A little more than a decade ago the Japanese indulged their insatiable desire for American cultural ...
A little more than a decade ago the Japanese indulged their insatiable desire for American cultural and commercial landmarks. In what seemed like a matter of months, Japanese companies, competing with each other to gain prestige, gobbled up the Rockefeller Center, the Pebble Beach golf course, Columbia Pictures, Universal Studios and even a piece of Goldman Sachs.
Americans, or at least a number of the noisiest American journalists and politicians, became very upset by this trend. They worried that their investment bankers and movie moguls were being taken advantage of by these shrewd, newly rich foreigners.
I especially remember Senator Fritz Hollings reminding US voters of Pearl Harbor, and saying that he was going to pass a law to prevent a new version of it from happening again.
Not once did anyone pause and notice that the sellers of these precious American assets - mainly Wall Street investment bankers and Hollywood studio executives - were perhaps the least likely people on the planet to be taken advantage of. That was an important clue to what was actually going on between Japan and the US.
There is only one sure rule in this life: if you are on the other end of a deal from either Wall Street investment bankers or Hollywood movie moguls, you are about to be screwed.
Sure enough, it was the Japanese buyers, not the American sellers, who suffered. Japanese corporations lost billions of dollars on the US assets they gobbled up, many of which they have been forced to regurgitate. And the Japanese investors made many Americans richer and, presumably, happier.
You might think that that episode of American xenophobia would end forever the commercial fear of foreigners in the US.
But now it is happening all over again. Deutsche Telekom, 56% owned by the German government, announced plans last week to buy VoiceStream Wireless for more than $50bn.
But the noisy Americans are, inexplicably, upset about the deal. On Capitol Hill a new law is being written. It will prevent companies more than 25% owned by a foreign government (such as Deutsche Telekom) from buying a majority stake in a US cell phone company.
Was I the only person in the world who had never heard of VoiceStream Wireless? This tiny cell phone company, apparently the eighth-largest in the US, has a mere 2.3 million customers.
We currently find ourselves in the throes of a new market craze, the natural successor to the thirst for dot.com stocks.
The new craze is for anything to do with wireless communication. As long as it does not come with wires attached, the capital markets are now willing to indulge virtually any madness you care to name.
This craze underpins everything from the $35bn sale of UK cell phone licences earlier this year, to the almost $7bn market value of a tiny money-losing wireless service provider in Owings Mills, Maryland, called Aether Systems.
The craze is rooted in two assumptions, neither of them particularly sturdy. One is that people will eventually use their cell phones to do more than talk. The internet, they say, will one day be entirely wireless and run mainly through cell phones. This vision may seem somewhat plausible in cell-phone-centric Europe.
But the same scenario seems less likely in the US where the citizenry is more fully wired and thus less in need of alternatives.
The other, more heroic assumption is that the middlemen of the cell-phone-centric internet will make a fortune. How great a fortune? If two million US cell phone customers are worth more than $50bn, what are 250 million subscribers worth?
The purchase of VoiceStream implies, to a certain extent, that the current market capitalisation of the entire US cell phone market should be roughly $6 trillion. Do you believe that? Of course you don't. No one does, really.
And so when the generous German people called and offered to pay a fortune for an obscure US cell phone company, the reaction of all Americans should have been slack-jawed gratitude. Each and every one of us who uses a cell phone should have offered to throw a party. I know that I feel, suddenly, more valuable than ever.
And yet the immediate US political reaction has been, incredibly, indignation. There has been endless moaning about how precious US cell phone assets are and how insidious foreigners can be.
There are now US senators threatening to block the VoiceStream sale. One of them is Fritz Hollings. Go work that out.
Michael Lewis via the Bloomberg New York newsroom
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