Watching Hillary Clinton and Barack Obama fight it out for the Democratic nomination is both exciting and heartening. Just the fact that a woman or an African American will most likely deliver next January’s presidential inaugural address is changing the way America looks at itself and the rest of the world looks at America, argues the FT’s Philip Stephens.
And yet. As America’s social divisions, allegiances and prejudices appear to soften and mellow, elsewhere the “them and us” mindset seems more entrenched than ever, as it applies to the US and the rest of the world and particularly the emerging world.
The latest vogue stateside is to fret publicly about the surging influence of sovereign wealth funds. Fair enough - it may be mildly disconcerting to have large chunks of the nation’s distressed banks snapped up by previously unheard of overseas buyers. It is certainly unsettling to a nation’s identity as leader of the free world and guardian of all things free market.
But there’s a point at which understandable angst tips over into outright prejudice and irrational finger-pointing. We now appear to have reached such an inflexion, where the US starts to manifest the kind of enlightened global view more often showcased by Prince Phillip.
This twist centres around the accusation that sovereign wealth funds may, or in its strongest form are likely to, indulge in insider trading and market abuse. The SEC’s new nemesis, notes an article on CFO.com, is other countries.
Earlier this week the SEC director of enforcement, Linda Chatman Thomsen testified before the US-China Economic and Security Review Commission.
We are concerned that some sovereign wealth funds, or persons associated with them . . . may undermine market integrity by engaging in insider trading or other market abuses.
The argument seems to be that the funds might have access to inside information, wield financial muscle because of the sheer volume of their assets, and are foreign, which makes them inherently untrustworthy.
Any actual evidence on offer to suggest that these funds have or will commit these kinds of offences is absent. If there were evidence, they’d be acting on it. If not, they should cease chucking accusations around. There’s ample insider trading and market abuse going on in America by Americans for the benefit of Americans that the SEC can spend its time worrying about.
The marginally more sensible point made by Thomsen is that, in the wake of the SEC’s perceived success in settling the insider trading allegations related to News Corp’s acquisition of Dow Jones, countries with sovereign wealth funds may be reluctant to work with the US on future investigations. The shred of sense here is that the need for cooperation internationally on these issues is real and growing. Why the existence of a sovereign wealth fund per se is apt to make a nation less receptive to the US’s policeman routine is unclear. Does anyone really think Norway’s going to be terribly obstructive?
But the accusation is again that it is the SWFs themselves doing the market abusing. And that their governments will be reluctant to take action against an entity under their control. Trouble is that it’s exactly this kind of sloppy mud-slinging that is likely to mean the US enforcers get a poor reception when they pitch up and start asking questions.
What makes all this nonsense more pernicious is that it’s happening in an election year - where a topic deemed an easy win with the electorate can provide ever more outlandish statements of anxiety and intent. Right on cue, the newly anointed prince of inspirational politics and progress has jumped in to express his worries about the rise of sovereign wealth funds. Barack Obama chose to stick to the possibility that SWFs may be swayed not just by financial and market-led considerations but by political or foreign policy sectors. The US has to get its “balance of payments in order”, apparently.
If we are sending money to Kuwait and Saudi Arabia, (and) the United Arab Emirates because of our inability to control our consumption of oil, then we’ve got to expect that we are over time transferring wealth to those countries. That’s something I intend to stop as president.
You might have four years. Eight at the outside. Good luck.
