Morgan Stanley Latest Beneficiary of Japanese Investment

The United States needs to look in the mirror when wondering about the current economic fix it is in. We think that somehow we can solve everyone's problem with a legislative "band-aid" and there will be no ultimate piper to be paid. But even more unrealistic is to think that a problem brought on by such unrealistic policies is not going to require "fixes" of the same magnitude.

FT.com is carrying a story by Michiyo Nakamoto in Japan titled "MUFG to buy 10-20% of Morgan Stanley" in which he writes that Mitsubishi UFG has agreed in principle to a purchase of from 10-20% of Morgan Stanley for a potential investment of nine billion dollars based on due diligence. Further, they will send at least one person to sit on Morgan Stanley's board.

Japan's economy, while having periodic challenges, has grown at an excellent rate. The reasons cited are a very good work ethic and a work environment that encourages sound principles of business that can also be used in life.

This purchase came right after Morgan Stanley and Goldman Sachs got regulatory approval to be regulatory banks.

The move by MUFG puts a damper on a possible merger between Morgan Stanley and Wachovia.

MUFG's action came literally hours after Nomura, Japan's largest broker, acquired Lehman Brothers' operations in Asia and was in talks about purchasing some part of their European operations.

Also, Mizuho, earlier this year, invested 1.2 billion in Merrill Lynch. These investments are just representative of many Japanese investments.

The problem isn't that Japan is investing in United States financial institutions, rather, they are benefiting from our turmoil; they are further weakening our economy.

What are we doing? The fact is we aren't doing a lot. While there have been investments, the major needed bailout is stalled between the White House and Congress.

The Democrats have augmented the initial plan to get bailout for homeowners and executive compensation limits. Further they want the government to be given ownership in the companies in trouble.

Our internal thinking is a little scary, reminiscent of FDR's "New Deal."