From Volume 7, Issue 22 of EIR Online, Published May 27, 2008

U.S. Economic/Financial News

Low Pa. Turnpike Bid Discredits Rohatyn's Strategy

May 20 (EIRNS)—Pennsylvania Gov. Ed Rendell today attempted to accept the unacceptable, a lower-than-low-ball $12.8 billion private bid for a 75-year lease of the Pennsylvania Turnpike—one of the nation's busiest toll roads. The paltry "winning offer" proves that fascist banker Felix Rohatyn's model of "funding" public infrastructure by selling it off to private financiers, is dead. The Rohatyn model has enthralled the Democratic Party leadership of Speaker Nancy Pelosi, blocking Lyndon LaRouche's and other proposals for an "FDR" Federal capital budget for infrastructure.

The final low-ball bid was left on the table after the forced pullout of the British imperial bank that perfected the infrastructure privatization Ponzi scheme. