Monday, January 28, 2008
In this report($) from the Davos World Economic Forum, the Wall Street Journal has a good overview of SWFs (no, not single white females, sovereign wealth funds) - it's behind the subscription wall but the cool interactive graphic is in the public area and it is well worth a look (don't forget to click on the Financial Deals tab for some nice barcharts).
Who knew that Alaska had a SWF?
For all its attention to environmental and social goals, Davos is ultimately a celebration of global capitalism. And these days, it is the sovereign-wealth funds, or government-controlled investment pools, of the Middle East and Asia that are sitting on capital gushers. Their assets total nearly $3 trillion and may hit $12 trillion by 2015, according to Morgan Stanley.You have to wonder sometimes where we would all be if not for the unlimited expansion of money and credit that is no longer just a Western phenomenon, but a world-wide phenomenon.
Defenders of sovereign-wealth funds aren't hard to find here. The funds are, after all, bailing out troubled financial institutions. Without their money, Wall Street would be an even bigger mess. SWFs also are crafting their investments to minimize influence over corporate affairs and avoid political controversy. Ask any of the chief executives who wandered the snow-covered streets here in recent days whether they would prefer an investment from an SWF, a hedge fund or the California Public Employees' Retirement System, and they'll choose the SWF.
For those living in the developed world, there are clear benefits to this new world order. Capital from SWFs will cushion the blow of the current financial crisis on businesses and consumers. And continued growth in emerging countries will soften the effects of a possible recession elsewhere. Over time, the global economy is hardly a zero-sum game. Americans, Europeans and Japanese can all prosper, even as their share of the world economy declines.