As business opportunities expand across the global network, net saving nations in the Middle East and Asia are beginning to utilize their overflowing coffers. Protectionist policies cannot hold back our inevitable thirst for monetary stimulus forever. Every day it seems that we read about some loophole or backdoor deal.

On November 27 of this year it was announced that Abu Dhabi had agreed to purchase a $7.5 billion stake in the stumbling banking giant Citigroup, representing a 4.9 percent ownership position.

No longer can these oil rich countries sit on the sidelines and watch their revenues, which are denominated in the collapsing dollar, depreciate. At the same time, they cannot afford to allow the U.S. economy to keel over into a free-falling nosedive – making such investment deals all the more attractive.

Today it was announced that UBS wrote down approximately $10 billion from its own subprime mess. Again, it’s not the government, but foreign companies stepping in to pick up the pieces.

UBS is now forced to raise the necessary capital by selling substantial stakes to Singapore and an unnamed investor in the Middle East. More specifically, the government of Singapore Investment Corp., or GIC, is investing $9.75 billion and the investor in the Middle East is contributing an additional $1.77 billion.

As the largest single shareholder, GIC stated that they have no intention of controlling the business of the bank.

In my opinion, they do have a controlling interest, which I’m sure will eventually play out over the long-term. When the U.S. economy spills over into a severe recession or finds itself in a financial crisis, whoever has the money will eventually secure its false sense of passive power. This time it won’t be the United States pulling the strings.

Stephen Oakes
Editor, Black Sheep Trader
www.blacksheeptrader.com