Posted on 06/27/2010 9:05:52 AM PDT by Willie Green
Back then, roads were built mainly by privateers who charged tolls for their use.
Unfortunately, the folks who used the roads found all sorts of interesting routes to circumvent the toll booths. Which, of course, caused many privateers to go bankrupt.
The truth is, those "private" toll roads were never intended to operate at a profit at all.
In the absence of any formal government highway agencies or departments if of public works, they were merely a legal mechanism for regional business interests to pool their resources in pursuit of a common goal that would provide economic growth.
They expected to profit from growth of their other businesses, not from the highway itself.
There's one major problem. In Texas, they are doing away with manned tollbooths. Either get a Tolltag or EasyPass, or they run a tab at a higher rate, and mail you a bill for the tolls and processing fees.
Then, of course, you lower speed limits on the paid roads to 50 or 55, and put it at 70 on the toll roads.
Slap lots of properly timed (to catch drivers) red lights, enforced by cameras, on the parallel surface streets.
Before you know it, the toll agency is rolling in money.
Transportation Bonds----that means two things: (1) mountainous taxpayer debt, and, (2) endless profits for bond sellers like Goldman Sachs.
COMING TO A TOWN NEAR YOU Mother Jones magazine, circa Feb 2007, reported on the activities of Mark Florian, Chief Operating Officer of Goldman Sachs' municipal finance division. According to the report, Florian was traveling to statehouses across the US to convince state officials that selling state assets would be "mutually beneficial." One of the scams involved "monetizing state roads. NOTE WELL: Monetizing means G/S bonding (AKA taxpayer debt)----which earns $billions for G/S til the end of time.
BACKSTORY Then-NJ Gov Corzine (ex-Goldman head) stationed Goldman Sachs functionaries in state government as the issue of road monetization surfaced. Corzine hired four G/S buddies, including G/S alumnus Bradley Abelow as state Treasurer. Corzine took a road show across the state to sell the monetization deal. However, monetizing NJ roads hit a large pothole and collapsed like a flat tire---b/c taxpayers were onto the G/S bonding-debt scam.
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REFERENCE Goldman Sachs opened an office in Princeton NJ 2006 when Corzine was elected governor (the better to loot the NJ Treasury).
Goldman Sachs Hedge Fund Partners
701 Mount Lucas Rd
Princeton, NJ 08540-1911
G/S Hedge Fund Partners advertises it seeks investments in traditional infrastructure sectors including transport infrastructure such as "monetizing" toll roads, airports and ports as well as "monetizing" regulated gas, water and electrical utilities.
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GOOD FOR GOLDMAN, BAD FOR AMERICA (G/S the major toll collector on govt's red-ink railroad)
BY TERRY KEENAN, anchor of Cashin' In, Fox News Sat 11:30 AM.
EXCERPT 7/19/09 G/S morphed into a commercial bank to take advantage of gov't handouts, yet Goldman is really a hedge fund on steroids, with trading accounting for 69% of gross revenue in the first quarter, a big chunk of its trading involves US govt debt -- federal, state and local. G/S has a huge vested interest in the US digging a deeper and deeper hole. Trading govt IOUs is big business.....one of the few growth markets on Wall Street.
IPO's, M&A's, etc, have yet to recover but the US will borrow a record $3.25 trillion in the current fiscal year -- four times as much as in 2008.
With its biggest competitors out of business, G/S is a major toll collector on Washington's red-ink railroad, a "debt tsunami" that will lift Goldman's fortunes. G/S plays on the bankrupting of America -- the more we borrow, the more they make........
........but the American public should know this side of the G/S profit miracle. Through savvy trading and management, G/S set aside $11.4B this year to compensate its employees on a playing field cleared of its top competitors and soon after Uncle Sam bailedout G/S with $10B TARP -- and millions more through AIG, all paid for by taxpayers.
G/S benefits nicely from the govt borrowing binge that was triggered in part by the banking crisis that started in Wall Street's own backyard.
SOURCE http://www.nypost.com/seven/07192009/business/good_for_goldman__bad_for_america_180130.htm
“” IPO’s, M&A’s, etc, have yet to recover but the US will borrow a record $3.25 trillion in the current fiscal year — four times as much as in 2008.
With its biggest competitors out of business, G/S is a major toll collector on Washington’s red-ink railroad, a “debt tsunami” that will lift Goldman’s fortunes. G/S plays on the bankrupting of America — the more we borrow, the more they make........
........but the American public should know this side of the G/S profit miracle. Through savvy trading and management, G/S set aside $11.4B this year to compensate its employees on a playing field cleared of its top competitors and soon after Uncle Sam bailedout G/S with $10B TARP — and millions more through AIG, all paid for by taxpayers.
