Superstrategist Tom Barnett has some wise words on sovereign wealth funds (as always, boldface is mine):
As for getting scared of these funds, the fear remains misplaced. The same money could be used for military buildups and all sorts of scary or stupid stuff. Instead, it's being re-invested in America.... Yes, SWFs need a voluntary code of conduct and yes, transparency must be improved. As for new rules...apply the same ones we've always had for big funds: certain industries (banks and defense) come with limits of ownership. As for their big size, SWFs remain about 2% of the world's $165 trillion world of securities, and they're collectively tiny compared to the combined weight of the three heavies (insurance companies, mutual funds and pension funds).... the real danger of SWFs right now is that they may trigger stupid protectionism instead of acceptance as yet another balancing mechanism in our increasingly globalized economy—something it's doing right now quite nicely.