Our guy John Tamny, editor at RealClearMarkets, has some insightful thoughts on sovereign wealth funds:
When it comes to trade, mercantilist politicians from both sides of the aisle regularly express their displeasure with our mythical trade deficit. They also consistently rail against money being sent overseas, but as the actions of certain SWFs indicate, those dollars must eventually return to the United States; in this case as investment in blue-chip investment firms. And while the aforementioned investment won't factor into governmental calculations of our trade deficit, we should consider this a "teaching moment" for those who presume trade doesn't balance. We let others make for us what's not in our economic interest to create, and the money returns in many forms, including as jobs creating investment.
Furthermore, with the dollar's weakness already well-chronicled, would we prefer that SWFs hailing from the "wrong" parts of the world simply exchange their dollars for euros, pounds and yen? If we ignore how actions such as this might weaken the dollar further, would we somehow feel better if instead of investing in American companies, the sovereign funds in question were to re-direct their capital to France, England or Japan?
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