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News Link • Corruption

Understanding Government Asset Sales: Oligarchs Move In For The Kill

• EconomicPolicyJournal.com
 
Given how unpopular [Chicago's] parking meter sale has proven to be, and how Rahm is emphasizing “innovation” and “minimizing bureaucratic interference”, can the secret plan he is loath to voice be more infrastructure sales? It’s not hard to see that these deals are going to be the sort of “heads I win, tails you lose” arrangements that bankers are so skilled at cutting with the great unwashed public. If they have no or few caps on fee hikes, the Morgan Stanley example shows that the public will be subjected to increases in charges that bear no relationship to inflation rates or maintenance costs. And if the sellers impose restrictions, the investors can skim on maintenance, or in a worst case scenario, dump the project back on the government body (think even a city like Chicago has a snowball’s chance in hell of getting recompense in that scenario from investors like Allianz or the Abu Dhabi Investment Authority, both of which were major participant in the parking meter deal?). Bottom line, the state and local debt crisis appears to be shaping up to be a bonanza for the politically connected with deep pockets. Under the guise of shrinking government, "infrastructure assets," a/k/a local monopolies, will be sold to these oligarchs who will use the governments to keep out competitors, while they jack up rates.

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