Headline, April10, 2014



First the background : in the run up to this post:

I have lost count,  -suffice to say, that thousands and thousands of you, from all over the world, from every segment and strata of life and society, keep querying on a perspective on  "Global Economics."

!WOW! -the World Students Society Computers-Internet-Wireless : Where the strongest opinions counts for everything - works up, to get you all to the baseline:

So, let me begin by firing the First Salvo : ""If the world finds itself in illiquidity, it is destined to compromise on every core belief""

Cash is King! Cash is Queen! 

EVERYONE  knows that China, Russia and India are growing like billyo:
The so-called   "emerging giants"   are in the midst of the fastest  industrial revolution the world has ever seen.

It's been less widely noticed that these countries   -and others across Asia and the Middle East   -have also been rapidly amassing huge, huge reserves of cash.

They have now got enough money stashed to buy pretty much what they want, including big, big chunks of Western commerce.

In recent years, these previously poor nations have been exporting manufactured goods and commodities   -including oil-  at a staggering pace.

That explains why China now has the world's biggest foreign exchange
reserves  -no less than $1.43 trillion. With An almost 40 per cent up leap from 2007 to 2008.

Russia, so recently an economic basket case, now controls $407bn of reserves  -the world's third biggest haul .  58% up in 2008 from  2007.

India has the sixth largest reserve  $220bn, up  38%  ^2007-2008.

To put that in context, India at the years in question, had  four times more reserves than America.

And then, Malaysia's central bank had a cash pile double the size of that sitting in the Bank of England.

So what?  Well, for one thing, anyone trying to understand the future shape of the global economy should note that the countries that were, until recently, seen as risky investments are the new bedrocks of International Finance.

Some years ago, amid the panic of then  "sub prime"  crisis, investors piled out of Western assets and into emerging markets. That's never happened before.

Until now, the  money-men  have taken shelter from  "Eastern contagion"  by switching back to the West  - So, some years ago, 2007 to be precise, the summer marked a historic reversal in investor prescriptions:

Based,  in large part,   on the emerging giants'    far superior reserves.

The truth is  that,  for some time before 2008, these countries have been channelling cash into Western government bonds, funding the huge budget deficits:

Of   "advanced"  economies such as America and the UK.

The Asian Tigers -along with the oil-rich nations of the Middle East  -are, in effect, now propping up the bloated, debt-soaked Western world.

"" >So a huge transfer of power has already taken place!!!.""

But when the strategic stakes rose again in 2008. And went higher still. The East began  diversifying out of investments in Western government debt and buying up stakes in Western companies instead.

So-called  "Sovereign Wealth Funds"  -(SWF)-  have been (got)  created   -gigantic, state controlled investment vehicles formed from the reserves of these increasingly ambitious nations and targeted at the developed economies.

 To be more specific, it is targeted, at Western Firms.

So, an Eastern Block of booming economies now has a controlling interest in global commerce:

Time enough to take stock, and quickly,  reason through 

P&O,  -the British ports and ferries group,  got owned by an SWF controlled by the Dubai government.

A big share of  Standard Chartered is held by Temasek,  the Singapore government's  SWF.

And the two biggest holdings in the London Stock Exchange are owned by government-controlled Middle Eastern wealth funds.  

The Honour and serving of the Post continues. Don't miss the next one:

With respectful dedication to all the Students, Professors and Teachers of Economics and Finance the world over. See Ya all on !WOW!  -the World Students Society Computers-Internet-Wireless:

"' State Of Play "'

Good Night & God Bless!

SAM Daily Times - the Voice of the Voiceless


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