The markets snatched back the 64 points it shed yesterday for apparently the same reason it lost them…none.
In other news the SEC has slapped ‘the tanned one’ (Angelo Mozillo) with a civil suit alleging securities fraud and insider trading. When Martha Stewart got busted for insider trading, she spent, what, 6 months in the pokey at ‘Camp Cupcake’ with another six months wearing an electronic monitor that ‘ensured’ her compliance with house arrest.
I just heard this on the news tonight and they’re (the media) already saying the case will be ‘settled’ without ever seeing the inside of a courtroom. What’s the danger Angelo might ‘inadvertently’ implicate any of his co-conspirators?
If he has the goods on anyone of consequence, (and we already know he does) the case will never see the inside of a courtroom.
Ah yes, ‘justice, American style’.
That also aside, we arrive at tonight’s offering where I will positively state that to date I have yet to reap a single benefit from either de-regulation or privatization.
The price of every ‘de-regulated’ service/utility has tripled in cost from what it was before de-regulation and my tax bill has yet to be ‘lowered’ by government out-sourcing/off-shoring.
Politics and the Financial Crisis Slow the Drive to Privatize
By LESLIE WAYNE
Published: June 4, 2009
It was hailed as a win-win for Main Street and Wall Street — a way for states and cities, along with financiers [And crooked politicians], to make some money.
A $2.5 billion plan to privatize Midway Airport in Chicago collapsed in April after investors were unable to obtain debt financing.
But now privatization, the selling of public airports, bridges, roads and the like to private investors, looks like a boom that wasn’t. Deals are collapsing. Airy hopes of quick profits are vanishing. And what was celebrated as a new wave in finance is, for the moment, is barely making a ripple. [Understand good citizen these operations were publicly owned, revenue producing, taxpayer funded projects that, um, desperate (criminal) politicians were willing to sell for a one time quick hit, forcing the public to pay for them in perpetuity.]
What happened? The financial crisis, for starters. The easy money that Wall Street was counting on to finance its purchases has largely disappeared. Then the Obama administration unintentionally damped interest with its $787 billion economic stimulus package, a windfall that local governments are now racing to spend. [Um, ‘racing’ isn’t the word I’ve seen used when it comes to ‘stimulus spending’.]
Bankers concede they got a bit ahead of themselves. When times were good, investment banks and private investment funds raised billions of dollars in hopes of buying infrastructure. But many state and local governments resisted selling because of money, politics or both. [The sale of infrastructure never works out well for the people saddled with paying a private entity to use. Worse, ‘user fees’ rise while maintenance goes undone.]
Some deals turned out to be less lucrative than these would-be sellers had hoped. Government officials also began questioning whether taxpayers would be better off if infrastructure were in private hands. After Chicago sold its parking system to a private operator, for instance, drivers had to feed meters with as many as 28 quarters to park for two hours. [Private industry buys these ‘assets’ as ‘cash cows’, it’s not their job to ‘serve’ the public.]
“We will see a few transactions,” said Fred Pollock, a vice president at Morgan Stanley Infrastructure, a private equity fund. “But we know what we won’t see — a tidal wave of projects.”
Some big names still want to enter this business, among them Citigroup, Goldman Sachs, Morgan Stanley and Kohlberg, Kravis & Roberts. Such investors have raised about $180 billion for global infrastructure projects. Large funds have also been established in Australia, Britain and Bahrain, where such public-private partnerships are more common. More than 20 states enacted legislation in recent years to allow some form of private-sector investment that would help fill budget gaps and [hopefully] repair crumbling roads, bridges and even airports. [After the deal is signed and sealed, the buyer would be under no obligation to maintain their newly acquired ‘investment’. Nor can they be told how much to charge in ‘user fees’.]
But now the deals are falling apart. In April, a much-anticipated $2.5 billion plan to privatize Midway Airport in Chicago collapsed after a group of investors was unable to obtain debt financing. The deal, which had been in the works for four years, was to have been the first in a Federal Aviation Administration project that would have allowed up to five major airports to move into private hands.
Midway was just the latest setback. The biggest was the failure last fall of the largest deal proposed to date — a $12.8 billion lease of the Pennsylvania Turnpike to an investor group headed by Citigroup and a Spanish investment firm. Postmortems into that failed effort show that privatization advocates vastly underestimated the political opposition the deal would stir up in the Pennsylvania legislature.
