Mr. Gorin may or may not be racist. He certainly is ignorant. And what Mr.Gorin does not know hurts him - in the wallet. He might have, for instance, invested his money in Indian stock and made more money in four years than he did in all the years he peddled luxury cars. Alternately he might have invested in real estate in Nariman Point or Connaught Place and made out like a bandit. But, he probably has never heard of Mumbai or Delhi - and in the bargin missed out on the 100 per cent plus increases in real estate prices. Poor Mr. Gorin, his information on India probably came from Mowgli and Indiana Jones. He says perception is reality. True. But it is equally true that unless the perceptions are based on well researched information, they produce a reality which injure the ignorant more than they can ever tell.
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The first is the relative enrichment of a large chunk of the world. If you're interested in selling assets, you can't afford to write off China, or India, or the Persian Gulf because you don't like their politics, or their economic systems or their history of poverty. Companies (and governments) in these areas are incredibly liquid. They've been busy producing commodities, goods and services and selling them to the booming global economy. As a result, they have loads of cash and solid balance sheets.
The second is the relative (temporary, one hopes) impoverishment of the United States. As the country comes to grips with the subprime mess and the associated problem of bad debt of all types, American financial firms and private-equity firms have morphed quickly from dispensers of capital to seekers of capital. That's what was behind Blackstone's sale of a 10 percent stake to China's sovereign wealth fund and behind Citigroup and chipmaker AMD raising much-needed cash from entities associated with Abu Dhabi's government. If Americans believe that the identity of the corporate parent, or of the investor who owns a controlling stake or something close to a controlling stake, will somehow cause damage to the consumer brand, then we're in big trouble. For with each passing month, a growing share of the world's capital resides overseas, in places that would seem to be beneath Ken Gorin. Dependent on foreign sovereign wealth funds and companies for capital, and dependent on foreign central banks to buy our government debt, we have become imperial beggars.
As the economy slows down and Americans cope with the aftermath of the housing bust, they are finding that there are a rising number of luxuries they can no longer afford. Being a snob about the source of capital may soon join that list.
© 2007
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