Business and Economy, Capitalism, Extreme poverty, Globalization, Government, Greed, Inequility, ongoing Privatization of the world, Privatization of the World., sovereign wealth funds (SWF), The European Union
<img alt=”” src=”http://media-cdn.tripadvisor.com/media/photo-s/04/79/29/e0/1728.jpg”/>
This photo of 1728 is courtesy of TripAdvisor
Its back to my hobby-horse the ongoing Privatization of the World.
It is of course is happening in a clever way, with very careful paperwork, so we have the option of pretending that it’s not actually happening, right up until the bitter end.
I often wonder is it just me. You barley hear a mummer about it from any other quarter. Other than Ireland where the population has woken up to the Privatization of water.
Perhaps it’s that no one gives a tosser.
That our Governments are systematically divesting themselves of bits and pieces of their own sovereignty, by transfer of assets and service functions from public to private hands.
It’s taking place all over the world without really anyone noticing it happening — often not even the people are asked to vote formerly on the issue.
It is my contention that it is the quality of the state rather than the fact that assets are owned by the state that matters more. In developing countries with extensive market and information failures the state should play an important role in promoting equitable development over the long run not sell of their assets to the highest buyers.
At the political level privatization has been challenged by workers affected by attendant retrenchments and the restructuring of internal and external labor markets consequent upon privatization that has resulted in increased worker vulnerability, and by consumers who have often been negatively affected by increased prices based on cost recovery pricing regimes instituted as a consequence of privatization, or by reduction in service provision arising from “efficiency enhancing” measures as a consequence of privatization.
No one knows precisely how much money is held by SWFs but it is estimated that they currently own $3.5 trillion in assets, and within one decade they could balloon to $10–15 trillion. (equivalent to America’s gross domestic product, an amount larger than the current global stock of foreign reserves of the USA which is about $5 trillion.)
Imagine the biggest and most aggressive hedge fund on Wall Street, then imagine that same fund is fifty or sixty times bigger and outside the reach of any other major regulatory authority, and you’ve got a pretty good idea of what an SWF is.
The rise of sovereign wealth funds (SWF) as new power brokers in the world economy can no longer be looked at as a singular phenomenon but rather as part of what can be defined a new economic world order.
This new order has been enabled by several mega trends which operate in a self-reinforcing manner, among them the meteoric rise of developing Asia, accelerated globalization, the rapid flow of information and the sharp increase in the price of oil by a delta of over $100 per barrel in just six years which is enabling Russia and OPEC members to accumulate unprecedented wealth and elevate themselves to the position of supreme economic powers.
It will not be long before transactions involving investment by sovereign wealth funds, as with other types of foreign investment, may raise legitimate national security concerns.
Concerns are growing that the purpose of the investments might be to secure control of strategically important industries for political rather than financial gain.
They on the other hand see themselves as passive, long-term investors, driven solely by the need to make a good return on their country’s surplus cash.
There is a degree of looking through the wrong end of the telescope to all this.
Sovereign wealth funds have with total assets estimated at $5.4tn as of October 2013. The funds have gained more than $750bn in additional assets since 2012 of which only $60 billion has gone to recent bank bailouts.
They are rapidly becoming owners of big chunks of American,the UK and Europe infrastructures.
Unlike the central banks of most Western countries, whose main function is to accumulate reserves in an attempt to stabilize the domestic currency, most SWFs have a mission to invest aggressively and generate huge long-term returns.
The origin of these SWFs is not even relevant, necessarily.
What is relevant is that these funds are foreign.
They are state-owned investment pools that thanks to a remarkable series of events in the middle part of the last decade they are buying up your governments services such as water treatment, parking meters, toll highways, rail links, ports, public infrastructure projects, commercial real estate all delivering a lot of cash into the coffers of sovereign wealth funds like the Qatar Investment Authority, the Libyan Investment Authority, Saudi Arabia’s SAMA Foreign Holdings, and the UAE’s Abu Dhabi Investment Authority.
Some recent activity:
(The first was the announcement that the Qatari royal family is planning a large investment in the controversial £50billion HS2 rail link, focused on a major new station and housing scheme in central Birmingham.
Qatar Investment Authority, one of the world’s largest sovereign wealth funds, is soon to table a new bid to take over Songbird Estates which owns the iconic Canary Wharf tower in east London, one of the best-known modern symbols of British capitalism.
Libya’s sovereign wealth fund is suing French bank Societe Generale in a British court for $1.5 billion for allegedly channeling bribes to allies of the son of slain dictator Muammar Qaddafi.
Iran’s President Mahmoud Ahmadinejad said on Saturday the country’s sovereign wealth fund could reach $55 billion by March next year if oil prices kept high.
Iran earned $100 billion in oil revenue in 2011. Iran is both the world leader in Shariah Compliant Finance and the world’s most active state sponsor of Jihadist terrorism.
Deutsche Bahn Seeks Sovereign Funds for the state-owned railway, is seeking to sell shares to sovereign wealth funds in the Middle East and Asia during the initial public offering. )
What is more to the point, is we’re being colonized/Privatized.
Industry today may not be regarded as such an industry tomorrow, and vice versa. Just look at the explosion of energy prices — thanks to a bubble that Western banks and perhaps some foreign SWFs had a big hand in creating.
Out side any regulation these funds are free to plunder the earth in the form of Hedge Funds( (which they have a bunch) with out anyone knowing who the funds investors are.
The point here is if these funds.
Are not regulated by the relevant international bodies determining which kinds of information about their balance sheets, management structures, investment objectives, portfolio breakdowns, and so forth should be supplied by sovereign wealth funds. The European Union could then put curbs on funds failing to comply with the standards for the publication of such information.
One way or the other they should be Capped ( See previous posts)