G/S benefits nicely from the govt borrowing binge that was triggered in part by the banking crisis that started in Wall Street’s own backyard. “”
Goldman Sachs doesn’t refer to the White House as their “ D.C. office” for nothing ;-)
Hope you had a good weekend, Liz.
L O L !!
From Judge Dismisses Charges in Major 'Swaps' Case - WSJ, 2010 June 25, by Kara Scannell
and SEC Loss Shows Difficulty of Insider-Trading Cases - WSJ, 2010 June 28, by Kara Scannell
In a 122-page opinion, U.S. District Judge John Koeltl rejected key components of the SEC's case against Deutsche salesman Jon-Paul Rorech and Renato Negrin, a manager of the Millennium hedge fund. The SEC sued both men, alleging they shared confidential information about a debt restructuring and then traded swaps, a type of derivative, based on that information. The defense maintained no inside information was exchanged. ..... The case represented the SEC's first attempt to extend its reach beyond stock and other securities and into the murky field of swaps and other derivatives contracts. ..... During a bench trial, the SEC and defense lawyers put on a number of Wall Street witnesses, including two defendants, who described how information is shared among potential bond investors and traders. ..... "While the SEC attempts to attribute nefarious content to those calls through circumstantial evidence, there is, in fact, no evidence to support this inference and ample evidence that undercuts the SEC's theory that the defendants engaged in insider trading," the judge wrote. ..... When the Securities and Exchange Commission charged two Wall Street executives with insider trading in credit-default swaps and produced tape-recorded phone calls in which they were sharing information about a possible deal, it appeared the case was a crucial moment in the agency's twin crackdowns on insider trading and derivatives. The SEC's defeat in the case, in which the judge said the regulators offered "no evidence" that inside information was passed between the two defendants, is a blow to the agency as it goes after far bigger names from Goldman Sachs Group Inc. to hedge fund Galleon Group. ..... A federal judge dismissed a high-profile insider-trading case against a Deutsche Bank salesman and hedge-fund trader, finding the Securities and Exchange Commission offered "no evidence" to support its allegations.
I don't know how SEC can possibly lose the lawsuit against Galleon - that is such out and out crooked deal, even the SEC should be able to win it blindfolded... There are also criminal investigations in the Galleon case.
However, this DB trial gives Goldman Sachs an even stronger hand in their settlement negotiations with SEC. At the same time SEC's lawyers may feel relieved from political pressure to either take GS to trial or settle with Goldman on terms favorable to government (i.e., "to punish" Goldman and make PR example of it) and may now be more incentivized to settle on Goldman's terms. After all, that phony lawsuit was brought mainly for "tough" PR, right in advance of "Wall Street" FinReg "reform"; the DB decision may allow SEC to "save face" and bow out "gracefully" with Goldman, while still managing to declare "win" in the case.
Yes, so I have heard. However, that line of reasoning does not pass close scrutiny:
Even the very name "toll road" implies pursuit of a profit via tolls, not businesses.
If toll roads were never intended to operate at a profit, then there would never have been a reason to charge a toll in the first place.
Furthermore, if the privateers who financed and built the toll roads were interested only in the economic opportunities which the roads were to supply via an increase in business traffic, then, again, there would be no need to charge a toll.
In the book "A Patriots History of the United States," Dr. Larry Schweikart and Dr. Michael Allen state the following:
"More typical of road construction efforts was the Lancaster Turnpike, connecting Philadelphia to Lancaster, and completed in 1794 at a cost of a half million dollars. Like other private roads, it charged a fee for use, which tollhouse dodgers carefully avoided by finding novel entrances onto the highway past the tollhouse. Hence, roads such as this gained the nickname "shunpikes" for the short detours people found around tollhouses. The private road companies never solved this "free rider" problem. While the Pennsylvania road proved profitable for a time, most private roads went bankrupt, but not before constructing some ten thousand miles of highways." [pg.'s 209-210]
You see, if the roads were never intended to turn a profit, then there would be no reason to worry about "free riders" and most private toll roads certainly would not have gone bankrupt; having turned a profit from, as you say, "growth of their other businesses."
Additionally, if the private owners of these toll roads never actually expected them to turn a profit, then they obviously would have set up a "road maintenance pool" in which all businesses profiting from the increase in traffic would have to pay into it in order to keep the roads maintained and open for even more traffic. The businesses would then just defray these costs by passing them onto their customers, hence negating any need for revenue garnered via tollhouse collections.
Therefore, I reject the popular notion that private toll roads were never intended to operate at a profit. I believe it to be just a myth.
But, that's just me.
Cheers
This is a great book WRT CDS’s, and CDO’s, that brought down the economy: “The Greatest Trade Ever,” by Gregory Zuckerman.
Tells of a small group who made hundreds of millions and billions by betting the sub-prime mtge industry would go bust. The billionaire is now a candidate in Florida.
Canary in the coalmine.
