Last March I wrote a piece critical of sovereign wealth funds (SWF). One of the funds that I used as an example of imprudence was Chinese Investment Corporation which had purchased a minority stake position in both Morgan Stanley and Blackstone. Oops, right?
Well, it looks like CIC has had enough of being burned by the charlatans (e.g. Dick Fuld) that run firms into the ground. To wit, Lou Jiwei, its chairman recently said that CIC no longer “dares” to invest in financial firms.
In a libertarian world SWFs would write their citizens checks as they liquidate their assets and disappear. However, as one of my econ friends in California told me, SWFs at least try to stay profitable and cannot inherently engage in inflationary bubbles because they have no printing press.
In that respect they are a marginal form of destatism, right? Maybe they’ll heroically turn into a type of Holdeen Trust.
Coda: in retrospect I suppose I should tone down this kind of rhetoric.