I missed the news.

And, I presume a lot of others also missed the news.

“In the weeks ahead, a 104-year-old unit of General Motors will be sold to new owners from China.The unit made steering equipment for decades under the name Saginaw Steering Gear.Now known as Nexteer, it employs 8,300 people around the world.It new Beijing owners call themselves Pacific Century Motors.” (http://professional.wsj.com/article/SB10001424052748703957804575602943255219552.html?mod=ITP_moneyandinvesting_0&mg=reno-wsj) China is, and has been, buying companies throughout the world. “But,” the above article goes on, “it is one of the landmark deals of the era, the first time Chinese investors have bought a U. S. industrial operation of such scale and history: Twenty-two factories around the globe, six engineering centers, 14 customer-support centers.” The only direct way to stop this activity is through capital controls and other forms of protectionism. The United States Congress did balk at some earlier attempts by China to purchase U. S. companies that were considered to be threatening to American security interests.Still, China continues to seek out and acquire United States companies.

I have mentioned this behavior on the part of the Chinese before.But, the Chinese are not alone…other emerging countries are engaging in the purchase of American companies as well.

And, the United States government continues to feed China and these other countries with the means to buy American countries.

“Ironically, at the G-20 conference in Seoul this week, U. S. leaders are trying to cajole China to buy more from the U. S., to help right a trade deficit that hit $28 billion in August alone.Such imbalances, they say, helped feed the credit craze that culminated in the 2008 financial crisis.”

In my mind, the “U. S. leaders” don’t get it!

The United States government continues to inflate the world with dollars and dollar-denominated U. S. Treasury securities and then encourages these foreign governments to buy American companies to combat the trade deficits that they have been instrumental in creating.

What am I missing here?

The United States government is inflating the world with dollars because the unemployment rate is too high and then encouraging foreign governments to buy American companies to put these people back to work again.

Again, what am I missing here?

And, why should the Chinese government want the situation to change.The Chinese government is in the driver’s seat and the United States is just feeding it with the means to buy companies both in the United States and in the rest of the world.

The Chinese have no reason to change the existing situation.

And, as long as the leaders in the United States government keep pointing their fingers at the Chinese and saying that the problem is out there…the problem will be that of the United States continuing to feed the rest of the world the means to acquire America.

But, this will not continue forever.The United States Congress will not allow it.

The threat, then, is as described by the German chancellor Angela Merkel stated in an interview with the Financial Times, is the imposition of controls and protectionism. (http://www.ft.com/cms/s/0/3cb912ca-eb6f-11df-b482-00144feab49a.html#axzz14tWucN4h)

This will not be good for either world trade or for international cooperation and peace.

But, the United States government shows no inclination to change its behavior. The leaders in the government are still working off of an outdated and inappropriate economic model.They are also working with an outdated ego that claims that America can still “go-it-alone” in the world.

Unfortunately, these outdated ideas are working entirely against what the United States would like to achieve.It is hard when you are your own worst enemy!

And, the United States continues to shoot itself in the foot.There is an excellent op-ed piece in the Wall Street Journal this morning by Alan Reynolds.(See Ben Bernanke’s Impossible Dream”: http://professional.wsj.com/article/SB10001424052702303467004575574610003111250.html?mod=ITP_opinion_0&mg=reno-wsj)

Although though Reynolds concentrates the focus of the article on the Bubble Ben’s quantitative easing plan, I could not help but think about who would benefit from the consequences of the “easing” that is presented.All the consequences described by Reynolds will benefit the wealthy because they are the only ones that are in a position to take advantage of the incentives that will be created by the quantitative easing.

This policy, then, will have three ultimate effects.First, income (wealth) inequality will continue to increase in the United States.The economic policies followed by the United States over the past fifty years which are just variations on the quantitative easing policy, have created a massive shift toward a more unequal distribution of income (wealth) in America.But, in an attempt to help the less-well-off, the government will continue to follow its existing policy-prescriptions.

Second, the United States will continue to become less and less productive.This is one of the criticisms leveled by Wolfgang Schäuble, the German Finance Minister.Schäuble stated that the reason for the strength of German exports was the fact that German industry was so effectively productive.He implied that other countries, like the United States, were not as competitive.The United States will be even less so if the results Reynolds foresees are achieved.

Third, given the current economic philosophy of the United States government, the leaders of the government will continue to combat this loss of competitiveness by “more-of-the-same” in terms of economic policies.This will just continue to hand the Chinese, and others, the means to acquire American companies.

Following such a path will result in the Obama administration achieving exactly what it does not want to happen.But, this is precisely what the Obama administration has achieved in the less than two years it has been in charge of the United States government.

And, why should China want anything different?