Leave it to Jim Cramer to accuse the US of sovereign investing, but get it wrong. And further claim it was his idea first. Then nearly break his arm patting himself on the back about it.
All yesterday morning, CNBC played clips of the grinning, bald former hedge fund maven claiming that he had personally first come up with the idea of the US Treasury investing in several commercial banks, so to restore investor, depositor and borrower confidence in them.
Cramer then pronounced this concept 'US sovereign fund investing.'
Sorry, Jim. You evidently don't understand the concept of sovereign investing.
The idea is typically for a wealthy country to organize a fund, by which they invest in businesses of another country. Hopefully, for long term profits.
Treasury's mandatory investment in nine large US commercial banks, and, subsequently, many smaller ones, is to provide stabilizing capital, against which the banks are supposed to write off or sell questionably-valued CDOs or loans.
The primary object of the investments is to provide capital which nobody else stands ready to invest. Whether taxpayers will profit, beyond the rate of interest paid on the preferred, is anybody's guess.
But conventional sovereign investing, it isn't.
Maybe you should read up on how foreign governments actually operate their sovereign wealth funds, Jim. I don't think they use them to avoid the dissolution of their own banking systems.
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