Sovereign Wealth Funds to the Rescue

Sovereign Wealth Funds were a topic of this blog last year and they are coming to general attention again. A Sovereign Wealth Fund or SWF are (for the most part) the surplus money that developing countries have, sometimes this is due (like in the middle east) to oil revenues, other times (like China) its from industrial output, but in any case it is a fund which is owned and controlled by a countries government, some people are quite sceptical of them claiming that they can interfere with markets on different levels even as far as being the cause of geopolitical risk .

Since last year many of the banks that should have gone out of business are still treading water thanks to these funds, they have been the healing salve to the wounds of the sub prime mortgage fiasco. Citibank and Merrill Lynch were both saved by SWF’s. (China and Abu Dhabi). Maybe this is a signal that capitalism is working but for some countries such as France they are an unwelcome guest, Sarkozy recently promised to protect France from …

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