European managers, they may conclude that they kind find better management-value-for-their money at home. US CEOs are not exactly cheap by global standards. That would be a change. And for the US, a potentially very big change. The US came to accept Japanese FDI – and some Japanese management practices – in the 1980s. But the potential shift of control should the current “uphill” flow of capital from the emerging world become the”uphill” flow of equity capital from the emerging world is far, far larger than anything that happened then. Remember, creditors – not debtors – traditionally have set the rules of the global financial game. Right now the US is a debtor – a big one. But the US still expects to set the rules, more or less. My guess is that most US business circles still think globalization means something close to the global Americanization of finance and business. It may. But it also may not. Reverse globalization may not be a bad term.