A new plan proposed by western countries to control sovereign wealth funds (SWF) has been called ‘unfair and will damage global capital flows’ by the Kuwait Investment Authority (KIA). The SWF’s are viewed as asserting political strength using financial means, especially in the case of the Gulf countries. The infamous view being portrayed of SWF’s is baseless and inaccurate. It is actually the exact opposite of those claims being sought by the western nations.
Some notes about the Gulf countries Soveriegn Wealth Funds
…SWF’s prefer not to be transparent in their dealings out of fear of internal corruption which is evident in all sectors and across the entire Gulf
…Gulf nations do not have enough skilled laborers in their own countries, to enact locals in the boards of foreign companies they acquire
…Have proven that they are investing in the companies long-term
…Do not have a hidden political agenda to control other nations since they [gulf] themselves failed in their own political arenas
…The fear of depleting oil reserves is the main factor of investing globally, thats it!
Nice Site layout for your blog. I am looking forward to reading more from you.
Tom Humes
At this week-end Group of Seven industrialised nations summit, US Treasury Secretary Henry Paulson said an effective IMF was as important as ever to ensure stability of the global financial system,
and called on the fund
to focus more intently on the alignment of the world’s currencies
and
to move quickly to address dangers to market stability posed by rapidly expanding sovereign wealth funds. (1)
The International Monetary Fund (IMF) was created by the Bretton Woods Agreements during the first three weeks of July 1944.
The goal of IMF was to supervise the Bretton Woods Agreements which linked the US dollar to gold and all other currencies to the said dollar.
Since August 15, 1971, when US President Nixon broke the Bretton Woods Agreements,
the US is in the possession of a blank check to print as much dollar currency as Federal Reserve Bank needed without being backed by reserved gold,
the present monetary system has no more link to gold
and
the IMF has no more reason of existence (the IMF has to maintain the Bretton Woods Agreements which are no longer in force).
If there is turbulence in currency markets,
it’s precisely because the de-facto international currency, the US dollar, has no intrinsic value.
How dare US Treasury Secretary Henry Paulson say
that an effective IMF is as important as ever to ensure stability of the global financial system
and
that rapidly expanding sovereign wealth fund pose dangers to market stability?
It’s US President Nixon in August 1971 by breaking the Bretton Woods Agreements of July 1944 who institutionalised market instability.
The Kuwaiti Investment Authority is one of the world’s largest sovereign wealth funds.
Bader al-Sa’ad, the KIA managing director, last week criticised the European Union’s proposals for a voluntary code of conduct for sovereign wealth funds.
Mr Sa’ad demanded that countries seeking to design codes of conduct for the wealth funds should apply the same principles to hedge funds, private equity funds, pension funds and other non-listed pools of capital.
Criticising the EU’s calls for more transparency, Mr Sa’ad said: “None of the recipient countries are able to explain how transparency, through declaration of size of assets under management and performances, would enhance global financial markets’ stability as well as ensure security of their domestic markets.” (2)
The Group of Seven industrialised nations and the European Union do not even understand the cause of the present turbulence.
How, the heck, could they then even start to demonstrate how their new plan to control sovereign wealth funds could solve the present turbulence?
It would be better if they addressed the cause instead of the symptoms
and re-linked the world financial system to gold.
But the IMF prohibits linking currency to gold.
Ask yourself why.
Ivo Cerckel
NOTES
(1)
Chiefs urge IMF to sharpen crisis radar
Reuters
By Lesley Wroughton
Reuters
Saturday, April 12 11:46 pm
http://uk.news.yahoo.com/rtrs/20080412/tbs-uk-imf-7318940.html
(2)
The indiscreet charm of sovereign wealth funds
By Paul Betts
Financial Times, April 8 2008 18:00
http://www.ft.com/cms/s/0/b8abb71e-058c-11dd-a9e0-0000779fd2ac.html
Ivo - I would like to emphasize Mr. AlSaad’s statement critisizing the EU’s plans, thanks for mentioning it:
“Mr Sa’ad demanded that countries seeking to design codes of conduct for the wealth funds should apply the same principles to hedge funds, private equity funds, pension funds and other non-listed pools of capital.”
German FinMin to meet Kuwait sovereign fund-report
Reuters
Reuters - Sunday, April 20
http://malaysia.news.yahoo.com/rtrs/20080419/tbs-germany-kuwait-fund-0b94ddd.html
SNIPS
BERLIN, April 19 - German Finance Minister Peer Steinbrueck plans to meet the managing director of the Kuwait Investment Authority , a leading sovereign wealth fund, to improve their relations, a German magazine reported on Saturday.
+
Many German politicians are nervous about the influence sovereign wealth funds can wield, and their capacity to buy leading national companies or key national infrastructure.