A free market?!Quite simply, China is a cash cow and they’ve got too much cash.  More complex, China’s currency was long undervalued causing a high deficit between China and its trading partners.  Now China possesses a $1.2Trillion basket of foreign currencies.

The Chinese have always been foreign cash rich, but now it seems like the People’s Republic is finally getting down to making these cash reserves work and generate more cash.  Traditionally, the Chinese have had high dollar amounts in T-Bills but T-bills are very uninteresting, low paying, savings bongs.  Who cares?  We want real returns!

Insert Blackstone.  One of the most prestigious private equity companies in the world is going public.  It planned to raise $4 billion dollars through its IPO and might now raise twice that amount when the Chinese amounts get figured into the overall sales numbers.

There were rather strict investment criteria for the deal.  China agrees to hold its investment for at least four years so that the nation doesn’t cripple stock prices from a heavy sell off.  China may sell after holding the company four years but only at a rate of $1 billion per year.  Also, China gave up all of its voting rights that were tied to the shares in order to stay away from US Government intervention.  Surprisingly, China has been very co-operative with Blackstone and the US government regarding this investment.

Blackstone believes this may pave the way for further investment possibilities primarily in China where Blackstone has been the weakest.  Generally Blackstone is thought to be a US Private equity company.

The deal not only caused a ruckus on the street but also politically.  American and Chinese officials just might now meet at a round table to discussing tariffs and currency valuations -good news for US consumers.

Chinas reserves grow at a whopping $20 billion per month.  If this money were pushed into the US markets, we’d see a huge boom.  Look forward to only good news with this deal.

The first few weeks of this IPO will probably be the glory days of the internet trading boom but I’m calling bust shortly after the gates are opened.  Unfortunately, I believe this deal involves far too much political tension to draw the investors BlackStone needs to raise capital.  After China’s interesting bid, I think some financiers may stay away from the once private equity firm.

There is such an idea attached to BlackStone much like a stigma to American Express charge cards and Rolls Royce automobiles.  BlackStone is all about the wealth and luxury of the world’s newly rich.

BlackStone is running into the same problems of companies such as Berkshire Hathaway or even mutual funds such as Vanguard and Fidelity Funds.  Too much money, not enough worthy investments.  BlackStone, in reality, does not need the additional capital.  I believe that an input of capital will only make the close of the group come sooner as the company stockpiles private investment dollars.

If you want in on the private equity craze, look no farther than the original.  Berkshire Hathaway is waiting for your capital.