Friday, November 21, 2008

French SWF

So how are we to think of the French sovereign wealth fund? President Sarkozy said that it would be a fund of 20 billion euros, but 14 billion of that consists of shares in companies in which the state already participates. The remaining 6 billion are to be borrowed. Money will be spent to protect "strategic" firms in danger of foreign takeover, firms with promising technologies for the future, firms engaged in "durable development," etc. One could justify each of these types of investment in a variety of ways. But the SWF is also being proposed as an "anti-crisis" measure. Is it credible as such? The only stimulus involved here is the borrowed 6 billion, which amounts to roughly 0.25 pct of GDP. Not much in the way of stimulus. And stimulus is needed now. What spending targets have been identified? Other than Daher, the firm where Sarkozy made the announcement, nothing has been revealed.

As so often in the past, we have an announcement, great fanfare, vague promises of imminent action, and a dearth of details. Patience was permissible in normal times, but the crisis demands more decisive commitment.

1 comment:

bernard said...

from FT Alphaville:

Abu Dhabi - $875bn
Norway - $391bn
Singapore (GIC) - $330bn
Kuwait - $264bn
China - $200bn

France - $7.6bn

No other comment seems necessary.