Foreign Wealth Funds Defend U.S. Investments

[flashl]

Source: Washington Post


Profit, Not Politics, Is Motive, Officials Say

KUWAIT CITY -- It was not Bader al-Saad's idea to buy huge chunks of Citigroup and Merrill Lynch.

It was early January and Saad, managing director of one of the world's largest investment funds, was in his office as usual, reviewing potential deals in Kuwait and elsewhere in the Persian Gulf region, when the banks asked him to invest, he recalled.

"They called us. . . . We receive calls on most transactions," said Saad, whose fund bought stakes of $3 billion in Citigroup and $2 billion in Merrill Lynch.

The increasing pace of acquisitions in the United States by sovereign wealth funds such as Saad's Kuwait Investment Authority is raising concern about their goals and motivations. Run by nation-states to invest their government revenues, the funds are estimated to control $2.5 trillion and are projected to have $12 trillion by 2015. The six Arab states on the Persian Gulf's western shore, which control nearly a quarter of the world's oil supply, provided more than half of the money currently in the funds, according to Morgan Stanley.

At one extreme, the funds have been characterized as saviors, propping up the struggling U.S. economy with capital infusions. At the other, there are fears that their investments could turn political, that the funds could buy stakes in entities that could someday be used to compromise the security of the United States while furthering their national interests.

Washington Post

Read more: http://www.washingtonpost.com/wp-dyn/content/story/2008/03/26/ST2008032603444.html?hpid=topnews

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Since 'we' still believe that an unregulated Wall Street, or the Federal Reserve taking over Wall Street, or the Feds taking over the SEC, is good for America, and 'we' are NOT in a recession, I suppose 'we' can believe this too.