compiled by Emmett R Smith
[AT Bodwyn Wook we realise that no one running for the american Presidency in 2008 has yet addressed the following issue. It is because in fact not one of the candidates on offer as yet even realises that this matter, and it alone, will be the most critical problem of the next four years of american governance. Period. To make this clear, we at Bodwyn Wook are taking the unusual liberty of reproducing in full the following text from the UK’s Guardian newspaper of 1 March 2008. We do so, with sincere apologies to that newspaper, as we indeed do consider the emergence of sovereign wealth funds — and the categorical failure of US and Whitehall policy ‘experts’ accurately to anticipate this development, so busy have they been in credentialled error, with the frying of other not-nutritious think-tank fish from stagnant middle-eastern rivers — to be of the first significance to anyone to-day trying to fathom the lunging historical transition now full upon us. For the movement to-day is well-underway, and it is away for good and for all time, from political government of nation-states to the emergence of what law- and military-scholar Philip Bobbitt has called an emerging system of ultimately territory-less ‘market states’.
https://bodwyn.wordpress.com/2006/04/12/the-shield-of-achilles/
The politics of course will be no less acute or sometimes terrible — but they indeed will be very, very different from the glib “New World Order” proclaimed in American only in 1989, and already avalanching away into oblivion and doom from under our gullible and professionalistic, post-modern, feet. — BW]
Oil money is coming – and there is little the west can do about it
Energy producing countries are buying global power after decades of subjugation
by Larry Elliott, economics editor The Guardian, Saturday March 1 2008
This article appeared in the Guardian on Saturday March 01 2008 on p40 of the Financial section.
Larry Summers was in full flow. Addressing a packed meeting on sovereign wealth funds at the Davos gathering of the World Economic Forum in January, the former US treasury secretary told the investment arms of foreign governments they should sign up to a code of conduct and be more transparent.
In a telling sign of the shift in the balance of global economic power, the sovereign wealth funds told Summers to get lost.
The Saudis accused him of double standards: hedge funds were not being regulated despite causing mayhem in the financial markets, so why pick on SWFs? The Russians – revelling in Washington’s discomfort – said American attempts to restrict investment were “not helpful”.
This week the fears resurfaced. José Manuel Barroso, president of the European Commission, said Brussels could not allow non-European funds “to be run in an opaque manner or used as an implement of geopolitical strategy”.
Barroso’s main worry is that Russia – which set up an official SWF last month – is planning to relaunch the cold war, only this time with oil and gas receipts rather than with the Red Army.
Some western governments are suspicious about the motives of sovereign funds that have been buying up assets in developed countries.
Washington, which has launched talks with funds in Abu Dhabi and Singapore, has concerns over Russia’s one-time rival communist superpower China, which has grown weary of stockpiling US Treasury bonds and has started to size up physical assets in the west.
However, the EU and the US are in a weak position. They would like all such funds to follow the example of Norway, which has banked its North Sea receipts from the past 30 years in a £300bn-plus long-term investment fund, and the International Monetary Fund is finalising a voluntary code of practice.
This will be revealed in the coming weeks, but if the SWFs choose not to abide by it, there is little Brussels and Washington can do. The fivefold increase in the price of crude oil to more than $100 a barrel has provided a windfall for the coffers of oil and gas producing countries, while the nations of east Asia have amassed huge holdings as a result of export-led growth. Britain, as a report by PricewaterhouseCoopers pointed out this week, could have built up a £450bn sovereign wealth fund had it not spent its North Sea bonanza on politically expedient tax cuts and higher public spending.
Elsewhere, sovereign funds are rich, they are growing in size and they have been bailing out the west’s tottering banks after ill-advised speculation saw their assets slashed in value by the American sub-prime mortgage crisis. The Abu Dhabi Investment Authority – the world’s biggest SWF – has taken a $7.5bn (£3.8bn) stake in Citigroup; one of Singapore’s funds has injected $11bn into the Swiss bank UBS, the other has invested $5bn into Morgan Stanley. China has ploughed $5bn into Merrill Lynch.
Train wreck
A study by one of the biggest banks, HSBC, noted: “The owners of emerging SWFs look unlikely just to roll over. They are enjoying the boot being on the other foot after an awfully long time. The train wreck that was the 1990s, when they had to go cap-in-hand to the developed world, was bad enough.
“Going back further, western jibes about state capitalism would, perhaps, have more power had they themselves not ruled many of these countries for years via state-licensed companies.”
Gerard Lyons, chief economist at Standard Chartered, said: “Sovereign wealth funds have existed since 1953 and are here to stay. Their size and influence is set to grow. Already valued at $2.2tn, on current trends they could reach $13.4tn in a decade.
“There is a serious likelihood of western governments and SWFs clashing over what they can buy and where. A protectionist backlash against strategic investments is real and threatens global trade.”
