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The financial folks on Wall Street often seem to actually believe
what they say. Sovereign wealth funds are investment companies
with piles of money owned by Chinese and Middle Eastern
governments. The Chinese government-owned companies' money comes
from extreme trade surpluses. The Middle East government funds'
money comes from extreme oil prices and addiction to that oil.
The funds dwarf - I mean dwarf - the hedge funds, and certainly the pipsqueak mutual funds.
Its just foreign investment, say the Wall Street types. Some politicians express "concern" and call for "transparency."
This
is national security folks. You can't have foreign governments
owning our private industry. What would the Wall Street types say about
the U.S. Department of Defense owning an investment fund to buy U.S.
and European companies? Or the Federal Reserve buying major
Chinese banks? "Communism!" they would shout. But its ok
for other governments to buy us?
Felix Rohatyn, the financial wizard that helped New York City out of bankruptcy in the 1970's said, in an article published today:
“They are making investments that they probably think are O.K. but
not spectacular,” Mr. Rohatyn said of government-controlled funds. For
them, he contends, “there has to be a political objective over and
above the rate of return.”
The reporter is appropriately skeptical of the "free market" delusion peddlars.
The Chinese recently proved that point when the government, at the
11th hour, overruled management at China Development Bank, which was
planning to invest about $2 billion in Citigroup. ...
Let’s be honest. The idea that foreign investors have no influence
because they don’t have a seat on the board is laughable. Prince Walid
bin Talal of Saudi Arabia doesn’t have a seat on Citigroup’s board, but
he managed to play a pivotal role in the ouster of Charles O. Prince
III and often appears to hold more sway than management.
And the "concerned" politicians utter mere words.
For the most part, investors and the United States government have
bought that line. Senator Charles E. Schumer sounded the alarm bell
slightly, but he’s not ringing it that loudly.
“Foreign investment, in general, strengthens our economy and creates
jobs,” he said at the time of the $6.6 billion infusion into Merrill
Lynch. “Because sovereign wealth funds, by definition, are potentially
susceptible to noneconomic interests, the closer they come to
exercising control and influence, the greater concerns we have.”
You just cannot have foreign governments buying U.S. assets. Its wrong. Just stop it.
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