Friday, September 24, 2010

Gaming Shadow Boys



March 2009--Military and intelligence officials conduct an exercise on economic conflict with China.  America loses badly.

Eric Weiner, author of The Shadow Market, states:

“The shadow market is a collection of unaffiliated, extremely wealthy nations and investors that effectively run the international economy through their prodigious holdings of stocks, bonds, real estate, currencies, and other financial instruments.” 
Bloomberg writes about the book:

What we’re witnessing, of course, is mercantilism in the Internet age. The wealth of these nations slithers through the digital depths and surfaces around the globe as purchases of land, commodities and securities.

Though hedge funds and private-equity funds participate in this plot to “secretly dominate the world” (as the conspiratorial subtitle puts it), Weiner focuses on sovereign wealth funds and government-owned holding companies that are buying swaths of the planet, parcel by parcel.

Conspicuously absent from financial reform, any mention of sovereign wealth funds.  Private equity underwriters got a virtual free pass in the bill.  The bill passed in May 2010.

Ironically, Weiner writes about the freeing of the Lockerbie bomber, a frequent topic of this author.

“The groups with access to capital and natural resources hold the power,” he writes. “And everyone else is just a pawn in a much larger chess match going on above their heads.” 

Capital is coming from nation states, those flush with cash or issuing debt out the wazoo.  It makes its way to the politically connected.   Wilbur Ross, David Rubenstein, Lord John Browne, Pete Peterson, Stephen Schwarzman, Bob Johnson, ... the list is long.