USA for Sale

Bloomberg is reporting, “Transurban Buys Pocahontas Parkway Road for $611 Million”:

“Transurban Group, Australia’s second- biggest toll road owner, agreed to buyVirginia’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-basedcompany said in a statement today. Transurban plans to build an extension linkingthe route to Richmond International Airport in Virginia’s capital.

“Transurban is among companies attracted to the reliable cash flows from tollroads that it estimates will spur some $200 billion of deals worldwide in thenext 10 years. Macquarie Infrastructure Group and Cintra SA got state approvalin March for their $3.85 billion bid for Indiana’s toll road as U.S. statessell rights to their highways to pay debt.

“Pocahontas is Transurban’s ‘first baby step into the U.S. market,’ said JasonTeh, who helps manage the equivalent of $4.2 billion at Investors Mutual Sydney, including more than 22 million Transurban shares. ‘A lot of thestate governments there are running budget deficits, and they need the cashfrom wherever they can get it.’

“There are $25 billion of private investments proposed for new and existing tollroads in six U.S. states including Virginia, Texas, and Oregon, according to areport last month by the Los Angeles-based Reason Foundation, which advocatesfor such privatization.

“More Highway Sales

“More U.S. states will sell roads as they seek to raise nontax revenue to payfor repairs to heavily traveled highways and bridges, Merrill Lynch & Co. saidin 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 legislationpermitting it.”


The Jerusalem Post is reporting, “Dubai Firm Completes US$1.3 BillionAcquisition of Doncasters”:

“Dubai International Capital said Sunday it had completed its acquisition ofDoncasters Group Ltd., which operates several U.S. manufacturing plants thatmake parts for U.S. military vehicles and aircraft.

“The White House approved the US$1.3 billion deal last week after a two-monthreview satisfied some American lawmakers who earlier blocked a Dubai company’sattempt to buy a British firm that operated several U.S. ports.

“‘Dubai International Capital is pleased to have successfully completed itsacquisition of Doncasters,’ said Sameer al-Ansari, company CEO. ‘This acquisitionallows Dubai International Capital to move forward with its investment strategyto build a diverse portfolio of direct investments across various industriesaround the world.’

“The deal followed a fierce and much-publicized battle between The White Houseand 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 thatdeal provoked concerns over the national security implications of the Arabcompany running several U.S. ports.”

Swamped With U.S. Dollars

Given our trade deficits and our massive government debt, I wonder what is notfor sale. Then again, we refused to allow China to buy Unocal. Given that oilis fungible, it really did not matter one iota who bought Unocal.

What is clear is that the United States is for sale, provided we like the buyer.Thank President Bush for cutting taxes while funding a stupid war off budget. Heck, thank the entire Republican Congress. While you are at it, thank thes spineless Democrats for not objecting.

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 onsurging oil and natural gas prices, giving the country cash to pay off itsforeign debts early.

“The reserves jumped by $8.6 billion by April 28, the 23rd consecutive weeklygain and the biggest increase since January 2005, the Central Bank said in ane-mailed statement Thursday. The country’s reserves are now the fourth largestin the world, behind China, Japan, and Taiwan.

“Russia is awash with cash from oil and gas after the price of Urals, its mainexport blend of crude, more than doubled in the last two years.

“The stockpile prompted President Vladimir Putin to say on April 27 that he wantsto pay off the country’s debt to the Paris Club of creditor nations ahead ofschedule.

“‘We are going to see massive reserve growth over the next few months as Russianoil sold today at these record prices will arrive with a lag of 1-3 months,’ saidPeter Westin, chief economist at MDM Bank in Moscow. Westin expects reserves torise 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 sankto less than $10 per barrel and the government was forced to default on $40billion of domestic debt and devalue the ruble, sending the economy intorecession.

“‘This year, Russia plans to fully repay its debt to the Paris Club,’ Putin saidApril 27 in the Siberian city of Tomsk, where he was hosting German ChancellorAngela Merkel. Russia paid $18 billion to the Paris Club ahead of schedule lastyear 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 areChina 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 perhapsthey might be getting ready to choke on them. Of course, they could buy overpricedU.S. equities, but then again why not buy U.S. roads and bridges and convert themto toll roads?

Think about how much money we are blowing in Iraq, how much we have blown on thelatest Medicaid giveaway, how much our pathetic energy policy has cost us and youhave 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 floodedwith 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 currentlymanifests the world’s highest economic growth rate, have surpassed G-7 countriesin their forex/gold holdings for the first time in history.

“As of the end of March, the aggregate holdings of BRIC amounted to $1,292,200million, according to estimates published on Thursday in Japan’s leading economicnewspaper, Nihon Keizai.

“As compared with the state of affairs in this respect as of the end of 2004, theforex/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 $1,253,900million, 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 itsforex/gold reserves has slowed down while those of Russia, India, and Brazil nowincrease by more than 10% a year.

“BRIC countries, the daily wrote, will continue to increase their influence onthe 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 dothey buy more U.S. toll roads, bridges, and ports? Either way, please tell me howthe USA wins.


Mike Shedlock ~ “Mish”
May 12, 2006

The Daily Reckoning