America for sale

- The big foreign-money purchases of stakes in Citigroup, Merrill Lynch, and Morgan Stanley are merely a hint of what's ahead in 2008. Foreign buyers, such as sovereign wealth funds from countries like Kuwait and Singapore, will continue to make headlines by grabbing major U.S. assets this year, and the trend is much broader than investments in Wall Street firms that need a capital infusion. What's important to understand is why this is happening - the reasons go beyond what most people realize - and why it may be even more worrisome than it seems.

Such deals were hot even before the bank bailouts. Foreign buyers set a record last year by purchasing $414 billion of U.S. assets - even more than they bought in the wonder year of 2000. The usual explanation is that the dollar was cheap, which was certainly an important factor. But more had to be going on. Many of the biggest deals were done by Asian or Middle Eastern buyers who already hold much of their wealth in dollars. Those investors didn't get a discount because of the dollar's declining value. In addition, U.S. stocks were hitting record highs through much of last year, so it's hard to say that American businesses in general were bargains. Why, then, were foreign buyers so busy?