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US Government May Not Approve Sale of IBM PC Unit
andy1307 writes "Xinhua, among others, quotes a Bloomberg report saying the Committee on Foreign Investments in the United States, or CFIUS, might block the sale of IBM's PC unit to Lenovo over national security concerns. CFIUS is made up of 11 U.S. agencies, including the Department of Justice, the Department of Homeland Security, and is chaired by the Treasury Department. They are concerned Lenovo employees might be used to conduct industrial espionage. The Bloomberg story said members of CFIUS were focusing their attention on an IBM facility in North Carolina of the United States. The same article says IBM hasn't produced its own PCs for several years and that the bulk of its production is done by manufacturing partners, largely in China. In the past, CFIUS has blocked the sale of Global crossing to Hutchison Whampoa because it would have meant Chinese control of the undersea cable communication network."
The last-ditch efforts of a superpower that will hate being #2 when when China gets its act together in the next generation or two.
Beware the Jubjub bird, and shun the frumious Bandersnatch.
I thought the US were supposed to be the laissez-faire free marketeers of the world?
If China was blocking US participation in their markets on these grounds, I've little doubt the US would be taking the matter to the WTO (and winning).
China can always threaten to stop buying up US debt. That would mean a large spike in interest rates in order to make buying US debt more attractive to investors. It would probably also mean a tax hike, something that Dubya would like to avoid at all costs.
Cheney may have said that deficits don't matter, but sooner or later, he will learn that giving the largest dictatorship on Earth a large voice in your government is a bad idea. (Esp. when you are supposed to be promoting "freedom" and "democracy")
Monstar L
>> IBM wants to sell, Lenovo wants to buy. No harm, no foul.
:) ). In those cases, the government is expected and does regulate economic activity in order to re-balance the market.
There is no connection between the first sentence and the second. In order to determine if there is any harm or not, a lot of factors need to be considered, mainly related to whether or not a company will increase what economists call "market power" and will get closer to a monopol status.
>> It's funny, the land of freedom and capitalism is taking steps that would make a communist plutocracy proud.
There is such a term in economy called "market power", which describes companies that have key resources and strategic positions on the market. In those cases, the "invisible hand" of offer and demand, that balances prices on the market, no longer works, because a firm is clearly advantaged compared to the others and in a position to get a monopoly status (Does Microsoft ring any bells?
I'm not saying that this is the case here; however, simply adjusting the balance doesn't mark this approach as communist. Depending on your position on the political spectrum, you might find this implication of government into the market more or less suitable. Still, no matter that, it is still far away from communist.
More likly Microsoft reads slashdot too and is worry about IBM having more power in the linux market in China so Bill called his friends in the White house and Justice department.
IBM support is not going anywhere. It's profitable and has a very high reputation. The main concern on the IBM side is whether or not Lenovo will stay with IBM after the transition period.
Dell does not sell IBM ThinkPad computers. The only thing I can imagine you are talking about is some kind of really screwy deal where Dell salesmen are playing some kind of marketing middleman game. Of course, in that case, I can quite well understand why it would be in Dell's interest to foul things up as long they thought they could blame it on someone else. That would also explain the rolling heads, come to think of it.
Freedom = (Meaningful - Coerced) Choice != (Speech | Beer^2), and sad sock puppets' bad mods avail them naught.
Nah, the Chinese didn't grease the right people. These big government deals are all about graft, and who gets it. In the Jiang Zemin/Clinton era, times were happy...the Chinese paid, and the U.S. responded with whatever they wanted...satellite technology, nuclear secrets, influence in elections. However, the new administration of Hu Jintao evidently forgot to pay off the right people, and now the whole deal is in jeopardy. Play ball, people!
Shutting down free speech with violence isn't fighting fascism. It IS fascism!
well, usa has been the only country getting mad at others and invade in the last years.
Conservatism: The fear that somewhere, somehow, someone you think is your inferior is being treated as your equal.
Human Rights record?? Can you say "guantanamo bay"?
I didn't think so.
Of course, at least the people held in guantanamo bay - against their will and without any legal proof of wrongdoing - are still alive. Unlike the (conservative, peer-reviewed estimate of) 100,000 dead people caused directly by the invasion of iraq - the vast majority of whom had done nothing wrong.
You Americans and your blatant hypocrisy make me want to puke.
The biggest menace in the world at the moment is not just red; it's red, white and blue.
I have a ThinkPad T41 on my desk right now. I flipped it over and found:
"Made in China"
Whether or not IBM sells its PC business to Lenovo, the technical information is already in China as is the actual manufacturing. So if our "national security" concerns are about the transfer of technical knowledge then it's too little-too late. If the concern is about having our important technology manufactured by a potential adversary, then it is also too little-too late.
This looks more like meddling for the sake of flag-waving to me...
Life is short: void the warranty.
The US has NEVER defaulted on a debt payment (post Civil War, might have during that). One of the smart things Clinton did during the government shut-down was violate all sorts of government accounting rules to get the debt payments out.
As a result, US Debt is considered 0-risk. It is the ONLY debt instrument in the world that is considered zero risk. Even other government debt has a small implicit risk premium in it.
Right now, the US raises money at no risk premium. If the US defaulted or increased the money supply (which would cause massive inflation and force the markets to devalue its currency... devaluation as policy requires a peg, normally to the dollar), the would cause the US to start paying a risk premium.
All of a sudden, you would have 10%-15% inflation from oversupply of money, and the US risk premium going up to 5%, for example, and now government bonds pay 15%-20%... How much do you think that your mortgage needs to be now? 25%, 30%?
Basically, the US CAN get out of its mess with massive printing of money, but the results would be catastrophic.
HOWEVER, your comment about the bank is 100% on, and I believe it is the current financial strategy. Continue to buy products from China for "worthless" sheets of paper (paying 4%-4.25% interest), then slowly increase the money supply and inflation to 4.5% or 5%, and inflate your way out of the mess. All of a sudden, the money is devaluing faster than your interest payments, tax revenues go up, and debt repayment is less painful.
Many countries played games like this, but it is normally to buy capital goods and other means of production... we've used it for consumer spending, which is why we may be in a bind.
Mild inflation is nice, but reasonable (5%) inflation) wouldn't kill us, and might be a way out of our mess.
Alex