Fleeing America

The Euro has appreciated by almost 50% against the dollar on Bush's watch, but that's not the only thing to be concerned about.

I happened to check on a foreign stock I'd once bought on the New York Stock Exchange, but couldn't find it...? Foreign companies, citing high administrative and regulatory costs, are delisting from the NYSE in droves.

Such costs presumably contribute to the decision of many American companies to go private, and to the number of IPOs which are occurring on foreign exchanges rather than in the US. Then there's the situation with securitized American mortgages.

Will the world's financial traffic reroute around America the way the Internet routes around censorship? My guess is that we're not at that point yet, but if it happens it will happen faster than people expect. If the next president is also incompetent, that might be enough to trigger the shift; if the next two are, IMO that should do it.

This ought to be an issue in the next election.

Displacing America as the world's financial nerve center would be wrenching for all involved. Whatever arrangement followed might become worse than the current one. But the Bush administration--not to mention the Democratic and Republican parties who concocted Sarbanes-Oxley--has flagrantly thumbed its nose at the electorate, and apparently they have not yet learned from the consequences.

Afterthought. Although Oxley has conceded that Sarbanes-Oxley went too far, perhaps the establishment is still in denial about its consequences at the margin. The law enhances upper management's personal responsibility for a public company's financial statements. Combine American civil litigiousness and scalp-hunting criminal prosecutions like the Conrad Black trial--not that Black is a paragon--, and it's not surprising that foreign CEOs decide they don't need the aggravation.