The Profitable Dismantling of Civil Society

[marmar]

from AlterNet's PEEK:



The Profitable Dismantling of Civil Society

Posted by Howie Klein, Down With Tyranny! at 3:54 PM on 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 leadership 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 sexy.

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 supports 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 transportation, 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 transportation and water and wastewater facilities, including roads, bridges, tunnels, airport facilities, maritime ports, 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 airports 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 opportunities. 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 airports 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.

...What attracts investors to infrastructure is solid cashflows - user charges and tolls - which provide the opportunity to borrow larger sums to pay for acquisition and investment costs. However, there have been concerns that infrastructure funds have borrowed too aggressively against cashflow, compromising the efficient running of facilities.

And globalization means this travesty won't just be happening in Mumbai... but also in Manhattan. You think the Chinese and Arabs own us now? Just wait. .......(more)

The complete piece is at: http://www.alternet.org/blogs/peek/85271/

[Elspeth]

1. Is there somewhere with this same information without the smarmy bloggy tone?

I'd like to send this to some fence-sitters I know, but the tone would be off-putting. The info is correct, however.