Reply #38: How Wall Street broke the free market [View All]

[antigop]

http://www.salon.com/tech/htww/2008/01/15/sovereign_wealth_funds/index.html

Globalization, thy name is Wall Street bailout. There is no better demonstration of the new global financial order than the cavalcade of "sovereign wealth fund" white knights riding to the rescue of the world's name-brand investment banks all winter long. On Tuesday, Citigroup and Merrill Lynch both announced huge additional sales of stock to foreign buyers. Some observers are alarmed, fearing a parade of boogeymen out to do the West harm under cover of their aid drops. But they should take heart -- the new players will be hard-pressed to do more damage than the old.

Here's a partial tally so far:

* Citigroup: $7.5 billion from Abu Dhabi Investment Authority and $6.88 billion from Government Investment Corp. of Singapore.

* Morgan Stanley: $5 billion from China Investment Corp.

* Merrill-Lynch: $5 billion from Singapore's Temasek Holdings, $6.5 from Kuwait Investment Authority, $2 billion from Korean Investment Corp.

* Bear Stearns: $1 billion from China Investment Corp.

* UBS: $10 billion from the Government Investment Corp. of Singapore.

A sovereign wealth fund is defined as an investment fund controlled by a national government. While not exactly new on the world scene, such funds have been proliferating of late, a consequence of the high price of oil and the growing strength of East Asian economies. Sovereign wealth funds are currently believed to control around $2.2 trillion worth of assets, and some predict that number could shoot up to $12 trillion or more in less than a decade. But the numbers hardly tell the whole story. Less than two decades after the collapse of the Soviet Union and the West's gleeful jig dancing on the grave of communism, state capitalism is suddenly threatening the autonomy of the global "free" market. Wall Street's elite banks, longtime freedom fighters for deregulation and scorners of all government intervention in the marketplace, are now begging, cup in hand, for aid from a gallery of regimes that includes some of the most authoritarian and undemocratic governments on the planet.