SOVEREIGN WEALTH FUNDS

Think About It
Let’s talk about CFIUS (pronounced sifius). No it is not a sexually transmitted disease. It is a committee that is supposed to protect your national interests---The Committee on Foreign Investment in the United States. Chaired by the Secretary of the Treasury, it includes members from Defense, State, Commerce and Homeland Security. Started by President Ford, its objective is to approve or disapprove the acquisition of US companies by foreigners. Companies proposing to be acquired by foreigners are supposed to voluntarily notify CFIUS, but CFIUS has the power to review any of which they become aware. The problem is, they have not seen many foreign acquisitions which they did not like.
Remember 2006, when Dubai Ports World proposed to buy P & O, a British company which was the 4th largest in the world, and operated at least 6 United States Ports? This transaction had already been vetted and approved by CFIUS when it became public knowledge. There was such a national uproar that our ever alert Congressmen and women decided to jump into action. On February 22, President Bush threatened to veto any action by Congress to block the deal. Up until then, he had not used his veto even once. On February 23, DP World volunteered to postpone its takeover while President Bush tried to convince lawmakers the deal involved no risk. On March 9, DP World said it would transfer its operations to a “US owned entity” after Congress told Bush the deal was dead on Capitol Hill. On March 16, the House added provisions to an appropriations bill to stop the sale. The Senate cut the provisions, and the bill was finally approved by both houses without any prohibitions. On July 18, 2006, Congressman John Murtha (D-PA) pointed out that our free trade agreement with the nation of Oman would allow Dubai to set up an Oman subsidiary and sue for compensation under free trade if such an Oman/Dubai deal was blocked. No one contradicted him. On December 11, Dubai finally reported they were selling the US port operations to American International Group’s asset management division. Hopefully it happened. You can’t prove it by me.
I point all this out to bring up a discussion of Sovereign Wealth Funds. These are cash asset funds actually owned by the governments of foreign countries, not by foreign private investors. As long as we have had US Hedge Funds, their assets amount to only $1.7 trillion. But these sovereign government directed funds have already grown to $2.8 trillion. Our own Morgan-Stanley brokerage firm predicts such funds will reach $12 trillion by the year 2015; almost the size of our total economy. In size of assets, the first 6 are the United Arab Emirates, Singapore, Norway, Kuwait, Russia and China. And you wonder where all our US dollars are going? Since May, 2007, over $20 billion of our trade deficit came back through foreigners to rescue our biggest Wall Street brokers, by buying equity ownership.
There are free-traders on both sides of the aisle in our Congress who don’t care what smell money has, as long as its color is green. I repeat my charge---we are being sold out, lock, stock and barrel, and they are using our own money to buy us. Because we are no longer a producer, and because our insatiable energy demand exceeds our domestic supply, we are their willing victims. This all started about 30 years ago, when Japan, flush with cash, began to buy up some of our prized real estate. Now, foreigners are not just buying real estate, they are buying our domestic corporations. Some day, we are going to wake up and realize that we are the vassals of foreigners.
Senator Evan Bayh (D-IN) rightly warns that when Sovereign funds approach the size of the entire American economy in a few years, the lack of regulation is a huge risk this country cannot continue to run. Sovereign nations have interests other than maximizing profits, and we must promulgate rules to protect our own self-interests.