Nancy's House

What is a blog if we never talk about politics?

Let me be clear. Whether the government is run by Democrats or Republicans does not change much when I am deciding to buy Berkshire Hathaway (NYSE: BRKB) shares for my son’s college savings account. Neither will the actions of the soon to be Speaker of the House, Ms. Nancy Pelosi. But it sure will be fun to watch what she will do next when it comes to US policy towards China.

Source: The Wall Street Journal

An article in the Wall Street Journal about her stance towards China caught my recently. She has protested in Tiananmen Square, she has held protests outside of White House on China matters and she is expected to allow tough China legislation to come to full vote in the House. Don’t get me wrong, I am all for protection of human rights and religious freedom. To be sure, labor conditions at many factories supplying American multinationals still need to be improved. However, taking a tough stance towards China won’t be the most constructive way to deal with things.

She should be reminded that the US economy is more than ever linked to the global economy and is a direct beneficiary of the ascendance of these two countries. After all if foreigners weren’t lending the US so much money, Americans would not be able to consume as much as they do today. In fact they would not be able to buy the fancy wine she makes at her vineyard in California (Ms. Pelosi is quite well off indeed - she is worth up to $55 million with a $25 million stake in a couple of Californian vineyards and a $10 million stake in a golf course).

Suggestion for Ms. Pelosi – have a nice dinner with Treasury Secretary Henry Paulson to learn about what it takes to have a cordial and constructive relationship with the Chinese. Whether Ms. Pelosi likes it or not, China (and India for that matter) will influence the world more than she may realize for the rest of this century. I will never forget when David Conklin, a professor at Ivey School of Business, reminded me and my classmates how lucky we are to be able to witness India and China change the world. Meanwhile, my brother and I are happy participating in the growth of these markets through investments such as ICICI Bank Limited (NYSE: IBN) in India and US multinationals which will undoubtedly benefit from the rise of the consumer class in China.