Sovereign wealth funds (SWFs) may be unwelcome in the US and certain parts of Europe, but they can shop all they like in Britain. That was the message repeatedly hammered home here in Davos by the UK government contingent of no fewer than five Cabinet members, including the Prime Minister, Gordon Brown, and the Foreign Secretary, David Miliband.
Whether that welcome will remain quite so fulsome if the "off the record" prediction of one FTSE 100 financial services boss here at the World Economic Forum comes true is open to question. In his view, virtually every British financial services company of any significance will have an Asian or Middle Eastern wealth fund as a strategic investor within five years and some may be taken over entirely by Chinese interests.
Does it matter? The political consensus in Britain is very much that it doesn't. The openness of Britain's economy to foreign capital is widely recognised as one of its virtues and strengths.
Yet there are legitimate concerns about wealth funds which our political leaders would be unwise to ignore. I'm not talking primarily about lack of transparency here. There are lots of secretive investors around but that doesn't and shouldn't necessarily disqualify them from the capital markets. Rather, the risk is of politicisation of investment – that the motivation and management of some of these holdings may not be entirely commercial. It is necessity, rather than desirability, which has caused Citigroup and Merrill Lynch to seek investment by SWFs.
But what safeguards are there when these shareholders put pressure on their new charges to invest in the financial hubs of the Middle East and Asia to the disadvantage of New York and London, or use these investments for some such other political or diplomatic objective? It seems to me that the Americans are getting it right in seeking to vet SWF investment in their major companies. This is not the protectionism that Mr Brown and Mr Miliband have complained of here, but entirely legitimate defence of the integrity of the free market system.
The blizzard that was blowing as the WEF meeting got under way earlier this week has been replaced by bright, alpine sunshine. The change in the weather seems also to have instructed people's outlook on the economy. As the meeting began, the predominant mood was of abject gloom and doom – Sir Martin Sorrell, chief executive of WPP, told me that he seemed to be the only person in Davos who didn't think there would be a US and UK recession this year.
Yet over the past 48 hours, the mood seems to have lifted. From despair, we have moved to resignation and now some optimism. The consensus on one panel here was that the policy actions taken in the US might ensure there was no recession there, or at worst a quite shallow and shortlived one. Some have even welcomed the turmoil in financial markets and its likely consequences in an economic slowdown as a necessary corrective that will cleanse the system of its excesses and reboot the markets for further progress.
Is this not 1987 and 1998 all over again, when policy action in response to financial crisis only delayed the end of the cycle? The downturn two or three years later was consequently much worse, with the economy encouraged by policymakers into a final blow-off before collapsing in a heap.
The CBI's British Business Leaders lunch in Davos gets bigger and better every year. Perhaps half the FTSE 100's value was represented at yesterday's bash, together with other stars of British business. The British presence is one of the more notable features of this annual eco-fest, so much so that on the way back from the Prime Minister's trade visit to China and India last week, Lord Levene, chairman of Lloyd's of London and one of 22 senior business representatives on the mission, suggested that since so many of them were going on to Davos, they should make a diversion and land in Zurich instead. He was overruled by the PM, who later came here anyway.
More gossip on the SocGen fiasco. Monday morning, its rogue trader's losses were a hefty but still manageable €1.2bn (£0.9bn). With the hedge funds sensing blood, SocGen managed to turn this into a life-threatening €5bn hit by liquidating the position into a falling market. Incompetence seems to have been the order of the day at every stage in this drama. And the board rejected the chairman's offer of resignation?