That's classic US pork/lobbying/ political interest groups. United Steelworkers union are pretty happy with it, no one else is. How buying steel at artificial prices from an inefficient industry (cause you have no choice) and making the stimulus money not go as far going to benefit anyone? So now you can only build 100 miles of road instead of 150 miles? What if GM is forced to buy more expensive steel?
All it will do is extend their recovery time and most likely push them into a long term depression if they keep up the protectionist barriers. It's pretty much what happened in the 30s.
I recognize the importance of mining. I also recognize the importance of free capital flows.
Now I assume from your post you want max 30% foreign ownership of any mining resource. So 70% of any given Australian mining resource would have to be Australian.
Well, that would pretty much limit the development of huge chunks of these resources. Why would you or a super fund put money into a company where they had limited scope of selling it?
If I'm investing money into equally run companies A or B but I'm limited to who I can sell Company B to.. who would I buy? Company A. I reckon most institutions would as well, because they want to have as much flexibility as possible.
And how are we going to buy back Rio Tinto? 150$ a share? Market value?
I do agree with you on one thing though, that is potentially going into administration might make more money back if we wait long enough. You might not be happy who buys them though.
OZL Price at posting:
$6.50 Sentiment: None Disclosure: Held