Late last month plans to privatize “Alligator Alley,” a 78-mile stretch of Florida highway that connects Fort Lauderdale with Naples, collapsed when no bidders showed up. The failure has had a ripple effect — in Mississippi, state officials have pushed back the bidding schedule for a new 12-mile toll road.
Then there is the $1.2 billion privatization of 36,000 parking meters in Chicago. In the five months since the deal took effect, widespread complaints about poor service and rising parking rates have created a political firestorm for the Chicago City Council. Public opposition was so strong that on Wednesday the council approved a delay in voting on any future asset sales. [How much do you suppose 36,000 parking meters bring in over the course of a year? At $7 for two hours, a single meter would rake in $17,885 dollars a year. 36,000 of them would haul in over six hundred million dollars a year! So the ‘contract’ will pay for itself in two years.]
Chicago public officials have called the work of the private operator, Chicago Parking Meters L.L.C., “simply unacceptable.” For its part, the operator has apologized and announced it would delay price increases at the meters. [The generous pricks! Apparently $3.50 an hour ‘isn’t enough’! Left unsaid here is who gets the revenue from illegally parked vehicles and if the fuckers run their own fleet of tow trucks?]
Proponents of public-to-private asset sales point to the $1.8 billion lease of the 7.8-mile Chicago Skyway in 2004 and the $3.8 billion raised by Indiana through a 75-year lease of its toll road in 2006 as successful pioneering efforts. [Successful, for who we might wonder? We just saw how the Chicago parking meters ‘amortized’ themselves in just two years…we can only suspect something similar from the toll road.]
In Indiana, the money went to pay for a 10-year highway infrastructure program, and Gov. Mitch Daniels was re-elected last year promoting the lease, despite bumper stickers that read “Keep the Toll Road, Lease Mitch.” [Given my deep distrust of ‘popular elections’ we can only wonder if part of the purchase agreement was guaranteeing Mitch’s re-election…]
The stimulus money, as well as other infrastructure money promised by Congress, has provided temporary relief for cash-poor municipalities. But this situation will not last forever. [Worse, once the ‘income stream’ provided by these resources is gone, these municipalities will be out of luck when it comes to additional funding, so they’ll have to raise taxes!]
“They still have expenses, and revenues will not keep up,” Scott Pattison, executive director of the National Association of State Budget Officers, said of state and local governments. “Some states will have to look at asset sales and decide. Once we step back from this crisis mode, I think they will be looked at again.”
If the market revives, the problems that scuttled recent deals may provide some lessons. In the case of the Pennsylvania Turnpike, politics clearly played a role in the deal’s collapse. A study by the Pew Center on the States found that proponents of the deal had overpromised what the turnpike could fetch and had failed to make it clear where the money would go.
After indicating that the turnpike might be valued at as much as $26 billion, when the winning $12.8 billion bid came in lawmakers felt it looked too small. Even more, there was concern that the money would be squandered and that the state was putting a valuable asset into foreign hands, since the top bidder included a Spanish company.
“It simply wasn’t a sufficient bid by a long shot,” said Joseph F. Markosek, a state legislator and head of the Pennsylvania House Transportation Committee.
Similar sentiments are coming into play in Florida, where few had expected Alligator Alley to be leased. “I believe the private partnership is like fool’s gold,” said David Aronberg, a state senator in south Florida who has led the fight against privatization. “It only looks good from afar.”
I know it isn’t but it should be criminal for a politician or a group of politicians to sell public property, especially revenue producing public property without voter approval.
Fortunately for several states, the ‘grassroots’ took action, putting a stop to what can best be described as ‘grand theft’.
Our political system is FUBAR to the point where even things like ‘term limits’ produce ‘negative outcomes’.
If we are to save our civilization we need to quite literally ‘purge’ the upper levels of society from our midst. They have proven time and again that they are too ‘self-serving’ to live among us, never mind rule over us.
It has become obvious that a college education cannot impart wisdom, bestow intelligence nor insure honesty from the holder.
Worse, a college degree has been reduced to a ‘pedigree’ as it only serves to mark the holder as a member of the elite…if it’s from the ‘right’ college.
Is everyone that has a college degree ‘evil’, of course not…but sadly they are the most likely to be unable to recognize evil when they encounter it.
Thanks for letting me inside your head,
Gegner, the 9th grade ‘dummy’.
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