The latest enthusiasm for at least partially privatizing infrastructure assets came on July 30 from New York Gov. David Paterson, who is trying to plug a budget deficit caused in part by lower tax revenue as Wall Street retrenches.

“We’re just looking at ways to be more efficient and that’s why I used the term public-private partnerships — trying to find some creative solutions,” Paterson said. “The reason I’m avoiding taxes is because I think taxes are addictive.”

Bankers and others in the industry say there is pent-up demand from dedicated infrastructure funds and public pension funds to invest in hard assets — perhaps $75 billion to $150 billion of equity capital — but not enough supply.

“Economic conditions are tough, and are going to be very harsh on the performance of state budgets in 2008 and 2009,” said Greg Carey, co-head of infrastructure banking at Goldman Sachs Group Inc (GS.N: Quote, Profile, Research, Stock Buzz). “States are looking for long-term solutions in running businesses. A public-private partnership is a tool in their toolboxes.”

…For Wall Street, infrastructure can be a bright spot at a time of deep job cuts and expected declines in bonuses.

“We’ve seen an unprecedented number of headhunters recruiting for positions on the buy and sell sides,” said Rob Collins, head of Americas infrastructure banking at Morgan Stanley (MS.N: Quote, Profile, Research, Stock Buzz). “Infrastructure investing can be counter-cyclical to economic trends.”

John Ma, the other Goldman infrastructure chief, added: “We’re very committed to this space. Our business activity has increased dramatically, even this year.”

…ALTERNATIVE TO TAX HIKES

According to the nonprofit Center on Budget and Policy Priorities, 29 U.S. states plus the District of Columbia may face a combined $48 billion of budget deficits in fiscal 2009.

But politicians might be loathe to cut spending or raise taxes at a time mortgage debt, $4-a-gallon gas and rising food prices leave consumers — of whom many vote — dispirited. Tapping public debt markets might also be too costly.

…Critics say some infrastructure transactions are short-term budget fixes that deprive governments of steady cash streams from taxpayer-funded assets. There is also the risk that private operators won’t do their jobs well.

Advocates of privatization say entities might do better managing assets than a government answering to voters.

Politicians could also get a boost if they can take credit for reinvesting sale or lease proceeds in needed projects.

“The argument for a public-private partnership is the private sector is a lot smarter about paying attention to costs, and because it has skin in the game will be more attentive to maintaining an asset over its life,” said Joseph Giglio, a privatization expert and professor at Northeastern University’s College of Business Administration in Boston.

“Elected officials often shortchange funding of maintenance because they don’t want to increase user fees or taxes to pay for it,” Giglio added. “Their election cycle is four years. They can pass it on to someone else’s watch.”

Collins, who also advised Pennsylvania on the turnpike, said infrastructure can also go beyond roads and airports. He said Morgan Stanley is advising Akron, Ohio, on exploring the leasing of its wastewater system, and Indiana on the possibility of private management for its state lottery.

“Lotteries have infrastructure characteristics in that they have stable cash flows and high barriers to entry,” he said. “They could even attract private equity investment because they are self-financeable and require minimal capital expenses.”

…At Goldman, Carey and Ma replaced Mark Florian, who is moving to First Reserve Corp, a private equity firm specializing in energy, a person close to the matter said.

Goldman itself raised a $6.5 billion infrastructure fund in 2006, and is reportedly trying to raise a $7.5 billion fund.

Morgan Stanley raised a $4 billion fund in May. Global Infrastructure Partners, a joint venture between Credit Suisse Group AG (CSGN.VX: Quote, Profile, Research, Stock Buzz) and General Electric Co (GE.N: Quote, Profile, Research, Stock Buzz), raised a $5.6 billion fund the same month. Private equity firm Carlyle Group CYL.UL last year raised a $1.15 billion fund.

http://www.globalresearch.ca/index.php?context=va&aid=9736
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I think it would be a big mistake to allow the same folks, like Goldman Sacks-USA, who are responsible for the current economic crisis to start buying up and controlling U.S. infrastructure. This is another step toward transferring control of U.S. assets into private hands. And where will companies like Goldman Sacks-USA get the money to do this? U.S. taxpayers? TARP? I have tried to bring this issue up with my political reps, so far, none have stated where they stand on the issue of whether or not to privatize U.S. infrastructure.

at a certain point in their discussion she used the idea that the approach they call socialist or left wing is a utopia idea. nobody called her on it and asked “isn’t the free market a utopia idea?” aren’t the economic theories favored by wealthy elite all striving towards a perfect system with no taxes and regulation? rove and this sweet rep on oprah both make their trade pushing the needed propaganda and public outreach to sustain our current economic power structure. how’s christmas fellow citizen?

and i’ll add we can bet assured a schizoid presence when rove uses a free market like argument to debunk the free market. forgive me if i am just economically moronic but don’t rich guys get off on giving their private opinions to the government? isn’t that the point of the millions they give to our political races? truly schizoid at least.

kkkarl will always say bad things – that is not the problem. The problem is that the DEMS are who has enabled it to continue.

How can you get a footing when repugs don’t follow the rules or laws? Take force? What if the opposing side has forces also? Then what?

It’s the congress’ fault not the dems fault alone.

hello, turd. Is anybody home?

Throwing our money to yours and chimpy’s buddies don’t hold the US together. And ignoring obvious common oversight and necessary accountability doesn’t work. Hell-f9ck-o!

These are common control practices to ensure proper procedures are followed. It also improves the control of the cash flow among other things. These are good skills and are practice by businesses from the beginning of time.

The only way capitalism will works is to “WORK” for the money. Something you know nothing about, turd blossom-out-your-ass-hole.

turd you need to give it a rest you silly old bastsid.

Turd Blossom Rove,”For example, look, I’m in favor of infrastructure spending, but let’s be honest about it. It’s not stimulative.”

What’s stimulative, what really gets Rove’s greasy mind drooling (besides 14 year old boys in women’s panties) is a higher and higher profit margin $$$ by outsourcing all our jobs and money.
Greed is what gets Rove and the Neo-cons off…