Vic G asked:


Lately, many American market participants have called for the Treasury Department to take unprecedented actions to stem the housing, mortgage & credit crisis which show no signs of being rescued by private concerns: open up the balance sheet of the United States to save housing prices from continuing their plummet and the cost of capital from continuing its dangerous rise. Obviously, there is a great deal of moral hazard in a government-led bailout of its own markets. But no private entities in America have the capital or risk appetite to engineer a systematic rescue. Without bids, there is no liquidity. Without liquidity, the problem expands and the vicious cycle continues.

But what about sovereign wealth funds, those investment arms of foreign governments controlling trillions of real money? Can they conceivably, in coordination with the Treasury, at some point jointly dive in with bids on massive assets and profit immensely from the opportunity? Could Abu Dhabi Investment Authority become the largest landowner in the USA? Could SAFE or Temasek become the largest corporate debtholder? What obstacles prevent them from moving in such an opportunistic way now?

Thomas