SWF Radar USA

Bloomberg reports that, “A New York federal judge blocked Argentina from transferring out of the U.S. investments held by its pension funds, granting a request by bondholders holding a $553 million judgment against the South American country.”

The Financial Times reports that, “Sovereign wealth funds in the oil-rich Gulf states are actively seeking investments in the troubled US economy, Robert Kimmitt, the deputy US treasury secretary, said on Tuesday.”

The Financial Times writes, “Will the largest US banks spend or hoard the $125bn made available by a plucky sovereign wealth fund? Unlike its Asian and Middle Eastern peers, the new entrant in the game of throwing money at the battered financial sector has not cloaked its identity in a three-letter acronym, opting for the more streamlined ‘US Treasury’.”

Thomson Reuters reports that, “The United States would welcome investments from sovereign wealth funds as it grapples with the impact of the global financial crisis on its economy, Deputy U.S. Treasury Secretary Robert Kimmitt said on Tuesday.”

The Beijing Review writes that, “[S]ome analysts said China has no better choice than to keep investing its swelling dollar reserves in U.S. Treasuries. While the American economy has been undermined by the property bubble, EU nations have received a heavier blow from the U.S. financial market debacle, making euro assets bad investments for China, said a person close to the State Administration of Foreign Exchange who preferred to be anonymous.”

Daniel Drezner writes in the National Interest that, “Lost amid the financial chaos of the past six weeks was the revelation that China’s State Administration of Foreign Exchange used a $300 million purchase of government bonds and a $150 million grant to Costa Rica in return for that country’s decision to sever diplomatic ties with Taiwan after sixty-three years and recognize the People’s Republic of China. Being able to offer big carrots to small countries is a very handy tool in great-power foreign policy. And the current crisis suggests that the United States is not the only country that can proffer such carrots.”

Seeking Alpha writes that, “File this under ‘be careful what you wish for, you just might get it.’ The good news? SWFs are not investing large sums in U.S. businesses. The bad news? SWFs are not investing large amounts in U.S. businesses.”

The WSJ Real Time Economics blog quotes Robert Kimmitt, the US deputy treasury secretary, as saying that, “In these times of heightened uncertainty, it is imperative that we don’t turn inward but rather embrace free investment and trade.”

The comment comes from remarks made by Kimmitt yesterday on the recently-released GAPP guidelines for SWFs. The OIR SWF blog has extracted some highlights of those remarks.

Financial Week writes that, “According to Barry Pupkin, an attorney at Squire Sanders & Dempsey who has been closely following the sovereign wealth fund debate, many critics, in Congress and elsewhere, have slowly been changing their views about sovereign investments in U.S. businesses. ‘It used to be about national security concerns,’ he said. Now, the worry is that ‘sovereign wealth funds are sitting on their money, waiting for these institutions to tank, and waiting on the sidelines before they invest.’”

The Sydney Morning Herald writes that, “International insolvency practitioners call it ring fencing - where rich countries, usually the United States, can lock down their borders to seize assets and jump in front of equally entitled but less muscular international creditors. That is why the US will get the lion’s share of the leftovers of bankrupt investment banks like Lehmans. But Iceland and Lehmans are sideshows in the new world of international financial cooperation and brinkmanship. The match-up that matters is between the mother of all debtors, the United States Government, and its primary financier, the Chinese Government.”