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The Biz Roundup February 20 — Back after a three day absence!

Guess who’s buying the world now . . .

China is taking advantage of the economic downturn to go on a major shopping spree, investing in energy and other natural resources that could give it an economic advantage it has never had before. . . .

“What’s changed for China is that their key competitive strength has increased, and that’s capital,” said Andrew Driscoll, a resources analyst at CLSA, an investment bank. “A lot of companies are begging for capital.”

(“China Starts Investing Globally,” New York Times, February 20) Part of the good deal the United States and others were getting from the trade imbalance with China was the piling up of capital in China — China was essentially subsidizing American and European consumption. That subsidy, just like Japan’s subsidy of American consumerism in the late 60′s and 70′s is about to bear fruit as the price of commodities and investments in the West hit their lowest historical prices ever. Got mei gwo?

And on this week’s final episode of Survivor: California Legislature . . .

A relieved Gov. Arnold Schwarzenegger signed a long-awaited budget package Friday, closing a $41 billion hole in California’s finances and easing the state’s cash crunch. . . .

Anti-tax conservatives, most of them Republicans, argue that the $12.5 billion in new taxes will kill jobs in the state and deepen the recession, while liberals complain that the budget cuts too deeply into education, health and other needed programs.

“This is a devastating budget in every way and it doesn’t solve the problem,” said Democratic Lt. Gov. John Garamendi, an announced candidate to replace Schwarzenegger, who is termed out next year.”We’re going right back at this in two months when the May (budget) revise comes out and there’ll be a huge hole in the budget again.”

(“Finally, Schwarzenegger signs California budget,” San Francisco Chronicle, February 20) California has three branches of government. There’s the judicial branch, the broken branch, and the stump where a branch used to be. Everyone with the power of language in both the broken branch and the stump branch hate the budget they just produced. Must be a good budget.

Drip, drip, drip.

The White House tried to knock down speculation that the government is preparing to nationalize several large U.S. banks, but some bankers complained that the Obama administration needs to act even more aggressively to shore up confidence in battered financial institutions. . . .

Top government officials remain highly resistant to the idea of nationalizing banks, fearing that it could prolong or even worsen the financial crisis. In addition, some Obama administration officials believe the government wouldn’t be able to sufficiently manage nationalized banks. A federal takeover of even a few institutions also could make it harder to attract private capital, since such investors would worry that the government might eventually dilute or wipe out their stakes.

(“U.S. Seeks to Stem Bank Fears,” Wall Street Journal, February 21) Listen, taxpayers have basically bought many banks already, like Bank of America, where the taxpayer capital infusion is about 2.5 times the current value of the bank. As the saying goes, the more you run over a dead cat, the flatter it gets. Let’s just do what we’ve already done: nationalize banks like Citigroup and BofA and resell them in shortly after. Whatever happened to “no drama” Obama?

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