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The Sovereign Wealth Weapon

Published 12/17/07 Economy In Crisis - Print Article
E-mail - editor@economyincisis.org

The recent purchase by Abu Dhabi of $7.5 billion in Citigroup is a reminder of the new power player in the global economy: sovereign wealth funds. These funds worth trillions of dollars are wielded by foreign states and are slowly subverting U.S. interests and the welfare of the American people.

SWF’s are like a giant wad of cash for the country that runs them. They are government controlled and operated, composing about $3 trillion in worldwide capital.

The funds are growing in wealth at a rapid rate of 27%, and as such, increasing in power as a potential bully pulpit in international relations. At the G7 meetings in October, world leaders expressed their concern that these vast holdings lacked transparency and would be used as a new international leverage.

Their concerns are justified. Countries in possession of these funds aren’t stupid- they want a return on their investment and a leg up on other ‘competitor’ nations. It is good for business- it is good for their economy- it is good for their country.

But it is not good for America. We have seen our ownership; technology and profits slip away through the continued acquisition of our best companies.

Though August, 785 companies worth $129 billion have been acquired by foreign purchasers- the fastest rate of purchasing since 2001.

And sovereign wealth funds have been a big contributor to that- here are some of their notable recent deals:

China 10% purchase of the private equity firm Blackstone group

United Arab Emirates purchase of the department store Barney’s for $942 million

United Arab Emirates purchase $622 in computer chip maker AMD


These purchases are part of the larger problem of America’s fiscal deficits coming back to bite us. As the value of the dollar drops, foreign nations will unload their vast dollar backed holdings into the ‘safer’ investment of ownership of American companies.

These countries will continue to buy up our best companies, as America continues to run up huge trade deficits like the $765 billion balance of trade deficit in 2006. This loss of company ownership will escalate our already towering deficits and devastate our nation.

We must demand that the candidates running for office in 2008 address how they would protect America from being the victim of strategic investments of distant and shady sovereign wealth funds.

Our country- and our children’s future may very well depend on it.


Front Page Photo by Auraelius- Flickr © Some rights reserved

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Unless the above article is already copyrighted, this article is licensed under a Creative Commons Attribution-No Derivative Works 3.0 United States License, EIC grants permission to use this article in whole or in part provided attribution is given, preferably in the form of a link back to EconomyInCrisis.org.

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Article Comments From Readers

guest says "Not all baby boomers are corrupt" on 12/18/07
I have never taken a dime from America. I live a modest life, I shop at goodwill to avoid buying foreign goods. My husband and I scavage for American things. I am voting for Ron Paul to get us out of this mess and change minds to a sound monetary system before we enter into a depression. I hate global goods, I have a hard time convincing my children not to buy things like aeropostole and nike and other foreign goods just because they have the label. Some of the younger generation are guilty of this, where do they get all the fashionable stuff and ipods and such. They need to be trained to not be snobby and sacrifice for America, as well as other generations or we are sunk, and the ship will sink in this generation.

guest says "Blame EVERYONE!" on 12/18/07
I blame the American citizen for being lazy, sheeple, who question nothing in their lives of zombie hyperconsumption! They live in fear. Instead of telling their boss and upper management to F-OFF they live in servitude to a baseless existence of cellphones, SUV's, and cheap China sheet! Our government is now going to make Growth Hormone illegal and mandatory 3 years sentences will be dished out. But crack users will get a break? LOL. Of course the Dems and Repubs are to blame but so are the zombies you call your neighbor that work upper management at places like CitiGroup, Dept of Education, CountryWide etc. We/You are all part of the problem. Cops, FBI agents, trashmen, what this country needs is a violent revolution. Something to really get politicians and government shaking in their boots.

guest says "Blame must go to both the Democrats and Republicans" on 12/18/07
Its easy to beat up on the little guy: the American citizen. So should we continue to bash the victims of predatory capitalism for the bigger problems of our nation?

Many Americans are working overtime or taking two jobs trying to support their family. Corporations love to paint Americans as lazy and demanding. They use constant pressure to undermine unions using illegals, threaten to move jobs overseas, and hammer down wages of the people who run the show and make it go, while lavishing obscene bonuses, stock options, and salaries on the ceos. The average American citizen is taking the punishment for the greed and mismanagement at the top. We are becoming victims of higher gas prices, falling home values, rising food costs, extreme health care premiums, overpriced college tuition, an endless Iraq occupation at the tune of $12 billion monthly, and a falling dollar. Hurrah! What a great place America is to live!
Both the Democrat and Republican parties quickly dispose of any voters interest after an election.

Instead, corporate lobbyists have a field day with unprecedented access and influence on all areas of life and our weak-willed public officials simply capitulate to their demands. The Result? Look around you. Are you better off now than you were before the Reagan devolution?
Our nation is in the worst financial and shape since the great depression.

guest says "Frrs" on 12/17/07
Dam Right GWB DC Co. has FUBAR'ed the entire country. There is nothing left to the US. In 2008 everything will implode. The politicians, CEO's and every baby boomer responsible should be jailed and fleeced of everything they have stolen and brokered to foreigners for short term personal gains at the expense of the entire US citizenry. Robbing social security to pay for bogus wars is treason against the American people.

guest says "WEALTH" on 12/17/07
THANK YOU GEORGE BUSH AND ALL THOSE CREEDY CEOS THAT HAVE DESTROYED MY COUNTRY,LOW DOLLAR, SUB-PRIME MESS, AN IDIOT WAR, MASS DEBT, ILLEGAL IMMIGRANTS,GREEDY POLITICIANS, LYING PRESIDENTAL RUNNERS, GOODBYE TO THE U.S. I KNEW, A THIELD WORLD COUNTRY IN THE MAKING, AND THE PREVIOUS WRITER IS ABSOULTLY CORRECT, OUR IDIOT AMERICAN PEOPLE ARE MORE INTERESTED IN WHAT G CLOONEY HAS TO SAY, RATHER THEN WORRYING ABOUT OUR DEMISE,WHAT A SHAME

guest says "Yeah " on 12/17/07
Go tell all the stupid Americans that work for CitiGroup that their company is a sell out and corrupt. See what reaction you get. You'll be labeled a conspiracy theorist or anti-capitalist. Amerians are brainwashed idiots who would rather spend time reading People magazine and watching Dancing with the Stars. This great country in which my grandfather fought for, and millions of other greatest generationals fought for has been destroyed by a bunch of greedy, egocentric, babyboomers!!!!!!!!!! Every wonder why they are the wealthiest generation? Go figure!