Events in the World are presenting an opportunity to positively change the US Social Security System. The Democrats, handcuffed by their doctrinaire rhetoric, cannot make the bold move. Republicans can change the subject of the campaign and form a winning strategy based on the financial security of American pensioners. The opportunity, discussed in our previous post, has to do with the recent formation of sovereign funds , by countries bursting with US dollars. The article below is telling: ...
About two dozen countries have established sovereign wealth funds, including Iran, the United Arab Emirates, Singapore, Kuwait, Australia and Russia. While precise data about each of the funds can be difficult to obtain, most Wall Street analysts agree that the value of the funds has reached about $2 trillion and is likely to grow at least fivefold by 2012."
The US may be in deficit, but the US Social Security System is in surplus. The political ball is there to be snatched up. The US has to get into the game and while the rest of the world is recycling their surplus, we can solve the unfunded liability of the social security system at a time when many American families are losing anticipated equity growth in their homes.
Oil and Trade Gains Make Major Investors Of Developing Nations
By David Cho and Thomas Heath
Washington Post Staff Writers
Tuesday, October 30, 2007; Page A01
The government of Libya, flush with oil, has amassed $40 billion and is ready to put it in play on Wall Street. China recently acquired a huge stake in one of the biggest names in U.S. finance. Tiny Qatar is adding $1 billion a week to its investment coffers and is trying to buy the leading grocer in Britain.the rest here
Developing nations, especially in Asia and the Middle East, are aggressively stockpiling some of the largest concentrations of investment money in history. The cash hoards, called sovereign wealth funds, are controlled not by state-run companies or private investors but by governments.
These investment pools are equal to or even bigger than the largest pension and private-equity funds in the United States, and many are highly secretive about their activities. The Abu Dhabi Investment Authority has an estimated $875 billion to invest, while China's first stab at a sovereign wealth fund, which started last month, has $200 billion. The largest private-equity firm has about $90 billion under management.
Sovereign wealth funds have been around for decades. But enriched by the surge in the price of oil, which settled at a record $93.53 yesterday, and the trade gap between the United States and Asia, these funds have grown to gigantic proportions. This has alarmed U.S. politicians and regulators, some of whom held a series of meetings on the topic here this month. Some on Wall Street say the growing prominence of these funds portends a fundamental shift in financing power away from Western nations.
"It's evidence of the emergence of the developing world as an economic superpower and . . . of a shift of economic power away from the United States," said Alex Patelis, head of international economics at Merrill Lynch.
In the past, these funds had largely been content to hold safe, low-yielding investments such as U.S. Treasurys. Now, with the expectation that Treasury yields could be low for years and the recent weakening in the U.S. dollar, they are seeking higher returns and taking bigger risks.
Some are buying stakes in key industries in the United States and Europe, including banks, ports, stock exchanges and energy companies. Others are looking beyond opportunities in the West, shoring up Asian banks and building Africa's infrastructure.
The new, more aggressive investing strategy is reigniting nationalistic sentiments around the world. Germany has been alarmed at Russia's move to acquire stakes in pipeline and utility companies. New Zealand opposed an effort by Dubai investors to take over a major airport.
In the United States, lawmakers reacted strongly against a state-run Chinese firm that tried to take over a U.S. oil company in 2005 and a Dubai firm that wanted to buy U.S. seaports last year. But the response to sovereign wealth funds has been more mixed.
Few eyebrows on Capitol Hill were raised when Dubai paid $825 million for U.S. clothing retailer Barneys in June and followed it with a 19.9 percent stake in the Nasdaq Stock Market last month. But some officials are concerned about what other kinds of businesses might be bought by governments that are secretive about their investment activities. It would be difficult to know whether these countries are just aiming to make money or have ulterior motives.
The emergence of sovereign funds "challenges us to ask whether these many benefits of markets and private ownership will be threatened if government ownership in the economy . . . becomes more significant," said Securities and Exchange Commission Chairman Christopher Cox at a speech at Harvard University last week. "When the regulator and the regulated are one and the same, deference to [sovereign wealth funds] can all too easily trump vigorous and neutral enforcement."
"You can see already in 10 to 20 years these funds are going to lead to a sophisticated asset-management system in Asia and the Middle East," said Patelis, of Merrill Lynch. "We already have huge interest among our clients to link up with these funds. Everybody wants us to introduce them."...