For decades, Americans have revelled in leading an extravagant life. Apparently, the splurge has generated some healthy economic growth and offered everyone lots of nice stuff. However, the housing bust, the subprime domino, evaporation of Wall Street's financial giants, and crumbling markets have dented household wealth. Now, the main glitch is America's huge trade deficit with the rest of the global economy. The trade deficit has produced vast dollar reserves and dollar-denominated securities at several of America's major trading partners. The dollar reserves are particularly large in Middle East, the Gulf and Asia, where export-oriented economies like Saudi Arabia, Abu Dhabi, China and Japan have run large trade surpluses with the US. So the outcome is predictable. As the financial crisis in the US continues to unfold, a combination of decreasing asset prices, global commodities boom and a relatively weak dollar will make the US trophy assets remarkably inexpensive to foreign investors. Foreign investors will obviously look at the opportunity as a golden chance and a salivating prospect to own prime pieces of Americana at bargain prices. So, eventually all these dollars in banks around the world will find their way back into the US to buy stocks, bonds and property. Debt-burdened-US, badly in need of liquidity, will be only too delighted to sell. The US will emerge as one giant store, where the clients are Japanese banks, oil-rich Arab sheikdoms and Asian state-run investment funds.
Prospective investors are targeting stable and more secure parts of the US economy. They see a lot of activity in high quality growth assets like real estate and energy businesses. They are making their presence felt across the US, from coastal and dormant inland cities to 24 hour cities. European investors focus more on well-known Eastern cities like New York, Boston and Washington, as well as the Carolinas and Florida while Asian investors favor western and south western cities like Los Angeles, Las Vegas, San Francisco, Phoenix, Denver and Seattle. Latin American and Caribbean investors eye coastal areas but focus more particularly on the southern parts of the US, such as Tampa, Atlanta and Dallas. Inland major metropolitan areas with traditionally powerful economies such as Chicago, Minneapolis and Indianapolis are also up for grabs. The US financial firms, which are the primary victims of the ongoing global financial crisis and whose market values have taken a severe beating, are among the targets that can sooner or later attract interest from foreign investors, experts say. The recent foreign-cash purchases of sizeable stakes in Citigroup, Merrill Lynch and Morgan Stanley are just a hint of what is ahead in the near future.
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