Humbling The Proud

Atrios makes a good point: just a short time ago, we could afford the kind of pride we just can't now:

Rudy's nonfriend wants some Citi.

Jan. 12 (Bloomberg) -- Citigroup Inc., the U.S. bank facing an estimated $4.21 billion fourth-quarter loss, may get cash infusions from Saudi Prince Alwaleed bin Talal and China's government to bolster its capital.

Citigroup, the largest U.S. lender, is seeking a total of $8 billion to $10 billion from investors including Alwaleed, who already owns almost 4 percent of its shares, and China Development Bank, the Wall Street Journal reported yesterday, citing people familiar with the matter. The Chinese bank is likely to invest about $2 billion, the newspaper said.

Flashback:

NEW YORK (CNN) -- Mayor Rudy Giuliani said Thursday the city would not accept a $10 million donation for disaster relief from Saudi Prince Alwaleed bin Talal after the prince suggested U.S. policies in the Middle East contributed to the September 11 attacks.

Andrew Leonard chimes in:

Globalization, thy name is Wall Street bailout. There is no better demonstration of the new global financial order than the cavalcade of "sovereign wealth fund" white knights riding to the rescue of the world's name-brand investment banks all winter long.

...Here's a partial tally so far:

• Citigroup: $7.5 billion from Abu Dhabi Investment Authority and $6.88 billion from Government Investment Corp. of Singapore.
• Morgan Stanley: $5 billion from China Investment Corp.
• Merrill-Lynch: $5 billion from Singapore's Temasek Holdings, $6.5 from Kuwait Investment Authority, $2 billion from Korean Investment Corp.
• Bear Stearns: $1 billion from China Investment Corp.
• UBS: $10 billion from the Government Investment Corp. of Singapore.
  

A sovereign wealth fund is defined as an investment fund controlled by a national government. While not exactly new on the world scene, such funds have been proliferating of late, a consequence of the high price of oil and the growing strength of East Asian economies. Sovereign wealth funds are currently believed to control around $2.2 trillion worth of assets, and some predict that number could shoot up to $12 trillion or more in less than a decade. But the numbers hardly tell the whole story. Less than two decades after the collapse of the Soviet Union and the West's gleeful jig dancing on the grave of communism, state capitalism is suddenly threatening the autonomy of the global "free" market. Wall Street's elite banks, longtime freedom fighters for deregulation and scorners of all government intervention in the marketplace, are now begging, cup in hand, for aid from a gallery of regimes that includes some of the most authoritarian and undemocratic governments on the planet.

...Indeed the reality may be that the era of free markets unleashed by Margaret Thatcher and reinforced by Ronald Reagan in the 1980s is fading away. In place of deregulation and privatization are government efforts to reassert control over their economies and to use this to enhance their global influence. It is an ill wind that blows...

...Perhaps it would be more accurate to say freer markets lost the day. The root of Wall Street's woes leads back directly to their own strategic missteps, greed, speculation-run-amok, and lack of appropriate supervision. The brightest minds in finance had exactly what they wanted, a playground where the monitors were looking the other way, and they blew it. When the China Investment Corp. pumps in $5 billion to Morgan Stanley, we are not witnessing the triumph of state capitalism, but rather, the embarrassing, humiliating failure of Reagan-Thatcher style unregulated capitalism. So now the U.S. buys Chinese toys at Wal-Mart, and China uses the resulting cash to buy American banks. Hey, anything's fair in love and war and free markets.