-Caveat Lector-
FROM PHOENIX, ARIZONA
Thought you may be interested in this e-mail edition of this Annex Research
report on the 1998 global investment trends. The print version, of course,
also has all the charts, too.
This e-mail is being sent in both "html" and "ascii" versions. Let us know
if you have any problems with viewing your copy.
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We'd be happy to oblige.
Bob Dj.
ANNEX RESEARCH
Phoenix, Arizona
e-mail: [EMAIL PROTECTED]
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ANNEX BULLETIN 98-44 December 11, 1998
Volume XIV
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Our Annual Analysis of the 1998 UN Report on World Investments:
TWO FACES OF GLOBALISM
A Tale about the Yin and Yang; the Princes and the Paupers
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CENTRAL RUSSIA, Scene 1: A well dressed woman in her late twenties watched
with a sad face as her toddler-size daughter slurped up the remains of a
soup. The woman had given up her only meal ticket so her child could eat.
A scene from a Charles Dickens-style film about England in the early 19th
century? No. Globalism at work in Central Russia. The scene was a part
of an early December 1998 CNN news report filmed at a Red Cross kitchen in
a small town about five hours by train east of Moscow. Like this woman and
her child, tens of thousands of Russians, are facing starvation this
winter, CNN said.
NEW YORK, Scene 2: Mr. "Big Shot," a Wall Street investment banking CEO, is
on a conference call with his star overseas executive, at about the same
time: "What the hell do you mean that a $20 million annual bonus won't do?"
"You want $40 million? And you want me to talk to which Russian government
SOB who can vouch for what you did?"
The executive gets up from behind his desk, and starts pacing angrily up
and down his office, holding his mobile phone.
"Listen, Jack. You'll have to do better than that. Send me the
documentation which backs up your claim, and we'll see. And I am not
talking to any damn Harvard crimson communist professor, either."
And with that summation, the CEO hangs up, puts the cell phone back in his
breast pocket, and leaves the room.
BUENOS AIRES, Scene 3: At the Wal-Mart in Buenos Aires, an Argentine flag
flutters in the store with a sign reading, "Proudly in Argentina." Families
stroll down the wide, bright aisles, past displays of Paul Newman's salad
dressing. "What is clear is that it is changing the Argentine way of life:
families buy their bicycles here, sometimes using dollars; the corner
bicycle store is no more," the New York Times reported earlier this year.
But, of course, Wal-Mart is not impervious to the risks of "divided
societies," a New York Times term for Brazil, Argentina's bigger neighbor
which has until recently mostly resisted the globalization pressures. In
early 1998, five Wal-Mart stores in Brazil had been attacked and robbed by
assailants operating in large groups armed with assault rifles.
Meanwhile, Wal-Mart's revenue is bigger than 161 countries' GDPs, including
Poland, Israel and Greece, according to Maude Barlow, a Canadian activist
who does not want to see her country's culture wiped out by, what we dubbed
the "Princes of the 20th Century," the multinational giants (see Annex
Bulletin 96-09, 2/13/96).
SCOTTSDALE, Scene 4: Well dressed and better manicured shoppers mill around
the Fashion Square, a fashionable indoor mall in an upscale Arizona
district which has become so fashionable that even tourists flock to it to
join the local "mall rats." Everywhere around the Fashion Square there is
the smell of money. The "Almighty Dollar" fragrance is at its peak at
Christmas, as the loaded customers - both literally (with gifts) and
figuratively (with money) - struggle to overcome the psychological stress
of spending. "How Do You Bust Holiday Stress?" - asked a Dec. 5 editorial
headline in the Arizona Republic, the state's largest daily. Such
hardships...
* * * *
The Princes and the Paupers
PHOENIX, Dec. 11 - So it's the "yin" and the "yang" thing. Globalism is
both the Paupers and the Princes. The preceding four scenes show two faces
of globalism. While impoverished masses, the Paupers, starve or riot in
places like Russia, Indonesia, Brazil, Korea, and other developing
countries infected by the globalism virus, the Princes are on a spending
binge. And not just during the Christmas season.
Americans have been spending themselves out of house and home for most of
the year. And in October, the last month for which officials statistics
are available, Americans spent 0.2% more than they earned. The nation's
personal savings at the end of 1997 were at a 63-year low of just 2.1%.
Not since the Great Depression has the savings rate been lower. Yet the
June 1998 savings dipped even further to a mere 0.2%, the lowest level
since the government started tracking the savings on a monthly basis in 1959.
Meanwhile, consumer spending soared 5.8% in the second quarter; after
rising 6.1% in the first. And since it represents about two-thirds of the
GDP, consumer spending is creating a false sense of prosperity for the
dumbed-down Baby-Boomers, who are splurging practically until exhaustion.
