Yesterday the Economist released their headlining article for this week’s print edition on the “invasion of the sovereign-wealth funds”. So what are sovereign-wealth funds? According to the economist they are “surplus savings of developing countries”. As of late that surplus has come from countries in the Middle East such as Saudi Arabia and Asia. Surging oil prices and rising imports have given these regions a surplus in funds that have so conveniently come in handy to assist banks such as Citigroup and Merrill Lynch out of this credit woe crisis.
But my question in hand is as follows, what do these funds want? And I mean really want? Because I remember my economics professor in college taught us that there are no free lunches in life and somehow or some way someone wants something in return. I am sure they are not lending US$21 billion just out of their own good will.
The issue with sovereign-wealth funds is that no one knows where their investments come from. They don’t publish annual reports or anything for that matter. What does this show? Well, all economies go through good times and bad times. They are called economic cycles and they have been happening since the beginning of time. Yet, now in our interdependent global economy, global powerhouses such as the United States are becoming more dependent on foreign money. In my humble point of view that just means that the United States’ power is diminishing by a certain amount. So when these funds want their money back, what do they want for it? What is the interest consisting of? How many favors is the United States going to have to comply with so our investors are happy? Hmmm…I maintain my theory that corporations rule this world, including international politics. It is no longer about Hillary, Obama or Bush, it is about how Citi and Merrill are compromising our position in the international arena.
Bush went to the Middle East last week. He met with King Abdullah bin Abdulaziz al-Saud of Saudi Arabia and they talked about increasing oil production to ease gas prices. Yet, Saudi Aramco is having issues of their own trying to meet deadlines on their own projects. And truly, do you think oil companies want to lower oil prices???
Ha…so this inter-comingling of economies and banking relationships is resulting in what? We are the careless child, who lends money to the ones that do not have money to pay a house, go through a crisis, ask our big brother to lend us money since no one else has it and then what?