Random Michael Moore Deceits [#32]

Saudi Investments in the United States [from Fahrenheit 9/11]

Moore asks Craig Unger: "How much money do the Saudis have invested in America, roughly?"

Unger replies, "Uh, I've heard figures as high as $860 billion dollars."

What is the basis of Unger's claim? The $860 billion figure appears on page 28 of Unger's House of Bush, House of Saud. He cites two sources: The Saudi Ambassador's 1996 speech to the U.S.-Saudi Arabian Business Council. In that speech, Prince Bandar discussed the Saudi economy, but said nothing about the size of Saudi investment in the U.S.

Unger's other cited source is a February 11, 2002, Washington Post story, titled "Enormous Wealth Spilled Into American Coffers." The $860 billion figure does not appear there, either. The article states:

After nearly three decades of accumulating this wealth, the group referred to by bankers as "high net worth Saudi individuals" holds between $500 billion and $1 trillion abroad, most of it in European and American investments. Brad Bourland, chief economist of the Saudi American Bank (one-quarter owned by Citibank), said in a speech in London last June that his bank's best estimate of the total is about $700 billion, with the possibility that it is as much as $1 trillion.

Raymond Seitz, vice chairman of Lehman Brothers in London and a former U.S. ambassador to Britain, gave a similar estimate. Seitz said Saudis typically put about three-quarters of their money into the United States, the rest in Europe and Asia. That would mean that Saudi nationals have invested perhaps $500 billion to $700 billion in the American economy.

In short, Unger's cited sources do not support his $860 billion figure. He may have "heard" the figure of $860 billion dollars, but only from people who were repeating the factoid which he invented.

According to the Institute for Research Middle Eastern Policy (a pro-Saudi think tank which tries to emphasize the importance of Saudi money to the United States), in February 2003 total worldwide Saudi investment was at least $700 billion, conservatively estimated. Sixty percent of the Saudi investments were in the United States, so the Saudis had at least 420 billion dollars invested in the U.S. (Tanya C. Hsu , "The United States Must Not Neglect Saudi Arabian Investment," Sept. 23, 2003.)

Unger is asked "what percentage of our economy is that?" (Meaning the supposed $860 billion.)

He replies, "Well, in terms of investments on Wall Street, American equities, it's roughly six or seven percent of America. They own a fairly good slice of America." A little bit later, Moore states that "Saudi Prince Bandar is perhaps the best protected ambassador in the US...Considering how he and his family, and the Saudi elite own seven percent of America, it's probably not a bad idea."

According the Census Bureau, the top countries which own U.S. stocks and bonds are the United Kingdom and Japan. Foreign investors owned $1,690 billion in corporate bonds in 2002. The Census Bureau lists the major national holders, and then groups all the minor holders--including Saudi Arabia--into "Other Countries." All of these other countries combined (including Saudi Arabia) account for only 6 percent of total foreign ownership of U.S. corporate bonds. Likewise, all "Other Countries" combined account for only 7 percent of total foreign ownership of corporate stocks. (And of course the large majority of U.S. corporate stocks and bonds are owned by Americans.) Bureau of the Census, Statistical Abstract of the United States, table 1203.

According to the Bureau of Economic Analysis, total foreign investment in the United States in 2003 was $10,515 billion dollars. This means that even if the figure that Unger "heard" about Saudis having $860 billion is correct, then the Saudis would only have about 8 percent of total foreign investment in the United States. Unless you believe that almost all American assets are owned by foreigners, then it cannot possibly be true that Saudis "own seven percent of America."

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But Moore won’t give it up; he quips: “Saudi Prince Bandar is perhaps the best protected ambassador in the U.S. Considering how he and his family, and the Saudi elite own seven percent of America, it’s probably not a bad idea.” Huh? He’s talking rubbish. Moore got this bogus factoid from an author whose two cited sources don’t support his conjecture. The author had guessed that the Saudis may have $860 billion invested in America. Even if that were true, the Bureau of Economic Analysis puts total foreign investment in the U.S. at $10,515 billion in 2003, which would peg the Saudi share of only foreign investment at eight percent. That’s a long way from Moore’s assertion that the Saudis “own seven percent of America.”"

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Speaking of the Saudis, Moore now launches on yet another disconnected line of argument. Standing with Craig Unger in front of the Saudi Arabian embassy in Washington, Moore asks Unger how much money the Saudis have invested in the United States. Unger replies: “Uh, I’ve heard figures inside of $860 billion dollars.” Moore certainly could have looked up the real figure, rather than rely on what someone else has “heard.” Unger offers no source, and his figure is not correct. Saudi investment in the U.S. is generally estimated at around $450 billion (http://www.saudi-american-forum.org/Newsletters/SAF_Essay_22.htm). Moore then asks him what portion of the U.S. economy the $860 billion would be, and Unger replies: “Well, in terms of investments on Wall Street, American equities, it’s roughly 6 or 7 percent of America.” This appears to be simple confusion. According to the Bureau of Economic Analysis, total foreign investment in the United States in 2003 was about $9.7 trillion. Unger’s (inflated) figure for Saudi investment would therefore be about 5 percent of that, i.e. 5 percent of foreign investment, not by any means 6 or 7 percent of the American economy—far from it (http://washingtontimes.com/upi-breaking/20040709-033853-6363r.htm).

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