On The Way to Third World Status

This is a crucial article. The Obama Administration is raising the need for investors to consider political risk when making an investment. Without going into detail this means that the U.S. is becoming less and less competitive and this will have profound effects on our day to day lives.

They view President Obama's restructuring plan for bankrupt automaker Chrysler as an attempt to subvert the legal rights of lenders and say lenders will also be unfairly targeted if the U.S. Congress passes a bill to rewrite bankruptcy law to reduce home mortgage payments.

Investors concerned that politics could hurt them may demand a risk premium before they buy stocks or bonds or do a business deal. That could make the U.S. less competitive and money might flow elsewhere.

"There is a much larger political risk premium on investing in the United States than there has been in years," said Sean West, an analyst at Eurasia Group, a research and consulting firm that studies political risks.

"What we're seeing now in the United States is much more like what we see in emerging markets, where the government either by choice or as a result of circumstance is in a position to decide which companies or banks survive and which ones don't," he said. "These were almost unthinkable risks a year ago."