The American Dream
July 6, 2011
July 6, 2011
All over the United States, politicians are selling off key pieces of infrastructure to foreign investors and big Wall Street banks like Goldman Sachs are helping them do it. State and local governments across the country that are drowning in debt and that are desperate for cash are increasingly turning to the “privatization” of public assets as the solution to their problems.
Pieces of infrastructure that taxpayers have already paid for such as highways, water treatment plants, libraries, parking meters, airports and power plants are being auctioned off to the highest bidder.
Most of the time what happens is that the state or local government receives a huge lump sum of cash up front for a long-term lease (usually 75 years or longer) and the foreign investors come in and soak as much revenue out of the piece of infrastructure that they possibly can.
The losers in these deals are almost always the taxpayers. Pieces of America are literally being auctioned off just to help state and local governments minimize their debt problems for a year or two, but the consequences of these deals will be felt for decades.
Sadly, this trend continues to accelerate. Just this week, a bill that will allow the state government of Ohio to proceed with plans to lease the Ohio Turnpike to investors was approved. The state government of Ohio will soon receive a one-time injection of cash and everyone in the area that uses the Ohio Turnpike will end up paying much higher tolls for decades to come.
Highways have also been auctioned off (most of the time to foreign investors) in Indiana, the city of Chicago, Florida, Virginia and Texas.
Amazingly, many politicians continue to insist that selling off pieces of infrastructure that have already been fully paid for by taxpayers is a wonderful thing. In fact, there are actually some politicians that have the gall to call it a “conservative” thing to do.
For example, Rick Perry has been at the forefront of the effort to “privatize” the highways of Texas.
You would think that the people of Texas would have gotten rid of him by now, but considering the fact that he may be running for the Republican nomination in 2012, he just might be our next president.
What makes the selling off of our infrastructure even worse is that big Wall Street banks such as Goldman Sachs are helping our corrupt politicians do it.
In fact, Wall Street sees a tremendous opportunity in the “distressed assets” of our broke state and local governments.
The fact that Goldman Sachs is making millions auctioning off our public infrastructure should make the blood of all red-blooded Americans boil. The following is a brief excerpt from a recent article posted on dylanratigan.com….
On Wall Street, setting up and running “Infrastructure Funds” is big business, with over $140 billion run by such banks as Goldman Sachs, Morgan Stanley, and Australian infrastructure specialist Macquarie. Goldman’s 2010 SEC filing should give you some sense of the scope of the campaign. Goldman says it will be involved with “ownership and operation of public services, such as airports, toll roads and shipping ports, as well as power generation facilities, physical commodities and other commodities infrastructure components, both within and outside the United States.” While the bank sees increased opportunity in “distressed assets” (ie. Cities and states gone broke because of the financial crisis), the bank also recognizes “reputational concerns with the manner in which these assets are being operated or held.”
Why does Goldman Sachs always seem to be at the heart of so many things that are wrong with our financial system?
Unfortunately, Goldman Sachs is not the only one seeking to make a quick buck these days.
Foreign investors in particular seem to have an affinity for pieces of U.S. infrastructure, and Wall Street banks such as Goldman Sachs love to help them gobble it up.
The sovereign wealth funds of nations such as Saudi Arabia, China, Kuwait, Libya, Singapore and the United Arab Emirates are eagerly investing in highways, ports, toll roads and even parking meters all across America.
So precisely what is a sovereign wealth fund?
In a previous article I defined it as “a huge mountain of state-owned money that roams about the countryside looking for assets to gobble up.”
The combination of sovereign wealth funds with huge piles of money to burn and state and local governments that are desperate to raise cash has created something of a “perfect storm”.
In an article for Rolling Stone, Matt Taibbi documented some of the key pieces of infrastructure that these sovereign wealth funds have been gobbling up….
A toll highway in Indiana. The Chicago Skyway. A stretch of highway in Florida. Parking meters in Nashville, Pittsburgh, Los Angeles, and other cities. A port in Virginia. And a whole bevy of Californian public infrastructure projects, all either already leased or set to be leased for fifty or seventy-five years or more in exchange for one-off lump sum payments of a few billion bucks at best, usually just to help patch a hole or two in a single budget year.
As Taibbi noted, the money that is raised from these long-term leases usually only helps fix budget problems for a year or two, but the pieces of infrastructure that are being auctioned off will be in the hands of foreigners for decades to come.
Sadly, much of our own infrastructure is not even built in this country anymore.
For example, a 2,050 foot bridge that is going to connect San Francisco and Oakland is actually being built in China and is being shipped over to the U.S. piece by piece.
This bridge is being constructed by the China State Construction Engineering Group, and according to an article in The Telegraph, they have been building a whole lot of major projects all over the United States….
CSCEC has already built seven schools in the US, apartment blocks in Washington DC and New York and is in the middle of building a 4,000-room casino in Atlantic City. In New York, it has won contracts to renovate the subway system, build a new metro platform near Yankee stadium, and refurbish the Alexander Hamilton Bridge over the Harlem river.
Massive corporations that are either fully or partially owned by the Chinese government are deeply integrating themselves into the U.S. economy.
For much more on this phenomenon, please see a previous article I authored entitled “The Chinese Government Is Buying Up Economic Assets And Huge Tracts Of Land All Over The United States“.
Sadly, as our state and local governments get even deeper into debt, the amount of infrastructure that is being auctioned off to foreigners will continue to grow.
Most Americans don’t realize how desperate many state and local governments have become. For example, things have gotten so tight that New York City is now actually rationing toilet paper at Coney Island.
The United States is drowning in debt from coast to coast and pieces of the country are literally being auctioned off. The looting and the “privatization” are only going to intensify as our state and local government debt problems get even worse.
Perhaps on all future maps of the world we should just put a big “for sale” sign on the United States.
What in the world has happened to this country?