Sunday 25 Feb 2018 | 13:16 | SYDNEY
Sunday 25 Feb 2018 | 13:16 | SYDNEY

Sovereign wealth funds: What's good for the goose...

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11 February 2008 09:39

We’ve commented before about the inconsistency of US economic guru Larry Summers, and we wonder afresh after his discussion of sovereign wealth funds (SWFs) at the Davos World Economic Forum. He suspects that these SWF investors have 'mixed motives' which will divert them from the pure value-maximising behaviour that keeps the free market system efficient. He proposes a set of rules to redress this. The SWFs should never speculate in other people’s currencies and once they invest, should stay put through thick and thin. It’s OK for George Soros and hedge funds to speculate and destabilise world currencies, but not SWFs. It’s OK for private foreign investors to engage in destructive lemming-like rushes into and out of foreign financial markets, but not SWFs. If you think this might just be arguing the US special interests here (they have no SWFs), you might like to look at my attempt to set out some of the issues in the AFR today.

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