Blog Post #408: American Retirees Are a National Security Threat

Blog Post #408: American Retirees Are a National Security Threat

Taken from:

When I ran into this headline from the Foreign Policy Magazine I was both surprised and shocked!!!  

As one of those American Retirees, how could I be a national security threat?  How about Gene and Thann, our neighbors, my great friend Tom and his wife Joyce – how could these good people be national security threats?  And … especially for my other senior friends? Bill was in the Airborne Rangers in Vietnam – I’m sure he is NOT a National Security Threat!!

The article states:  (read it carefully)

“Leading economists, such as the Wharton School’s Jeremy Siegel, predict that, just as American baby boomers are increasingly selling stock in U.S. companies to fund their retirement, foreign investors from emerging markets such as China and India are increasingly buying those stocks. That’s because, almost exactly as many Americans are cashing out, these foreigners are buying in, a trend reflected in their countries’ significantly higher domestic growth rates and per capita savings rates. Siegel and others predict that, as a result, by the middle of this century many U.S. companies will be majority-owned by non-American investors. These economists thus predict that majority ownership of key U.S. businesses—as well as leading European and Japanese businesses—will be in the hands of foreigners from emerging markets.”

So, if I am reading this correctly, when I sell my shares of stock in American companies (like General Motors, Boeing, Microsoft, General Electric, United Technologies, and many more ‘American’ company) they are being snatched up by investors from China and India.  So, with enough baby boomers selling stock they purchased for their retirement, instead of being (say) 75% owned by Americans and 25% owned by non-Americans; eventually, it will become 49% of the stock will be owned by Americans and 51% of the stock owned by non-Americans.  

Or, over some time, Mr. Wu, a rich investor from China, buys into Boeing, over-and-over-and-over and by 2050 owns (say) 20% of Boeing.  He gets on the Board of Directors and keeps and encouraging his Chinese friends to buy shares of Boeing. By (say) 2060 Chinese and Indian investors own 51% of Boeing stock, and Mr. Wu as a majority shareholder (or his heirs) control the Board of Directors and demand that Boeing’s headquarters get moved to China.

Now, there is one major safeguard – CFIUS (The Committee on Foreign Investment in the United States) is an oversight group from the US government.  BUT CFIUS has traditionally been concerned about company-C from China buying a majority of a US company. But CFIUS doesn’t look at all the little investors.  Maybe by 2050, thousands of Chinese and Indian investors collectively own a majority of Boeing (maybe without even knowing it). So as the US Air Force wants Boeing to build a new top-secret warplane, the Chinese stockholders block that effort.

But, how does that implicate us baby-boomers?  When I’m ready to take that dream vacation, buy the dream RV, take out retirement funds to live on – I don’t really care who buys my stock other than I get the highest price for my stock.  So, if Mr. Wu buys my stock and I get my money, I’m okay. But every time a United States senior/retiree sells their 10 shares in Boeing (or their 100 shares of Boeing or 1000 shares), Mr. Wu and his friends are willing to play the highest price, less and less of Boeing remains “American” and more and more of Boeing becomes “International” (or even Chinese).

So, what if the government says to us retirees – you have to take the top price on the stock exchange from United States citizens and organizations.  Maybe Sue Smith in California is willing to pay $100 for each of my Boeing shares – and is the top American wanting to buy my stock, but Mr. Wu is willing to pay $150 for each of my Boeing shares – I would prefer to get the most from that stock I’ve collected over the years.  

So, back to the article title:  “American Retirees Are a National Security Threat”.  I don’t think my brother-in-law Bill is damaging national security when he sells his 1000 shares of Boeing, but collectively as many of us retirees, wanting to use those funds we accumulated over the years – as a whole might allow Boeing to slowly drift into non-American owners.

Interesting concept.  What is your take on that?



Posted by Bruce White

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