You may have heard people on the news mention “Sovereign funds”, and some are pointing fingers at them as being the boogey man behind the global economic problems – especially people like Alex Jones. What are they and what do they do?
From time to time, people suggest that Social Security invest in stocks rather than putting money in the “Social Security” lock box. The Government would then own assets more substantial than an IOU from the U.S. Treasury. If they did that, it would be an example of a sovereign fund. They are pools of money that are owned by governments (or government agencies) to go around the world and “buy up stuff”. Much of the money in the funds is oil money. Here is [a list of the world’s largest sovereign funds]. Sovereign funds (in total) control about $3.6 trillion in assets. [Keep that number in mind when you hear the U.S. is going to run a $1.7 trillion deficit for a single year].
Secretary of Treasury Paulson last year told these funds to “Bring it on“, inviting them to buy up as much of America as they wanted. It’s very probable that the “Private Equity funds” in the United States that have financed much of the radio business are funded by these funds, either directly or indirectly. U.S. law prohibits foreign governments from owning FCC licenses, but if you put up the facade of an “American” Private Equity fund managed by a group of Harvard MBAs, that satisfies the legal requirement. If the countries are members of the WTO (like China), the presumption is that they can own U.S. Radio and TV stations, unless someone can make a case that they shouldn’t.
Congress is making noise about requiring more disclosure of where Private Equity Funds are getting their money. Pay attention to see if that gains any traction. With the US Government begging for money anywhere they can find it, it seems unlikely that anything will happen that might increase transparency or alienate sovereign funds.