The once all mighty U.S. Dollar is turning into a worthless piece of paper, the American economy is crumbling, US stock markets are losing billions daily while the average American owes more money than they could ever hope to save in two or three lifetimes and the U.S. Savings rate is at ZERO.

What is happening?  This is a going to be and currently is a major historical event, for Americans and for the world, the fallout from an entire decade of frivolous lending practices and allowing people truly insane levels of credit is now impacting the globe.

It was easy to see coming if you paid attention. When banks started allowing people to use home equity as a personal ATM machine. Then started jacking up home values post 9/11 due to the drastic drop in interest rates. You see home didn't really appreciate, the low rates simply allowed them to jack up selling values and keep mortgage payments the same. Once that game was played out, they went to adjustable rates to make the teaser rate seem like the home payment was low, finally the sub-prime loans came in. Now we are only beginning to see the results of these practices.

Now we are a joke around the world. From the Sudan to India, to Iran to Russia, and now China, people don't trust the value of the US Dollar anymore. And why should they? The US owes the world, and its own people, as much as $50 to $70 trillion. This level of incomprehensible debt will never be paid back in full, with or without interest, to international lenders and they know it, which is why so many are now, as queitly as possible, trying to sell their off American debts.

At the same time, hundreds of billions of foreign currency is pouring into the American economy.

But they're not extending Americans more credit, they are buying our country, at a deep discount!  

With our tight credit, growing unemployment and worries of an imminent recession, American business and government leaders are seeking foreign money to keep the economy growing. Foreign investors are buying aggressively, taking advantage of America in duress and a very weak dollar, to snap up what many see as bargains, while making inroads to the world’s largest market.

Last year, foreign investors poured a record $414 billion into securing stakes in American companies, factories and other properties through private deals and purchases of publicly traded stock, according to Thomson Financial, a research firm. That was up 90 percent from the previous year and more than double the average for the last decade. It amounted to more than one-fourth of all announced deals for the year, Thomson said.

If a recession now unfolds (I believe it already has) and the dollar drops further, the pace will accelerate, economists say.

The most conspicuous beneficiaries are Wall Street banks like Merrill Lynch, Citigroup and Morgan Stanley, which have sold stakes to government-controlled funds in Asia and the Middle East to compensate for calamitous losses on mortgage markets. Beneath the headlines, a more profound shift is under way: Foreign entities last year captured stakes in American companies in businesses as diverse as real estate, steel-making, energy and even baby food.

The weak dollar has made American companies and properties cheaper globally, notably for European and Canadian buyers. So as Americans confront the prospect of a recession, economic growth remains very strong in the world, oil producers like Saudi Arabia, Russia and export powers like China and Germany are floating in cash.

Many labor unions see the vast acceleration of foreign takeovers as the latest indignity wrought by globalization.

“It’s the culmination of a series of fool’s errands,” said Leo W. Gerard, international president of the United Steelworkers. “We’ve hollowed out our industrial base and run up this massive trade deficit, and now the countries that have built the deficits are coming back to buy up our assets. It’s like spitting in your face.”

Perhaps emblematic of national ambivalence, in an appearance on CNBC last week, the voluble market analyst Jim Cramer spoke in menacing terms about the growing role of state investment funds from the Middle East and China.

“Do we want the communists to own the banks, or the terrorists?” Mr. Cramer asked. “I’ll take any of it, I guess, because we’re so desperate.”

“They’re buying financial assets at well under book value,” said Gary C. Hufbauer, a trade expert at the Peterson Institute for International Economics.

Trade experts assume tensions will rise as developing countries — which tend to have more state companies — continue to expand their share of investment in the United States.

....even if political tension increases, so will the flow of foreign money, some analysts say, for the simple reason that businesses need it.

“The forces sucking in this capital are much bigger than the political forces,” said Mr. Garten, the Yale trade expert. “If there is a big controversy, it will be between Washington on the one hand and corporate America on the other. In that contest, the financiers and the businessmen are going to win, as they always do.”