Platform: For weeks now, Britain's Barclays bank and three European banks have been locked in hand-to-hand financial combat to see which will prevail in bidding for the Dutch bank ABN Amro, the biggest bank takeover ever.
On Sunday night, Barclays got a big boost from a couple of new, deep-pocketed investors, which agreed to put up as much as $18.5 billion (€13.5 billion) to help it finance the proposed $93 billion deal.
And who were these investors with the deep pockets? None other than the governments of China and Singapore.
Welcome to the new world of global finance, in which capital not only moves freely around the world, but the old distinction between what is public and what is private is also quickly blurring.
We're well beyond the days when people worried about the influence of public pension funds over private companies.
Today, trillions of dollars in investment capital are under the direct control of central banks, state-owned corporations, state-designated monopolies and royal families.
And more and more countries are following the lead of Singapore, Norway and Kuwait in setting up "stabilisation funds" and "sovereign wealth funds" that are capitalised with state assets, run by government-friendly officials and charged not only with earning a competitive return on investment, but also with leveraging new-found financial wealth to long-term economic advantage.
The size of these state holdings now dwarfs almost anything in the private sector.
The Abu Dhabi Investment Authority, for example, controls assets worth more than all the companies listed on the stock markets of Austria, Belgium, Denmark, Finland, Greece and Ireland combined, according to a calculation by Morgan Stanley.
At $430 billion, Singapore's two investment funds have twice the market value of Bank of America.
And if you were to combine the roughly $2 trillion in assets of all the sovereign wealth funds, they would easily exceed the assets of the global hedge fund industry.
As Clay Lowery, an acting under-secretary of the US treasury, noted in a speech last month, these pools of government-controlled funds are now so big that their annual growth alone would have allowed them to buy up every one of the $461 billion worth of bonds issued last year by the governments of Europe and the United States - and still have $720 billion left to invest in other assets.
This week's Barclays deal is only the latest example of how government-controlled funds are making their way into the private-sector economy.
Recently, the investment arm of the Dubai government and Russia's largest government-owned bank each bought a stake (3 per cent and
5 per cent respectively) in the parent of Airbus.
China's new sovereign wealth fund recently bought a nice chunk of the Blackstone Group, just before it went public.
Investment funds controlled by the government of Qatar have been busy buying up prime real estate in London, Paris and Milan, and last week made a play for Britain's Sainsbury's supermarket chain.
And a number of Russian companies designated as "state champions" have begun to buy up steel mills, aluminium smelters, auto-parts companies and energy pipelines in Europe, the United States and in Canada.
Even the Bush treasury, which recently has been doing cartwheels to convince the world that the US is wide open to foreign investment, acknowledges that new rules are needed to govern these foreign investments.
These would be for no other reason than to prevent another outbreak of "financial protectionism" like the fiasco involving a Dubai firm's purchase of US port operations.
Last month, Mr Lowery called on the International Monetary Fund to craft "best practices" for government-controlled investment.
Such guidelines, he said, might require a minimal level of transparency, have controls against fraud and corruption, and require the funds to act like private-sector investment pools whose sole purpose is to maximise returns rather than further government, foreign or economic policies.
I'm not sure all that goes far enough. I don't see any problem with China buying a minority stake in the Blackstone Group that gives it no say in how Blackstone or any of its acquisitions are run.
However I do have a problem if it's implicit in the deal that Blackstone would be favoured over other private-equity firms when it comes to the best-investment opportunities in China, which many suspect.
Similarly, I don't see why Marriott or Starwood, which are subject to the discipline of the financial markets, have to compete for the choicest hotel properties with Dubai Inc, which has access to unlimited amounts of free capital from a government determined to use its oil profit to become a dominant player in the airline and travel industries.
An if Russia decides it wants to designate one company to be its nickel monopoly or its aluminium monopoly, that's its business.
But as soon as one of those companies tries to use its monopoly profit to buy foreign competitors that are shut out of the Russian market, that's our business.
In a global economy, insisting that governments making foreign investments play by commercial rules isn't "financial protectionism".
It's basic economic self-defence.
And while it would be great if the International Monetary Fund or some other outfit came up with a set of best practices, those practices would have to be enforced by vigilant national governments that know the difference between a passive investment and an active industrial policy.