The growing tension erupted in 2006 when the US prevented Dubai Ports from taking control of six American ports on grounds of national security. Lyons believes that western governments will seek to protect national champions and strategic sectors, but that SWFs are also likely to take a tough line. “Many governments will argue that it is their money and why should they be so transparent when other areas of the financial markets are not,” he said.
“Western countries may need to accept the rise of SWFs as a further sign of a shift in the world economy and should seize this opportunity to work with emerging economies such as China and Russia and others to find common ground rules and a code of practice.”
There are few signs that SWFs are being used as an instrument of foreign policy, although Brussels clearly has misgivings about the Kremlin’s intentions. Equally, there is evidence that the governments behind the SWFs are enjoying the clout their wealth has given them. And with no immediate end in sight to the credit crunch, their bargaining position is strong and getting stronger.
Tequila crisis
“From the Latin American debt crisis of the 1980s, through the Tequila crisis of 1994-5, the Asian crisis of 1997, Russia’s default and Argentina’s even larger one in 2001, the emerging world always with its finances in a parlous state, rocked from one crisis to another,” HSBC said.
“Now, huge quantities of money from the emerging world – some $60bn at the last count – are injecting a measure of stability into the developed world’s arteries: some of its biggest, boldest and brashest banks, brought low, in their turn, by investments and finances that were themselves, it now transpires, an awful lot less stable than they or most others had assumed.”
guardian.co.uk © Guardian News and Media Limited 2008
[Emmett R Smith
[all introductory-text rights reserved
[4 March 2008]
This is really bassackwards. The environment is our big problem (nature), because without it these sovereign wealth funds won’t even have shit after they suck out all of the oil.
If we model national health care to the world and show how government really can be used to help people for once (real compassion) these corporations will just rot and blow away.
I mean after we put a few people in jail first for stealing everything and their greedy profits. Justice has to be first.
Everybody in China is on the bottom like us too, and so they are envious and want to hang their leaders too.
But no fear, because then they can be free to be really like the US. It ‘s a gamble just like in Saudia Arabia where nobody can even boink somebody a little without getting stoned, only not on drugs. That’s not all good because we might still have some wars (human nature) but it won’t be corporate like now and dictated in secret by global market people.
It will be more like honest anger over misunderstandings (cultural) and then the common people will make peace after all. That can happen to anybody.
Like in South America. I bet the common people there in all three countries will just ignore their leaders and not shoot at each other.
It’s their oil anyway, and their cocaine too.
Not Chavez’s or those other ones whose names aren’t so well known. (It’s because the bushies hate Chavez’s guts for giving heating oil to poor people in Alaska, so we all know who he is because it gets in the news every winter, screw the shrub!)
MR jodyjoeboy, I am…whelmed.
My mare Ginger Spice, I grew up on her and she bit me last night!
I don’t think you would rile a horse so I suppose there was a stallion in the picture?
“then they can be free to be really like the US”.
Heaven help us all!
I see you know critters because yes, Holt had Orion in the next box stall and he was talking trash at Ginger who wasn’t in heat any more and just pissed when he kept wuffling at her between the uprights. So she bit me. Poor Ginger Spice, she is an old girl and so she kind of winks her clit even after the end of her cycle. But she wasn’t squat-peeing anymore and Orion is just oversexed. She felt most terribly awfully obviously guilty this morning when I went hobbling out (ouch!) to give her a whole bag of carrots, so we’re sisters again and Holt and Orion are nervous, and they better be! I have a welt on the front of my leg as big across as a grapefruit, and Holt will have to rub stuff on there for hours. Anyway it’s cold today too, and any lump like this is meaner when it’s cold, you get more stiff I mean.
But I like the article you posted from England. My dad says that this money business is real unpredictable because it’s not now based on anything except emotional agreements which always break down when large numbers of people get nervous. So anybody who says they’re in control is a fool, or a liar which is even worse. Also he is kind of sarcastic like you about your generation and says Bernanke is a kid, he’s not adult and can’t take a little tension. Real American. That’s why he is loaning out money to everybody he can like a kid hoping the boogie man will go back in the cellar if you just get enough people to come over and stand around and make a lot of noise while you party. I agree that the global economy dropping the US off at the pool is the real story, and that nobody in the main parties has even guessed. They don’t dare because this is a HUGE weasel.
What you have posted is a major parcel of the overall picture. We can probably finish it and settle ourselves into the reality of living in a rusted out, former industrial power by reminding ourselves of the national debt. Left to us by the borrow-and-spend Rebooblian perfect storm (Congress, the White House, the Court, and the Corporate Empire being one in the same), a national debt approaching $10tn renders the next administration powerless to stop any [machinations] against it. Anything that can be bought and carted away will be. Anything that can’t will still be owned by powers outside of this country, making those Americans fortunate enough to know employment nothing more than wage slaves. That vaunted libertarian belief in private property is now moot in our own country where we will lease the very land we squat upon. Post modern period, indeed! Welcome to the very edge of the New Dark Age.