Are Sovereign Funds Threatening Our Sovereignty?

by Seth Green | December 24th, 2007
America has suffered a profound loss of international influence and respect over the course of the Bush administration. While most of the attention has focused on the administration’s flawed security strategy, recent events demonstrate that Bush’s economic agenda has been similarly disastrous for America’s role in the world. The administration’s tax cutting for the wealthy combined with big spending has left us with dangerous levels of debt and the highest level of inequality since the 1920s. And the administration’s failure to impose even basic regulations on the subprime industry has encouraged (although not caused) turmoil on Wall Street.

What is most alarming about Bush’s economic blunders is that he appears to be clueless to the threat our economic vulnerability poses to our sovereignty. Over the last few weeks, sovereign wealth funds (i.e. foreign governments by another name) bought up major stakes (i.e. 5 to 9.9 percent) in the some of the biggest banks on Wall Street such as Citigroup, UBS, Morgan Stanley, and now Merrill Lynch. Bush’s response to foreign governments (and primarily non-democratic governments at that) buying up huge shares of our biggest banks was hardly a response at all. “I’m fine with capital coming in from overseas to help bolster financial institutions,â€