The New wealth on the global block

At first glance, Sovereign Wealth Funds appear to be a ‘no-brainer’. Take the major assets that your country has, and invest in them by saving a portion of their worth in interest bearing accounts. The most famous one, or at least the one that has gained most column inches over the past few years is Norway. Realising that that they had a massive amount of oil in territorial waters, but also a social system lacking in a few areas, this country made the decision in the 1960’s to not spend it. It sounds like that person you bump into at parties not drinking, not smoking, has the World’s most boring job, and is using his wealth to save for retirement. Meanwhile, you have to stop him half-way through the conversation to go throw up becuase youhave had four servings of dip, and two cigarettes too many on top of a sampling of EVERYTHING in the bar.

As you hurl up the shrimp, you realise with growing sobriety and alarm, that you aren’t saving all that much. It’s that he is Norway, and you are a G8 country!

At the last count – before the global meltdown – Norway’s SWF was worth about $350 Billion, and their social safety net, like most Scandinavian countries, was among the best in the World. Even now, it is still one of the World’s “Super Seven” funds. When you get that big, you are investing it in lots of BIG items – namely other countries. So when a country needs investment money, does it look at a certain type of nation to deal with? Is Norway safe, white, Northern Hemisphere and Western World, so therefore safe? of course not – you go to any SWF, and as many as you can. This brings us to China. It’s SWF is worth over 1 Trillion US. This is froma ciountry of rice paddies, and technological know-how. But it is it’s people that are the important item, here.

Just like Norway, they have made a decision to care for it’s citizens. it’s citizens care for their families, it’s companies care for it’s workers. I almost choked on my Wheaties last week reading an American analyst saying that the global financial downturn – which by last week had cut 25% of global wealth, by the way – wasn’t solely the fault of the USA. Part of it was the fact that the Chinese were SAVING too much!

When you are rich and profilgate, like most of the G8, you dont care where the money comes from as long as you have more. Not only addicted to oil, we are addicted to being as best as we can, right now. When the bank won’t lend you any more, becasue your re-payment schedule is laughable and intermittent, then you go somwehere else: Family, freinds, and even the loan shark on the corner. In the global perspective, China isn’t a loan shark. It’s a local busienssman that sees your potential, and will gladly use his bank account to support your aspirations, knowing that with every missed payment, he owns more and more of your car, house, and future. The Chinese have seen a simple way to make it’s own future: Lend money to he US by buying US currency, therfore keeping it’s value low, selling more and more of it’s own goods while looking after it’s citizens. When the wheel stops turning in the business world, as it did in 2008, you have a safe citizenry, with ample money going through your system to keep it all running, and a bank account full of someone else’s money to do with what you need, not them.

This is what a SWF was meant to do, but we were all too busy complaining about the lack of decnt programming on our brand new flat screen TV, that we couldn’t afford to buy, to see it. This is why Presidnrt Obama is in such a tight spot. He cannot turn the US around in four years, becasue he has to change the way people think. In the UK, I am used to a Nanny state that tells you what you should be doing. there is no control like that in North America, and look where this freedom of choice has got us. Meanwhile, China will be able to push forward and become something Super-Power like in the coming decades, and Norway will be a quiet, rich, caring country that is actually able to look after the 25% or so of it’s citizenry that will be no longer working and sick over the next 40 or so years.

More and more countries believe the way that Norway and China do – let’s not blame them for being sober at the party – after all they have to drive home in the new car they can easily afford, when you are taking a cab. In fact over the last five years prior to 2008, there was a major shift in Power and Wealth globally due to responsible countries, governments and citizenry. It is these countries that now hold the key to the next century or so of global existance, and they have it right. the G8? NATO? Think again. The fastest generators of Sovereign Wealth are as follows:

Nigeria (over 290% raise)

Oman (256%)

Kazakhstan (162%)

Angola (82%)

Russia (74%)

Makes you think, doesn’t it?

A Capricorn speaks

My Birthday is during Christmas week, so over the decades, the entire seven days has become a winter celebration of all things that change; a chance for hope and reflection around the change of the year, and the Winter Solstice. It must be my ancient Welsh Druid DNA cropping up on a yearly basis.

 I appear to spend a lot of time reading the same articles on what happened during the previous 12 months, and slapping my forehead in frustration that I never ‘saw that coming’. The media run this ”We-are-smarter-than-you” exercise annually because it’s a time saver. In early December, with Christmas breaks coming up, no time to properly research upcoming stories, and the movers and shakers of the world taking time off from the spotlight, they are not in a position to grab a press release, or visit a press conference, then parrot back what was said, and treat it like news instead of what it really is: Propaganda from one point of view.

Of course, if a blogger does not join in the party and do the same thing, it appears that they haven’t learned any journalism tricks, so in order to join the crowd, here comes another “Best and Worst” column. Let’s do something different, shall we? As I turn a year older at the same time as all of this regurgitation of past work takes place, I like to look to the year ahead, and see what knock-on effects the shepherded news stories of the last 12 months will provide: Those items of interest that the powers-that-be have deemed us intelligent and emotionally steady enough to receive and take in. As most of the real news is still buried, let’s turn this on its head. Predict what will happen in 2009, and then return 12 months from now with all of the excuses why it didn’t. Have fun:

There will be a new Britney Spears-type ‘heroine’, because the current one is wising up about how bored little girls have become with grown up angst. Another real life tragedy based on the simple premise that you CAN get what you want, but the price is ALWAYS higher than you think. In fact, it’s the same Morality tale that has been told to us for centuries. Most of us may not have a church in our lives to continually tell us this, but that gap has been filled by the media.

The much ballyhooed exotic and ‘green’ travel industries will die this year. There may still be a few hardy soles (or those whose bank accounts are still hardy), that are able to cruise to Antarctica, or hike through a pristine Latin-American rain forest, but not enough to keep the industry afloat. Thanks for the memories.

Your savings will be worth less in January 2010, than they are now. This American created debt crisis, that they somehow have got the rest of the globe to pay for will be dragging on until the Winter Olympics in Russia, not Canada. That’s 2014 for those of you not keeping count.

Secondary education will get more governmental money, because more kids will want to stay in school now that their parents can’t afford a ‘gap year’ exotic excursion.

Oil at $150 per gallon by next November: We didn’t stop institutional investors bidding the price up during holiday seasons in 2008, we won’t in 2009. There’s too much money to be made by some.

GM and Chrysler will either merge, or announce plans to. They are just too big, old, and greedy to survive. Thousands will be on their final pay check, and the Franchising industries will pick them up. Boom times for local shopping malls as new, hungry, specialized industries aggressively search for market share in your neighborhood.

President Obama will make bold claims and plans, have most of them thrown back at him, survive an assassination attempt, and change the Middle East political landscape forever.

Bernie Madoff is just the beginning. There will be a slow-burn of investment house malfeasance brought to light that shows that most of the large scale banking and investment industry is more crooked than Enron.

Union power will grow as everyone realizes that they need a long term job in one corporation for a long time, like their parents did. Who needs new ideas and skills sets when you can get vacation and a pension?

We will still import dangerous and shoddy goods from China. They will still continue to buy foreign currencies to ensure they have an ongoing fuel supply. Wal-Mart will not change, and get even bigger.

An Assassination attempt on Ex-President Bush will be laughed off as “extremist”. It will be from an Auto industry worker, now unemployed, who lost all of his savings, had his house re-possessed, lost a child in uniform in the Middle East, and cannot afford to send his other child to College. Oh, his wife died waiting for a Doctor, too.

 

Have a great 2009, and let’s check our work in December – please remind me, I’ll be busy with preparations for my Birthday.