Can the US really control sovereign wealth funds?

The US Treasury Department is talking to two large sovereign wealth funds with a view to drafting rules to govern their behaviour. But with a massive current account deficit, what bargaining power does the US actually have?

The Wall Street Journal reports in 'U.S. Pushes Sovereign Funds To Open to Outside Scrutiny,' that the US Treasury Department is talking to two large sovereign wealth funds, Singapore's Temasek and the Abu Dhabi Investment Authority, as the first steps in a process to ''draft rules to oversee the behaviour of such funds, without discouraging them from investing.'

Let's see if I get this straight. The US is running a chronic current account deficit, which means we are dependent on the kindness of foreigners to maintain our lifestyle. In other words, we have to run a capital account surplus, which is tantamount to having other countries buy our real or financial assets. And while the fall in the dollar has reduced our current account deficit somewhat, it's still at a high level. Ergo, we need our money fix.

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