Therefore, I reject the popular notion that private toll roads were never intended to operate at a profit. I believe it to be just a myth.
But, that's just me.
That's OK.
In the overall scheme of things, it doesn't really matter whether they intended to profit or not. The lesson to be learned is that the venture went belly-up and had to be absorbed by the government if we wanted paved roads.
Transportation infrastructure is a market where the private sector FAILS.
Government should provide the infrastructure for the private sector to use because the private sector cannot do it itself.
I got no problems with it. Works for me!
Agreed.
Cheers
I have posted several articles here how John Paulson and a few others made a killing on CDSs and made George Soros' English Pound trade look chumpy, but it wasn't enough to know about CDSs, it wasn't easy to get to trade them.
From book reviews After the fall, the autopsies - B, 2009 November 09, by Jay Palmer, reviewd by Ann C. Logue
It's been a year since the markets started to crash and the global economies stumbled, but the autopsies are now coming out in a flood of books by prominent financial writers. In two of the first, we have the battle of newspapers (Wall Street Journal reporter Gregory Zuckerman versus New York Times scribe Andrew Ross Sorkin) -- and the battle of the unrelated Paulsons (hedge-fund manager John, who made a killing in the crisis and is central to Zuckerman's book; and Treasury Secretary Henry, critical to the big picture laid out by Sorkin). Both books are highly readable, although neither answers the eternal question in finance: Are those who came out on top lucky or smart? Zuckerman's entry, The Greatest Trade Ever, starts with the housing bubble. He tells the story of several people who shorted the mortgage market through credit-default swaps. They certainly weren't the first to realize that the U.S. housing market had gone insane, but they were the few who figured out how to use complicated derivatives contracts to profit from the coming disaster. John Paulson was the standout in that crowd. He knew that there had to be a way to make money from the sheer stupidity going on all around him. One of his analysts, Paolo Pellegrini, realized that it could be done by buying credit-default swaps, which were insurance contracts that would pay off if the mortgage-backed securities that they covered went into default. Paulson used his track record and connections to raise the money he needed to make a big commitment to the market, pocketing $20 billion from 2007-08 -- when Bear Stearns collapsed. Paulson isn't the only investor in the book, but he's the one who made the most money with the least amount of stress. Andrew Lahde, another hedge-fund manager who made out with credit-default swaps, worked out of his rent-controlled apartment in Santa Monica, Calif.. Lahde was 35 and had been fired from a larger fund because of his bad attitude. He, too, was able to bring in some investors, but only enough to make millions. Paulson clearly had a leg up on the likes of Lahde. Because he operated a good-sized institutional fund, brokers not only returned his calls; they also called him. A friend of Paulson's, Jeffrey Greene, had major headaches getting approved to trade credit-default swaps as an individual investor, even though he had a good-sized fortune and deep knowledge of the real-estate business (showing that even an individual with millions to invest is small potatoes in the brokerage world). The problem described in The Greatest Trade Ever is that identifying market inefficiency isn't the same thing as eliminating it. Bubbles can exist for a long time; even if everyone knows that there is no way people can afford the new McMansions going up in their neighborhoods, they may simultaneously believe that real estate always goes up in value. Only a rare few may have the resources and timing -- through skill, luck or both -- to see to the heart of the matter and to win big.
WHEN MICHAEL JACKSON DIED, THE OBITS and career memorials made it into the papers, magazines and glossy coffee-table books within days, weeks and months. The near-death of capitalism takes a little longer to analyze.
Sorkin starts out with the rapid decline of Lehman Brothers. Company executives wear designer suits, pose for photos in glossy magazines, commute by private helicopter and figure that any problems facing their firm will somehow be solved. But Lehman can't find a merger partner or financing in time to avoid failure, and Treasury Secretary Henry Paulson decides to let the company go under. *
It turns out that Lehman Brothers wasn't too big to fail. It was the perfect size: large enough to slay the "moral hazard" that led to lax risk management on the Street, but small enough that its failure wouldn't create a catastrophe.
The firm had the connections that in ordinary times would be helpful, but in this case worked against it: Henry Paulson's brother Richard worked in Lehman's Chicago office; George Bush's brother Jeb was a paid advisor to the firm, and their cousin George Walker ran the investment-management business. The political fallout from survival could have been more radioactive than the fallout from failure.
When I first saw Too Big to Fail, I dubbed it Too Big to Read. Even if you deduct the index and notes from the tally, it's still a chunky 624 pages. However, Sorkin's writing is clear, so the story moves right along. The pace is downright frenetic at the end, as everyone tries to prevent calamity on too little sleep and too many catered sandwiches.
They know all too well how high the stakes are. Henry Paulson leaves meetings to vomit. Rob Kindler of Morgan Stanley is unshaven and in flip-flops when he greets the well-dressed executives of Mitsubishi UFJ with their $9 billion check. George W. Bush, president of the United States, and Robert Willumstad, CEO of AIG, struggle to understand what the heck is going on. The limits of the financial system smack into the limits of human endurance.
