Tuesday, December 12, 2006

Hank Paulson Heads to China to Stir Up More Business for Goldman Sachs

Fresh off a banner year, Goldman Sachs hopes ex-Chair Henry Paulson comes back from China with a Christmas present for the company, increased access to the communist country’s financial markets. However, while China exports the heck out of manufactured items (giving it a trade surplus of $156 billion in just 11 months), it suffers from a deficit in services (amounting to $5.6 billion). As a result Hank will have a hard time selling greater access for American financial firms in that country.

Should he wish to talk with an American with insider knowledge on the broad shift of manufacturing capability from the U.S. to China, Mr. Paulson should contact Robert Gates, the soon to be sworn in Defense Department Chief. Bob served on the board of NACCO Industries. One division, specializing in small household appliances, contracted out all U.S. production to China. Their last plant in North Carolina is slated for closure according to an SEC filing.

Unfortunately Hank’s trip is prior to Dr. Gates’ swearing in next week. Maybe they can conference call should Robert’s expertise be needed. They can three-way with The Carlyle Group, the Pennsylvania Avenue private investment firm with a large Chinese presence. Carlyle recently bid on a Taiwanese semi-conductor company, just what Hank wants more of on the mainland.

If Goldman gets more business in China, how will that translate to domestic U.S. political donations? Long the heavy hitter, Goldman Sachs plies ample green to members of both parties.

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