Until now, the United States has been the biggest force in the global markets. They've held this title since it became a super power and when it became the world's reserve currency.
However, there's coming a day when this all may change. So what country will take its place? Who says it has to be a country. It could be just a fund owned by a country or several of them that "join forces" together to affect the world as the U.S. has up until now.
Check out the comments from Morgan Stanley this morning:
Sovereign wealth-fund assets may more than quadruple in value by 2015 to $12 trillion -- equal to the current capitalization of the Standard & Poor's 500 Index -- from about $2.5 trillion now, according to Morgan Stanley. It predicts the funds will have assets of $28 trillion by 2022, more than double the size of the U.S. economy.
So if these funds end up becoming TWICE the size of the United States, then the U.S. may lose their dominant influence that it's had throughout the world.
Abu Dhabi seems to have more in assets than the next three biggest combined. However, Norway, Singapore and Saudi Arabia all supposedly have over $ 300 billion to their name. Abu Dhabi supposedly has $ 1.3 trillion in assets. Wow!
Kuwait and China supposedly have at least $ 250 billion in their Sovereign Wealth Funds.
So you can see that if a few "funds" aligned themselves, they could easily become the newest "Super Power" of the day very quickly.
As you can imagine, most of these countries have built up their "war chest" through the sale of their oil. Now they are diversifying these profits away from oil so that it brings even more stability to their economies.
I really can't blame them. It's like Warren Buffett diversifying profits away from the textile industry when he took over "Berkshire Hathaway" and went into other industries. Textiles eventually went out of favor yet Buffett still had a war chest because he was smart and took those profits and re-invested them elsewhere.
This is what these funds are doing. That way, if there came a day where oil ran out or demand shifted away (due to vehicles running off of alternatives) then they'd still survive just fine. Obviously, that would be a long time away but countries can't re-adjust on a dime, they have to plan accordingly many, many years in advance for major adjustments like that.
So watch what these new 800 pound gorillas do and where they invest. We should know more about them as time goes on.
Even as of this writing, Washington is putting more pressure on them to be more transparent about their intentions and objectives when they invest in American companies. So this will be a new trend to keep an eye on for sure.
Sean Hyman
Editor/Trader
www.money-trader.com
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