First world financial services groups have had the wind knocked out of them by the sub-prime mess, a mess largely of their own making.  Now the developing world is administering mouth-to-mouth resuscitation as vast foreign holdings of U.S. debt are beginning to be recycled through the so-called sovereign-wealth funds.    

    

The infusion of funds just over the last ten months, according to Morgan Stanely, has amounted to a cool 69 Billion USD.   

   

“Some funds, such as Norway’s, behave as capitalists bent on making as much money as they can.  Others may have ‘strategic’ goals – to nurture national champions, say, or to galvanize regional development.  Sovereign-wealth funds are a way to help recycle emerging-market surpluses.” (Briefing Sovereign-wealth funds, Asset-backed insecurity, pp. 78-80, The Economist, Jan 19th – 25th 2008)   

  

Whether you think this is a good thing or not, until the first world and developing world even out their deficits and surpluses, sovereign-wealth funds will be a player on the world economic stage.