The Profitable Dismantling of Civil Society
Posted by Howie Klein
Down With Tyranny!
May 13, 2008.
Public infrastructure is deteriorating and Wall St. stands to profit
from it.
Yesterday Scholars & Rogues featured a pretty ominous look at the
serious deterioration of basic American infrastructure. The author,
Dr. Denny, points out that our otherwise preoccupied government is
normally only moved to action by catastrophes-- like the deadly bridge
collapse in Minneapolis last year. So that bridge is nearly fixed.
They're waiting for a spate of disasters before they do anything
preventive. They may not have to wait long and we have far more than
"failing bridges to find, fund and fix." Dr. Denny is left cold by the
leader****p abilities of the current presidential candidates to lead us
successfully through a real crisis. Just to keep up, the U.S. would
need to spend $225 billion per year for 50 years-- $11 trillion.
McCain definitely has a couple wars he'd rather wage. But the
country's infrastructure-- not just roads and bridges but also dams,
sewage systems, drinking water systems, air traffic control, nuclear
plants, electricity transmission lines, levees...-- gets a grade of D.
Unfortunately, national politicians don't usually find infrastructure
***y.
Wall Street does, I found out on the radio yesterday. Tens of billions
of dollars are coming out of the firms that brought us the real estate
and mortgage collapse and going into buying up infrastructure. Alarm
bells went off when I heard that the sleazy GOP vulture capital firm
Carlisle Group-- whose real estate arm went belly up recently-- is
buying up sewer systems and roadways. And they're only one of many.
Republicans want to reduce taxes and let the infrastructure go to hell
so that the public sup****ts selling it all off to for-profit
companies. Democrats are too cowed to stand up for government
functions that have been delegitimized by greed obsessed Republicans
(and Blue Dogs and DLC Democrats). So... on to the predators. Today
Morgan Stanley-- and I assure you a more unscrupulous and cut throat
firm you will never find-- announced that it has raised $4 billion to
target investments "that provide public goods or essential services in
sectors such as trans****tation, energy and utilities, social
infrastructure and communications." Global Infrastructure Partners
(General Electric and Credit Suisse) have capped their infrastructure
fund yesterday at $6.5 billion. A new Carlyle subsidiary, Carlyle
Infrastructure Partners, formed specifically-- and under heavy
political protection-- to rip off American taxpayers and ratepayers is
investing $1.5 billion in trans****tation and water and wastewater
facilities, including roads, bridges, tunnels, air****t facilities,
maritime ****ts, transit projects and other public benefit
infrastructure in the US and Canada. Henderson Investors, CVC Capital
Partners, Macquarie (Australia), Rreef, Citigroup, Ferrovial (Spain),
Goldman Sachs, J.P. Morgan and Alinda are all up to the same thing.
Infrastructure assets such as utilities, toll roads and air****ts are
attractive to financial bidders like banks and pension funds because
of their stable cash flow despite having lower growth rates than other
private equity op****tunities. GE had disappointing first-quarter
earnings, but its infrastructure segment performed better than
expected.
The money being ante-ed up for infrastructure projects by private
capital is at historically high levels.
New roads, railways, oil pipelines, hospitals and schools: the world
is an infrastructure financier's oyster. In Mumbai, for instance,
there are plans to build an extension of the city to house 15 million
people - nearly double the size of London's population. One UK banker
who returned from there last week said: 'I left London depressed at
the state of the markets. Going there, you see that there are people
making huge sums of money.'
Even in the developed world, there are signs that we do not have the
infrastructure to cope with continued economic and population growth.
Blackouts, road congestion and capacity problems in air****ts and on
railways are commonplace in both the US and Europe. In addition, an
ageing population means different kinds of healthcare facilities are
needed.
The question is: how are these essential building blocks going to be
financed? There has been a decline in governments' willingness or
ability to pay for new facilities in the past 15 years. Among the
developed countries, government outlays on capital projects fell from
9.5 per cent of overall spending in 1990 to 7 per cent in 2005,
according to the OECD.
Increasingly, it is the private sector that world leaders now rely on
to fill the funding gap.
http://www.alternet.org/blogs/peek/85271
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