I have an article in the latest issue of The American entitled, "The Sovereigns Are Coming!" The main point:

No question, the growth of SWFs puts advocates of open capital markets in a quandary. During debates over what to do with the Social Security trust fund a few years ago, there was deep resistance to the idea of having a U.S. government fund pick winners in the stock market. Why should foreign governments get to play?

Sovereign wealth funds do present concerns on the near and far horizons, but the predominant reaction at this point should be what is emblazoned on the cover of The Hitchhiker’s Guide to the Galaxy: “DON’T PANIC.” To date, SWFs have acted responsibly, and there is no sign that their behavior will change soon.

A mixture of voluntary standards and additional surveillance by the salient authorities should deal with current concerns. With luck, they will also cause policymakers to focus on the bigger picture. SWFs are merely a small symptom of two bigger problems: the absence of proactive energy and exchange rate policies in this country.