Niall Ferguson and the triumph of the middling

This is, frankly, just an incredible piece of stupidity and all the more reason that people no longer take Newsweek seriously. Here’s the most amazing part…

And then there are the assets that have the potential to be among the most lucrative of all: America’s highways. Plenty of other countries—Japan, Turkey, and even China, to name just three—have already privatized substantial parts of their transportation infrastructure, leaving private companies to manage both revenues and maintenance.

American highways sold to foreign investors? It may sound unthinkable, but it’s already happening. Indiana recently leased the operation of the state’s principal 157-mile highway to a consortium led by the Spanish company Cintra and the Australian investment bank Macquarie. For the next 75 years, the consortium will collect the tolls from motorists. Indiana got $3.85 billion upfront. The city of Chicago has done a similar deal, leasing out its Skyway toll bridge for $1.83 billion. A few other state governments have been moving hesitantly down this same path, usually by setting up public-private partnerships to manage stretches of highway.

But there’s so much more that could be done. California’s government has an estimated $103 billion in assets, including state highways with a book value of $59 billion. Are you telling me a sovereign wealth fund from, say, Singapore couldn’t do a better job of running those choked and often potholed roads?

Any capitalist worth the name will tell you that when things are bad, it’s the absolute WORST time to sell off assets, especially assets that are income producing. But that’s just what Indiana did when they sold off the ITR in 2006. As a result, the taxpayers of the state lost about $1bn over the sale price.

Yeah, while Governor Daniels is crowing about what a great deal the lease was, the math actually works out very badly and shows Governor Daniels to be a terrible negotiator and an idiot with numbers since he apparently can’t understand that the investment group (Macquerie and Cintra) are going to make an extra billion IN ADDITION TO THE MONEY THEY WERE ALREADY GOING TO MAKE. Governor Daniels sold, for $4, an asset that was worth $5 and then beat his chest about what an awesome job he did. That kind of brilliance is exactly what’s wrong with this country. This guy shouldn’t managing a Burger King, let alone a state.

Niall, dear, sweet, stupid little Niall doesn’t even think about any of this. He’s like the idiot son of a wealthy man who has just passed away and is now desperate to unload all the property for cash which he can then use to purchase something more desirable (like hookers. Or cocaine. Or booze). Or the spendthrift who, as soon as times get tough, would rather sell assets rather than increase income.

None of this answers the question… what does the state do to replace that revenue and what happens when the next crisis occurs and all the assets are gone? What happens then? Niall doesn’t answer that question, probably because he’s busy working on something clever to say to Amity Shlaes and Veronique de Rugy when they next see one another at the weekly meeting of the AYN RAND WAS RIGHT ABOUT EVERYTHING AND YOU’D SEE IT TOO IF ONLY REALITY WOULD COOPERATE club.

What will really drive you all crazy is hearing this come from President Obama and certain other Democrats beholden to the investment banks. Ripping off taxpayers ain’t just for Republicans anymore, apparently.

This entry was posted in Economy and tagged , , , , . Bookmark the permalink.

Comments are closed.