But booms are usually followed by busts. Our analysis of the 1998 United
Nation's UNCTAD report showed that warning signs were present in the global
economy even in the boom year 1996, well before Southeast Asia, Russia and
Brazil exposed the cracks in the globalism armor for all to see.
True, on the "yang" side, the world's Top 100 largest industrial
multinationals, the "Princes of the 20th Century," increased their foreign
assets over 1995 by 6.5% to a record $1.8 trillion. They saw a rise in
their total assets by 0.9% to $4.2 trillion. They boasted a foreign sales
jump of 5.1% to $2.1 trillion.
But on the "yin" side, their total sales declined by 1.2% to $4.1 trillion.
Their foreign employment dropped by 0.8%, while their total employment
decreased by 2.5%.
So the Annex Research' overall Business Trend Index (BTI) - the aggregate
annual change in the Top 100 multinationals' total global assets, sales and
employment - was DOWN 1.5% from the year before. And our Top 50 BTI
slumped by an even greater percentage (-6.1%).
In other words, even in the boom year of 1996, the global "yin" forces were
stronger the "yang" ones. But few of the Princes seemed to care, as they
kept increasing their foreign investments. Until the Southeast Asia bust
in the second half of 1997, one would assume?
Wrong. Not even that calamity caused an abatement in the 1997 global
investment picture. The Princes' Southeast Asia investments rose by 6%
last year to $82.4 billion.
The Princes' total global investments increased by 19% in 1997, to a record
$400 billion. Which means that the multinationals had spent over $2
trillion since the end of the Cold War (1990-1997) paving the world with
gold and misery.
Well, not quite gold, as we know. But misery is real. The New World
Order's "fools' gold" is minted in the computers of the Federal Reserve and
other global central banks.
As the above examples show, don't look for common sense investment
strategies in a business world ruled by a globalist IDEOLOGY. Anymore than
the rule of reason and compassion was present in the Marxist dogma. Nor
should one, therefore, expect to win many fair bets in a game played with a
stacked deck and "fools' gold."
"Mergermania" and Layoffs
Coca-Cola, for example, one of the most visible symbols of globalism in the
world, was ranked No. 82 in terms of its foreign assets on our 1996 Top 100
list. But it was No. 22 in terms of its "internationalism" (foreign over
total assets index), and No.39 when it comes to foreign over total sales
index. Yet even back in 1996, Coke already had a negative 6.6% overall
Annex Research Business Trend Index.
Today (Dec. 11), Coca-Cola said that it expected poor foreign results in
the fourth quarter. Undaunted by such warning signs from overseas markets,
Coke also said today that it was spending another $1.85 billion on an
overseas acquisition (Cadbury Schweppes). Go figure...
Of course, many of such mergers and acquisitions (M&As) are driven by the
investment bankers' greed and self-interests, rather than their clients'
welfare. Which is why so many global clients are downsizing their
businesses while increasing their M&A activities.
In 1997, for example, $236 billion, or nearly three-fifths of all global
investments by the multinationals, came through M&As. That's up from less
than half of all cross-border capital inflows in 1996. Many of such M&As
were large deals - 58 of them worth more than $1 billion. Not
surprisingly, therefore, developed countries accounted for 90% of all
worldwide M&As in 1997. "One outcome is a greater industrial concentration
in the hands of w few firms in each industry," concluded the UNCTAD report.
In other words, more power to the Princes. The latest spree of
"mega-mergers" in 1998 will only accelerate a transfer of power from the
people to the corporations.
In the wake of such industrial "restructuring," millions of human beings
are facing the fate of the Paupers. Even in the "good old days" of 1996,
the Top 10 multinationals reduced their foreign work force by 18.3%, and
their total worldwide employment by 9.2%. The Top 50 downsized to the tune
of 1% and 8.4% respectively.
The job cuts in 1997 and 1998, which the above figures do not reflect, have
been much more severe. During the first 11 months of 1998, the U.S.
businesses have announced plans to cut 575,000 jobs in America alone. And
the November 1998 layoffs represent the highest monthly total in five
years, according to Challenger, Gray & Christmas, a Chicago-based
outplacement company.
Most of the cutting is being done by the multinationals, while most of the
hiring is taking place by small and medium size companies. This reaffirms
our long-standing contention that America is actually UPSIZING, but from
the bottom of the business pyramid (see Annex Bulletin 98-12, 3/12/98).
And that large companies, particularly the multinational Princes, are
causing most of the damage to the U.S. economy. Just as they did in the
1980s, when the Fortune 500 companies shed three million American jobs,
according to a September 1996 Wall Street Journal report.
