In life, as in my portfolio management, I seek the path of least resistance. I may not always find it, but I seek it.
I kind of feel like President Bush is going out of his way to find the path of most resistance with this whole port issue. It makes intuitive sense to me that nothing bad would happen but I have to think there would be an easier path for him to take than selecting Dubai based DP World to manage some of our ports.
Bush has threatened to veto a bill that would delay or prevent DP World from signing on and starting work. Wow, a veto? Really? You feel that strongly about this? Why?
Who knows if this will matter to the markets or not but this is a fascinating story.
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9 comments:
The way I understand it, he did not "select" the company to manage our ports, they BOUGHT the British company that does it. So, the matter would be one of telling the new owner of the port-managing company that they no longer have the contract.
I think he is going to such great lengths to show the world what hypocrits the Democrats are. They have been yelling "be nice to Arab nations" DAILY. So, now we have an Arab nation, a very friendly ally I might add, who owns the port management company and they (dems) want to cry Chicken Little.
That is the essence of it.
g
Friendly Ally? What planet have you been on?
2 of the highjackers were from UAE and much of the funding for terrorism came through right and government connect UAE citizens.
Based on terrorism and threat to the USA there was easily more reason to invade UAE then Iraq.
Not to mention the fact that many Republicans are screaming just as loudly.
There can be only one reason that Bush is being so stubborn about this. It must mean big money for some Bush family cronies both here and in the Middle East.
great sparring, glad I am a Libertarian
There's more -
the U.S. Committee on Foreign Investment in the United States (CFIUS) meets in secret and is headed by Treasury Secretary John Snow. In 2004, DP World purchased part of the American company CSX for over $1 billion. Before he became Treasury Secretary, John Snow was Chairman and CEO of CSX.
The country,Dubai, IS an ally to the US. I am on planet Earth. YOU?
If you'll remember, much of the landings for the Gulf War(S) took off from there.
Money? Much of the funding for terroism used to come through US banks, also...check it out. Also, Swiss banks, German banks, and on and on.
However, the main jist of my comment was to point out that Bush did not SELECT Dubai, they purchased the company that does that.
Also, I find it exciting to see so many "politicians" against this when those SAME poiticians say there is really no threat from terrorism. DUH?
Political arguments and the putative role of the United Arab Emirates in 'facilitating' Islamic terrorism aside, it appears that approval of the P&O acquisition of US ports involved a violation of law.
To summarize:
The administration's review of the deal was conducted by the Committee on Foreign Investment in the United States, a body that was created in 1975 to review foreign investments in the country that could affect national security. Under that review, officials from the Defense, State, Commerce and Transportation Departments, along with the National Security Council and other agencies, were charged with raising questions and passing judgment. They found no problems to warrant the next stage of review, a 45-day investigation with results reported to the president for a final decision.
However, a 1993 amendment to the law stipulates that such an investigation is mandatory when the acquiring company is controlled by or acting on behalf of a foreign government. Administration officials said they conducted additional inquires because of the ties to the United Arab Emirates, but they could not say why the mandatory 45-day investigation did not occur.
ref: http://www.nytimes.com/2006/02/22/politics/22port.html?pagewanted=2&_r=1
I have not investigated the deal and have no comment on whether it is a good one or bad one from an investment standpoint but bypassing standing law does not help matters. It currently appears that only 2-3% of containers arriving in this country are actually inspected by US agents (coast guard and customs I believe). If that is conducted on a random basis then that % appears too small to me but I do not know how containers are selected for inspection or what stratagems might be used to deflect an inspection of a container (should someone desire it) even if the % were higher so it is not clear what difference a change of management would make. According to analytic summaries I've seen it does not seem it would make much difference at all but given the already low rate of inspection even a slight additional uncertainty may be too much.
Fear is a useful political tool but it is also a climate; that climate is relatively nonselective regarding who catches cold. IMO the infection is spreading and, regardless of merit or lack thereof, the B&O deal is going to die.
RW
RW,
Thank you. This unfolds to be more and more complex at every turn.
while I am no expert, I will stand by path of most resistance.
I'm not an expert either but I’d say path of most resistance is a fairly concise analysis, and not just from the perspective of the Bush administration either.
The question of foreign ownership of US ports aside, Bush has never vetoed a bill before and doing so with the proposed bill would only serve to spotlight all the bills he probably should have vetoed but didn’t.
However the same could be said for congress: They have not only written and passed bills they shouldn't have but virtually every bill contained inappropriate spending items or projects not connected with the bill itself (AKA 'pork'). I really wish there was a futures exchange for pork barrel projects because, by my rather loose tally, I would have had a 10-bagger if I’d bought in 1995.
Regardless there's an interesting game of chicken going on here which, given the general lack of spine in congress, the president could win under ordinary circumstances; the chance their antics might be exposed to sunlight must be unsettling for our duly elected representatives. But the increasing odds of losing the next election stiffens spines fast so the president will not win this one IMO.
Such speculation aside, I normally dislike political discussion on investment boards because it tends to generate far more heat than light; the latter is a rare commodity and rational investment requires as much of it as it can get. In the case of the B&O bid for US ports there are some ramifications that decidedly do have investment implications however, not the least of which is the chance that increasing protectionism and/or curtailment of foreign investment could promote a reduced rate of foreign capital flowing into US assets. I don't think I need to spell out what that could mean.
Just a couple cents worth, if that.
RW
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