From Kevin Kelly:
You’ll be hearing more about sovereign wealth funds and flows in the future.
A sovereign wealth fund is a huge heap of money that is controlled by a nation — say Singapore or Saudi Arabia — rather than by a private transnational company. The latter is called private equity funds and their investments have been prime movers in global finance for decades. Some of the largest banks and finance companies that are in the current news cycle, like Bear Stearns, or UBS, are good examples of private money. They buy and sell business across national borders.
But as large as these financial behemoths are they are small compared to the largest sovereign funds. The total amount of private funds sloshing around the world is in the hundreds of billions, whereas sovereign funds — the money controlled by nations looking for investments — is $2.5 trillion. Sovereign funds are common in countries where the division between state and capitalism is thin and blurred. According to the New York Times in their article The Leveraged Planet, the amount of sovereign controlled wealth is expected to rise to $12 trillion by 2015. These funds also buy and sell businesses across borders but since their owners are other nations, or nation-state organizations, the implications of their scale and intent are proving enormous.
This a a fascinating and important topic. If you are tracking this and other Global Financial system news, then is also recommend a great primer from Foreign Policy magazine on how the credit crisis happened:
8 Steps to a Trillion-Dollar Meltdown By Charles R. Morris
Post a Comment