Mother Russia Is Hungry
Every time a foreign enemy burst through her western door, three times in
the last two centuries alone, Mother Russia kept her sons and daughters fed
and watered on the front lines. But Mother Russia is herself hungry these
days. And she can't even feed her sons and daughters in their own homes.
So what neither foreign enemy nor communism succeeded in doing, the New
World Order's globalism is. It's slowly destroying one of the world's
greatest nations. As the western leaders duplicitously spoke of friendship
and "Partnership for Peace," they expanded NATO to the east, corrupted and
plundered the Russian assets under the guise of "free market reforms,"
encouraged Islamic insurrections in southern Russia, and are now allowing
mass starvation to take place in a country which still has enough nuclear
power in its arsenals to incinerate much of the planet.
Talk about playing with fire! Literally.
It is both ironic and tragic that many Russians face starvation in the 1998
winter of despair, the year after the Princes finally put some serious
money behind their prior empty promises. In 1997 alone, Russia received
$6.2 billion in private foreign investments, more than in six previous
years - combined! But there was a catch. Even there.
In 1997, Russia also EXPORTED $3.7 billion of capital, according to UNCTAD,
implying that some foreigners had been already pulling their investments
OUT of Russia well before the latest financial crisis hit in the summer of
1998. Which resulted in a failed IMF bailout, and the country's default on
foreign debt.
In early November, the United States agreed to send 3.1 million tons of
food aid - worth about $625 million - to "help Russians get through the
winter" after their worst harvest in 45 years, according to the US News &
World Report.
Actually, the preceding statement is BS. The reason the Clinton
administration agreed to provide this food aid to Russia - for a price (!)
- was to help out the American farmers by spending the U.S. taxpayers'
money in order to buy 1.5 million tons of EXCESS wheat from them. And by
beating out its European Union (EU) competition (in food giveaways) whose
farmers had also accumulated vast amounts of surplus food.
"We must not let the Americans help Russia alone," the head of the French
wheat producers association told Reuters, according to a Nov. 4, 1998 New
York Times report. The EU "must launch its own food program."
Actually, this was also BS. A German official complained to the Dow Jones
Newswires that the European leaders attending the EU Vienna Summit on Dec.
11-12 spent a grand total of half an hour discussing the grave situation in
Russia. By contrast, they spent a full hour haggling over the date the
"duty free" shops will be abolished out in Europe.
Furthermore, the IMF chairman, Michel Camdessus, told the Russians during
his Dec. 2 visit to Moscow that there will be no new funds available for
Russia. The IMF has been holding a $4.3 billion loan installment since
September, demanding more evidence from the Russian government about its
"fiscal discipline," and its "commitment to reform."
So as Moscow, Brussels and Washington fiddle, and while the Russian people
are starve and freeze to death (in Kamchatka, for example), signs of
another revolution in the making are already discernible in Russia.
Regional governors, fearing food shortages, are banning exports of food to
other regions of Russia - in defiance of a federal law which explicitly
prohibits it, according to a Dec. 12 story in the Moscow Times, an
English-language newspaper.
In other words, Alexander Lebed, the recently elected governor of
Krasnoyarsk, and Aman Tuleyev, governor of Kemerovo, are challenging
Moscow's rule, while protecting their own people.
China Still Raking It In
China's communist government shot its own people in 1989 because they
wanted democracy. The Russian government shot its own people in 1993
ostensibly in the name of democracy. So if "ET" dropped in on Planet Earth
from outer space, he might have thought that the democratic leaders of the
free world would have punished the Chinese and rewarded the Russians?
Sorry, "ET." But this is Planet Earth, not Planet Hollywood. This is
where Greed, not Justice rules supreme. Since the Tiananmen Square
massacre, China has received over $202 billion in foreign investments from
the Princes. That's about $51 million per head of each Chinese
pro-democracy victim.
In 1997, for example, China received another record infusion of foreign
capital - $45.3 billion - the highest of any country in the world except
for the U.S. And China continues to be a relatively calm island in the
midst of Asia's financial typhoon. Why?
Because globalism and its "free trade" mantra are for the birds. China's
relative stability has proven it.
But don't take our word for it. Take it from a respected magazine
published by the U.S. globalist establishment's Council for Foreign
Affairs. Here is, for example, what Nicholas Lardy, a senior fellow at the
Brookings Institution, wrote in the July/August 1998 edition of the Foreign
Affairs. His article was titled "China and the Asia Contagion:"
"China is unlikely to catch the Asian flu. The Chinese currency is not
convertible for capital account transactions. Chinese savers... cannot
legally convert their deposits and purchase foreign currency-denominated
financial assets. Moreover... foreigners own only small amounts (of Chinese
assets). Indeed, non-residents are legally barred from purchasing 'A'
shares - bought and sold for local currency on the Shanghai ad Shenzhen
markets."
