. Middle East investments soar Flooded with money from soaring oil prices there has been an explosion of investment banks, private equity funds and venture capital coming out of the Middle East. But unlike the 1970s and 1990s when both governments and investors relied on international banks to handle their wealth local transnational capitalists are now guiding their own funds. That means petrodollars aren't being recycled through New York and London but through such firms as Dubai's Istithmar and Abu Dhabi Investment Authority. Funds are expect to hit $10B by 2007. David Jackson, chief executive officer at Istithmar says, "In 2003, people hardly understood what private equity and alternative investments really were; now every other day we get wind of another fund." Says another banker, "In the past, they would just give the money and put it in the US. Now they want to do their own deals…" . Neo-liberals advocate pay-raise for Chinese Transnational capitalists are trying to help China spend the billions of dollars sitting in State coffers. But their surprising advice is a consumption-led boost for growth. Concerned that too much investment is pouring into industry and real estate creating overcapacity and non-performing loans Martin Wolf, finance editor for the Financial Times, argues that Government spending on health, education, welfare and pensions has been "far too timid." Afterall, to pursue such policies you don't have to be a Communist, just a mild social-democrat will do nicely. In addition, Wolf says China needs "greater reliance on consumption," and one way to achieve that is raising the minimum wage in all state owned industry. His views are backed up by a recent report from the Institute for International Economics by Nicholas Lardy titled "China: Towards a Consumption-Driven Path." Joining the discussion from the Yale School of Management Jeffrey Garten calls for a Chinese Marshall Plan supporting the UN's Millennium Development goals to "reduce extreme poverty, improving health and education and ensuring environmental sustainability." Garten wants China to take $100B of its $1,000B in foreign exchange reserves and establish a fund for the Third World. This could be done by giving money to the WTO, Rockefeller Foundation and working with GE and BP for alternative energy. It might come as a surprise that such organizations need money. But of course Western capitalists can always find ways for Third World countries to manage their finances. After devastating social services and creating more poverty neo-liberals now turn to China to help solve their problems. An interesting turn of events, but as hypocritical as the calls may be, the ideas retain their merit.

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