Tuesday, December 4, 2007
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Should you fear the sovereign wealth fund?
Over at Foreign Policy, economist Anders Ňslund says that sovereign wealth funds pose greater problems to home countries than host countries:
[S]uch funds are nothing for Americans or Europeans to fear. If anyone should worry about them, itís the people whose governments are amassing them. Thatís because governments tend to be terrible at managing money that is best left in the hands of private citizens. And locking away billions of dollars in wealth can have pernicious economic side effects. Maybe thatís why sovereign wealth funds are popular with dictators and semi-authoritarian regimes, which donít have to answer for the consequences when they make poor economic gambles....
posted by Dan on 12.04.07 at 10:30 PM
His article deals with more about government and taxes being bad. Since SWFs are government funded, they are also bad. He does it by taking a few negative and in most cases misleading examples from these funds and damns all SWFs by association.
These funds need to be more transparent and accountable but for the most part these investment funds are quite good for their citizens and for the world's economy.posted by: Patrick Flaherty on 12.04.07 at 10:30 PM [permalink]
There hasn't been enough experimentation with these sorts of funds to derive and accurate conclusion. The nations cited as being underdeveloped have many more problems than wealth funds. Besides this, these funds serve the purpose of keeping the currency from appreciating and protecting against big dips in energy prices.posted by: Tony Trepanier on 12.04.07 at 10:30 PM [permalink]
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