In other words, what Lardy is basically sayin is that protectionism pays.
What Bill Clinton's June visit to China was telling us is that
protectionism pays. What the failures of Southeast Asia, Russia and Brazil
are telling us is that globalism is for suckers. And that the suckers are
not the business leaders who made the bad investments. The suckers are the
American and other western taxpayers sold down the river by their own
governments. It's the ultimate twist of globalist perfidy: the Paupers end
up bailing out the Princes. To the tune of nearly half a trillion dollars.
And counting...
Enter Socialism International, epitomized by the IMF, the World Bank, etc.
- the reincarnated mutants of the now defunct Communist International.
Other World Regions
As for the other world regions, the highest regional increase in the 1997
foreign investments took place in the Pacific area - Australia, New
Zealand, Japan and some other smaller countries. The total inflow of
capital to those countries was up by 50% to $14.3 billion.
Yet, this amount only underscores how relatively small the Pacific market
is. Brazil alone, for example, picked up $16.3 billion in foreign
investments last year, up 47% from 1996. Mexico received $12.1 billion, up
48% from the year before. Argentina got $6.3 billion, up 24% from l996.
Latin America as a whole, attracted $56.1 billion in foreign capital, up
28% from the prior year. Which is why there is so much capital to bail out
Latin America.
SUMMARY
Right now, most American, in fact most western business leaders, are
brimming with confidence. And the western consumers are on a spending tear.
Just as were the people in the "roaring twenties," students of history will
remind us.
Boom and bust go in cycles. Always have. Always will. Only locations,
duration and amplitude of the swings vary. As do the names of the Princes
and the Paupers who get caught up in global storms. Some sail through.
Many don't.
Right now, we have a feeling that we are in for a doozer of a global storm.
So batten down the hatches and shore up your hedges. Here come some reasons:
· It is the nature of statistical analyses that it always delivers its
conclusions AFTER the fact. With about a two-year delay, in the case of
UNCTAD. The latest year for which the Top 100 multinationals' data is
available, and upon which that segment of our analysis was based, is 1996.
For many global competitors, business conditions have become much tougher
since that time. If you've found surprising how bad things were back in
1996 while reading our report, as we did, just think what it's going to
feel like to be taking in our 1998 Top 100 report in about two years from now?
· Goldman Sachs approached this fall a Saudi billionaire prince, whose name
has more letters than his net worth has zeros (Alwaleed bin Talal bin
Abdulaziz Al-Saud), about helping out with the Long-Term Capital Management
LP situation. In late September, the Federal Reserve Bank, fearing a
collapse of the financial markets, engineered a $3.6 billion bailout of the
LTCM hedge fund by a consortium of 14 Wall Street banks.
Why are we telling you this story only now, in the summary? Because
Goldman Sachs is a Wall Street investment banking "all star." The fact
that it should be begging a Saudi prince for money - WITHOUT first telling
their 13 bailout partners -is kind of like Michael Jordan asking Hillary
Clinton for a dunking lesson.
In other words, the forces of "yin" seem stronger than those of "yang."
Something is rotten in the global house of cards. These are desperate
times on Wall Street despite the multi-million dollar year-end bonuses
which some of its executives are collecting. It's just that the Casino has
so far managed to contain the stench. For the most part, anyway.
Instead, the stench of the globalist ideology in various stages of decay is
coming from places like Indonesia, Russia, Brazil...
So our advice for 1999 and beyond is: Try to forget the smell of money,
such as that evident in Scottsdale's Fashion Square. Start thinking about
the smell of blood, such as at the Tiananmen Square. Or that at the gates
Saint Petersburg's Winter Palace in 1917. Or at the Bastille in 1789.
And even if you can't give up the illusion of your own prosperity, for
God's sake, quit spending and start saving for the sake of your children.
And their children's, too. For, even the "fools' gold" can only fool so
many people only so often.
"A day of reckoning is coming," a well known U.S. politician and a media
superstar wrote to us recently, while complimenting us on our analysis of
global affairs.
So why not heed his advice, if not ours? For, we'd hate to see our clients
among those buying the "fools' gold" at a time of the "Yin Dynasty."
Happy holidays!
Bob Djurdjevic
----
Bob Djurdjevic
TRUTH IN MEDIA
Phoenix, Arizona
e-mail: [EMAIL PROTECTED]
Visit the <http://www.truthinmedia.org/>Truth in Media Web site for more
articles on geopolitical affairs.
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