$12 Trillion Monster Threatens Globalization

Some countries control great pools of wealth, building funds from oil or other natural-resource revenue, according to William Pesek, Bloomberg news columnist. But with funds growing by leaps and bounds, their owners look to make good use of these savings – and in the process could transform global financial markets. The funds together, many based in Asia, could outgrow the entire US economy by 2015. Many countries turn to investments abroad, offering potential for solid financial returns, but such investments can raise protectionist concerns. The US, for example, might balk at China or Russia investing in Silicon Valley firms. Many governments are taking efforts to understand the implications of these large stockpiles. Governments cannot dump reserves for fear the market will drop nor can they keep accumulating reserves because their currencies would surge. Pesek advises wise and careful study into the best use for such funds. – YaleGlobal