Sovereign wealth funds
My favourite site for business and economic news is Felix Salmon's Market Movers site over at Portfolio.com. I can't really stress how good it is for keeping one informed of such news.Anyway sovereign wealth funds are a hot topic. Views on these seem to be mixed - some people, such as Felix and also Tim Worstall, seem to see them as simply a player, albeit it a large one, in the financial markets. They take the view that their principles are profit-maximising, so don't compare to other government intervention. Other peope, me included, think it's perhaps a bit worrying to have governments, and unelected governments, controlling large parts of your fincial and (one assumes to come) business sectors. Larry Summers seems to want it both ways - in the post Felix links to here he describes them as 'terrific' but believes they should sign up to a list of principles, mainly that they don't use their political influence.
Brad Setser has made the good point that they way they have arisen was through government intervention in the markets - in China's case through an undervalued exchange rate, whilst in other cases through oil industry nationalisation (or onerous taxation). The most likely outcome is some funds (Norways for instance) are trusted and some aren't - Russia springs to mind. The important issue will be in which category China's ends up.
Update: Liam Halligan says that the attitude of some in the west is hypocritical, and you see his point. But some of his other points I couldn't agree with - I'm not sure whether one should welcome SWF as 'active investors', I don't believe the Chinese had the ability to 'drive the US economy into oblivion' and I don't know whether one should refer to 'our' investment banks.
Labels: economics
posted by Matthew @ 2/02/2008 10:42:00 AM
Comments: 0
