USA for Sale
May 12th, 2006 | By Michael Shedlock | Category: Macro EconomicsBloomberg is reporting, “Transurban Buys Pocahontas Parkway Road for $611 Million”:
“Transurban Group, Australia’s second- biggest toll road owner, agreed to buy Virginia’s Pocahontas Parkway for $611 million, gaining its first U.S. motorway.
“Transurban bought the rights to manage, operate, and maintain the 8.8-mile (14 kilometer) highway known as State Route 895 for 99 years, the Melbourne-based company said in a statement today. Transurban plans to build an extension linking the route to Richmond International Airport in Virginia’s capital.
“Pocahontas is Transurban’s ‘first baby step into the U.S. market,’ said Jason Teh, who helps manage the equivalent of $4.2 billion at Investors Mutual Ltd. in Sydney, including more than 22 million Transurban shares. ‘A lot of the state governments there are running budget deficits, and they need the cash from wherever they can get it.’
“There are $25 billion of private investments proposed for new and existing toll roads in six U.S. states including Virginia, Texas, and Oregon, according to a report last month by the Los Angeles-based Reason Foundation, which advocates for such privatization.
“More Highway Sales
“More U.S. states will sell roads as they seek to raise nontax revenue to pay for repairs to heavily traveled highways and bridges, Merrill Lynch & Co. said in a report in March.
“The firm said 14 U.S. states have enacted laws allowing for toll road, public-private transactions, and five more have introduced legislation permitting it.”
Manufacturing
The Jerusalem Post is reporting, “Dubai Firm Completes US$1.3 Billion Acquisition of Doncasters”:
“Dubai International Capital said Sunday it had completed its acquisition of Doncasters Group Ltd., which operates several U.S. manufacturing plants that make parts for U.S. military vehicles and aircraft.
“The White House approved the US$1.3 billion deal last week after a two-month review satisfied some American lawmakers who earlier blocked a Dubai company’s attempt to buy a British firm that operated several U.S. ports.
“‘Dubai International Capital is pleased to have successfully completed its acquisition of Doncasters,’ said Sameer al-Ansari, company CEO. ‘This acquisition allows Dubai International Capital to move forward with its investment strategy to build a diverse portfolio of direct investments across various industries around the world.’
“The deal followed a fierce and much-publicized battle between The White House and Congress over Dubai Ports World’s bid for control of six U.S. ports.
“Government-owned Dubai Ports World was forced to give up control of six U.S. ports it had bought from Peninsular and Oriental Steam Navigation Co. after that deal provoked concerns over the national security implications of the Arab company running several U.S. ports.”
Swamped With U.S. Dollars
Given our trade deficits and our massive government debt, I wonder what is not for sale. Then again, we refused to allow China to buy Unocal. Given that oil is fungible, it really did not matter one iota who bought Unocal.
The Moscow Times is reporting Russian “Currency Reserves Jump to $225 Billion”:
“Russia’s foreign currency and gold reserves rose to a record $225.7 billion on surging oil and natural gas prices, giving the country cash to pay off its foreign debts early.
“The reserves jumped by $8.6 billion by April 28, the 23rd consecutive weekly gain and the biggest increase since January 2005, the Central Bank said in an e-mailed statement Thursday. The country’s reserves are now the fourth largest in the world, behind China, Japan, and Taiwan.
“Russia is awash with cash from oil and gas after the price of Urals, its main export blend of crude, more than doubled in the last two years.
“The stockpile prompted President Vladimir Putin to say on April 27 that he wants to pay off the country’s debt to the Paris Club of creditor nations ahead of schedule.
“‘We are going to see massive reserve growth over the next few months as Russian oil sold today at these record prices will arrive with a lag of 1-3 months,’ said Peter Westin, chief economist at MDM Bank in Moscow. Westin expects reserves to rise by as much as $6 billion per week over the next few months.
“The country’s reserves have climbed almost 20-fold since 1998, when crude sank to less than $10 per barrel and the government was forced to default on $40 billion of domestic debt and devalue the ruble, sending the economy into recession.
“‘This year, Russia plans to fully repay its debt to the Paris Club,’ Putin said April 27 in the Siberian city of Tomsk, where he was hosting German Chancellor Angela Merkel. Russia paid $18 billion to the Paris Club ahead of schedule last year and has another $30 billion or so to go.”
So Russia is sitting on a huge pile of U.S. dollar reserves. Of course, so are China and Japan. The question is what are they going to do with them? One answer, of course, is to outbid U.S. companies for oil and gas reserves in Canada, Nigeria, and other places. The next answer is to buy U.S. Treasuries, but perhaps they might be getting ready to choke on them. Of course, they could buy overpriced U.S. equities, but then again why not buy U.S. roads and bridges and convert them to toll roads?
Think about how much money we are blowing in Iraq, how much we have blown on the latest Medicaid giveaway, how much our pathetic energy policy has cost us and you have the answer as to why the USA is for sale to the highest bidder.
On that note, the telepathic thought lines are now open. Once again I am flooded with calls. The big question on everyone’s mind is, who else besides Russia?
Who Is Swamped With Cash?
Enquiring minds deserve answers, so let’s take a look.
SmartMoney is reporting, “BRIC Nations Surpass G-7 in Forex, Gold Holdings”:
“Brazil, Russia, India, and China, referred to as BRIC group that currently manifests the world’s highest economic growth rate, have surpassed G-7 countries in their forex/gold holdings for the first time in history.
“As of the end of March, the aggregate holdings of BRIC amounted to $1,292,200 million, according to estimates published on Thursday in Japan’s leading economic newspaper, Nihon Keizai.
“As compared with the state of affairs in this respect as of the end of 2004, the forex/gold holdings of BRIC went up by 40%.
“At the same time, the forex/gold reserves of G-7 countries (Britain, Germany, Italy, Canada, the United States, France, and Japan) amounted to $1,253,900 million, said the paper.
“At present, China accounts for 68% of forex/gold reserves of BRIC countries. However, according to the estimates of Japanese experts, the growth of its forex/gold reserves has slowed down while those of Russia, India, and Brazil now increase by more than 10% a year.
“BRIC countries, the daily wrote, will continue to increase their influence on the world currency market while having a mounting impact on the rate of the U.S. dollar, in particular.”
So the big question is does BRIC buy more gold, silver, copper, and oil, or do they buy more U.S. toll roads, bridges, and ports? Either way, please tell me how the USA wins.
Regards,
Mike Shedlock ~ “Mish”
May 12, 2006
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