At a recent Society for International Business Fellows (SIBF) luncheon, a speaker with an impressive background in both the domestic and international financial sectors shared some speculative and provocative insights on the quaintness of the protectionist sentiment and the idea of economic nationalism.

To give you some background, Atlanta is the sixth Federal Reserve district covering Georgia, Alabama, parts of Mississippi and Tennessee, Florida, and the southern half of Louisiana. This region populates 45 million people and has an estimated economy of $2 trillion, which is roughly 13% of the U.S. economy. If this district were a country, its economy would be between those of Italy and Canada or roughly the eighth largest in the world.

These insights not only reiterate the enormous forward looking vision of SIBF as an organization, which began 26 years ago and now has 450+ members, but also the circular nature of our economy.

The Atlanta Federal Reserve district deals with a local, regional, national and global economy. It is truly interesting to see how much of this district is moving into the third and fourth wings. At the local level, LuLu’s Nail Shop will never be outsourced to India, yet the global economy is driving a highly integrated capital market.

To the southeast or Atlanta business community, for example, “international” has been a long time adaptation and protectionism impulses have remained prevalent. Andrew Young, former U.N. ambassador and Atlanta mayor, declared Atlanta as the next great international city. The 1996 Olympics were a decisive point in putting Atlanta on the global map. Since the inception of SIBF some 25 years later, the southeast is a very different region. It is home to many global corporations (“global” defined as those happy with the depreciating dollar as a great deal of their revenues come from foreign currencies) benefiting from decades of inbound foreign investments.

And textiles, which have been the dominant player, have been replaced with industry clusters such as biotech in the Raleigh-Durham area, healthcare in Nashville, and with the recent AT&T acquisition of Bellsouth, telecom in San Antonio. It is estimated that more than 130,000 auto assembly jobs are in the southeast – many of them transplants of Asian and German manufacturing as evidenced by the BMW plant in Alabama, Nissan in Tennessee, and Kia in Georgia – who are greatly benefiting from the port economy from Norfolk to Galveston.

As highlighted in a recent McKinsey & Co. report, there are four fundamental forces at play today that make globally integrated capital markets highly opaque: petro dollar assets, Asian central banks, hedge funds and private equity groups.

Petro dollar assets, as defined by sovereign wealth funds, include Saudi oil wealth reinvested in U.S. real estate, for example, which represents $8.4 trillion in wealth or 5% of global assets.

This opacity issue revolves around the fact that in the past, you could review an asset and clearly identify its underlying risk. Global distribution of certain assets has now made that task nearly impossible. Take, for example, a small regional German bank struggling due to sub-prime troubles in the U.S. market. A more cosmopolitan, worldly outlook helps us become more engaged with the rest of the world.

Last month, I delivered a keynote speech at the Mississippi Manufacturing Association’s annual convention. In my research, I uncovered a great deal of “assembled in America” in our overall manufacturing sector vs. truly “manufactured” or “made in America.”

Did you know that a Russian oligopoly recently purchased 5% of GM? As a result, ownership of the company has become somewhat unclear. A New York-based private equity firm, whose limited partners (LPs) are based in Dubai, could own the same 5% next week.

And in terms of brand identity, what is really worth our loyalty? Even names have changed. Shell, for example, has in recent years become the Royal Dutch Shell Company. Loyalty to those who provide work here at home could certainly support our global competition for share of the work, for increased work share follows sales. Is it any surprise that China, although perhaps not overtly but certainly indirectly, convinced Airbus that in order for it to succeed in the market, it should build a brand new A23 factory scheduled to go online next month? The transplanted auto manufacturers in the southeast are certainly another way for foreign firms to secure their access to an estimated $15 million in auto sales per year in the region. So should consumer alignment lead to political loyalty?

Unfortunately, in the current political climate, there is a great deal of noise around a protectionist mindset. We continue to enjoy a very strong U.S. economy – one that many believe has only recently been exposed to exogenous shocks as its primary source of risk such as possible terrorism, geo-political effects on oil supply, and natural disasters such as Katrina or a bird flu/SARS pandemic. The sub-prime mortgage securities turmoil, for example, is purely endogenous and of our own doing and this heightened uncertainty has created concerns with several key questions:

1. Can the spillover from housing expand to the general economy? What effect will it have on consumption, which is 70% of the GDP?

2. How will underlying economic fundamentals effect inflation? GDP growth in Q2 was 3.8%. In Q3, it was 3%. To many, the housing sector troubles are not expected to return to any level of stability until the second half of 2008. (The most recent employment figures point to 4,000 jobs destroyed which, like many figures, was later revised, pointing to neither a robust or collapsing job market.) Consumption is in fact steady, yet business investments seem to be softening with caution as inflation is moderated.

Many of my colleagues in the professional services industry truly believe that our economy is a resilient one. The flywheel effect counterbalances one weakness (such as the housing market slump) with compensation by something else such as export growth by a weakened dollar.

We are currently experiencing an unprecedented world wide low inflation with global concerns around sound monetary policy which, by the way, point to the absolute principals of central bank independence. I, for one, believe the outlook for growth continues to be strong.

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