Plenty of other books about the crisis are starting to appear, such as On the Brink, by Henry Paulson himself; Sellout, by CNBC's Charles Gasparino; How Markets Fail, by New Yorker writer John Cassidy; and The Big Short, by Michael Lewis of Liar's Poker fame.
All will tell tales of hubris, greed and denial. In the two reviewed here, everyone assumes that someone else will be the greater fool -- but only a few of these folks were right about that. Goldman Sachs may have been at the tippy-top of the Wall Street pyramid, but the firm needed Warren Buffett to bail it out. Buffett came through, even delaying a trip to Dairy Queen with his grandchildren to do so.
Who was lucky and who was smart remains unclear. Zuckerman's protagonists are portrayed as misfits. Were they finally in the right place at the right time? Or were they smarter than the folks at the big banks who believed that real estate always makes money? The top executives of the top banks in Sorkin's story had amazing résumés that implied that they were smart. Were their educations of little value, or were these unfortunates simply up against unprecedented bad luck?
One of the ironies is that the analysts and investment bankers are quick to tell clients how to run their businesses, even though they can't run their own. People in the business of valuation couldn't price the risk in mortgage markets; the executives who charge huge fees to advise companies on mergers couldn't manage their own deals.
Andrew Lahde sent an e-mail to his clients that turned into a hot Internet memo. "I was in this game for the money," he said. "The low-hanging fruit, i.e., idiots whose parents paid for prep school, Yale, and then the Harvard MBA, was there for the taking." It doesn't matter if Lahde was lucky or smart. He's retired.
* In his later book, Henry Paulson claimed that there was an agreement to sell Lehman to U.K.-based Barclays Plc., but that British government delayed the buyout for review. "The British screwed us!" Hank Paulson told the U.S. bankers the next day when Lehman had to file bankruptcy. Paulson Says He Was Prepared to Guarantee Lehman - FR / BL, 2010 January 29
We are witnessing the trillion dollar implementation of the most efficient political machine since the halcyon days of 1940's era Europe. Obama's slush funds are strengthening the Democrat Party. All of his official acts are designed to handout bailout monies to insiders who kickback contributions to THE DEM MACHINE.
1/29/10-----Paulson Says He Was Prepared to Guarantee Lehman. In his book, Henry Paulson claimed that there was an agreement to sell Lehman to UK-based Barclays Plc., but that the British govt delayed the deal. "The British screwed us!" Hank Paulson told US bankers the next day when Lehman had to file bankruptcy.
Watta a basshole this guy is. As Bush's Treasury Secretary Henry Paulson (former Goldman CEO) first suggested the “$750 billion” bailout. Paulson stationed his G/S right hand man Neel Kaskari to (cough) oversee $750B TARP payouts. We still do not know in which G/S rathole these two secreted the $750B.
Paulson threatened US Senators with Martial Law if they did not vote him the bailout billions. This depraved G/S Pig---Paulson---demanded the TARP be exempt from judicial, legislative, and regulatory review. $750B disappeared without a trace---and NO significant effect on the economy.
US Sen. Jim Inhofe (R-Oklahoma) said that Congress was not told the truth about the $700 billion bailout. "The American people don't know how much money Treasury Secy Henry Paulson has given away to anyone. IT COULD BE TO HIS FRIENDS. We don't know. There is no way of knowing.''
Later, Paulson told Congress bailout billions would be used for one purpose then the foxy, wily Paulson changes horses in midstream and decides to use the billions for something else.
The heck with Congress enacting the bailout law for one use. Paulson personally decides he and the G/S guys will use it for "something else."
As US citizens line up at soup kitchens and sell apples on street corners, Paulson, Kashkari, and the G/S frat boys are cashing in bigtime......numbered offshore bank accounts, "parking" bailout billions at Goldman Sachs and other Wall Street entities; wire-transfers must be going 24/7.
The late economist John Kenneth Galbraith blamed Goldman Sachs policies for causing the Great Depression of '29. In his book, The Great Crash, 1929, Galbraith, a key figure in JFK's admin, an entire chapter titled “In Goldman, Sachs, We Trust,” details the “large-scale corporate thimblerigging” that Goldman and other Wall Streeters practiced in the 1920s.
G/S frat boys at the highest levels of govt are now pulling the levers of power. Watching them operate, we know Goldman types promote their own interests relentlessly...........the rest of us be damned.
G/S insiders are pocketing as fast as they can----making motions to bail out the crooks who contributed to the economy's meltdown is part of the exercise in greed. Even Pres Bush was willing to give the USofA away to Paulson and Bernanke.
" Golly Ben, bailing out hedges and other greedsters is hard work."
"Keep bailing, Paulson."
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