by Jerry Harris, SolidarityEconomy.net . Transnational capitalists hedge US investments In November US investors bought a record number of foreign assets ($39.1B) amid fears of the weakening dollar. Wall Street Banks are also profiting from a boom in global business with international revenues growing three times as fast as their US investments. The world’s biggest bank, Citigroup, said its international revenues jumped 34 percent compared to an increase of about 10 percent in the US. For the first time operations in Europe and Asia earned more than its US investments. JPMorgan Chase saw its global investment revenues soar upwards 42 percent to $9B, almost matching its US business at $9.2B. . London passing New York as a financial center London is becoming a center of choice for raising capital challenging New York as the world’s leading financial center. In 2006 $55B was raised on the London Stock Exchange for the first time ever exceeding the amount raised on the New York Stock Exchange and Nasdaq where shares issued reached $46B. Chuck Prince, chief executive of Citigroup, says “I think we are going to see a diffusion away from New York as a center of financial activity. New York will not be unimportant but the rise of London, Hong Kong and Dubai and other places is going to be quite significant. People will be going to other places to raise capital.” London is seen as a natural hub for operations in Europe, the Middle East and Africa. London is also the center of the world’s biggest financial market, the foreign exchange or money markets. Of the $2.7 trillion traded daily about a third passes through London. All this reflects the growth of the transnational capitalist class and its patterns of global accumulation. Particularly in the financial world national centers have become less important with the free flow of money and investments across borders. . Is Islamic banking high road finance? The Koran bans both the loaning of money for interest or speculation. So in recent years Middle Eastern bankers have devised equity-style investments known as Islamic bonds or “sukuk” and Koran-compliant insurance called “takaful.” Both are rapidly expanding in size, some estimates putting investments now at $750B. The boom has been built on a profit-sharing product model and high profitability at Islamic banks. These banks have also benefited from a shifting political environment that reflects a rise in religious and nationalist feelings since the start of the US “war on terror.” Unlike the profit windfall from the oil booms in the 1970s and 1980s more money is staying in the Middle East rather than being placed in Western banks. European banks are jumping in with ABN Amro, Societe Generale, UBS and Deutsche Bank all now offering Islamic investment instruments. Just another sign of the lost of US financial hegemony to transnational capitalism.

email2friend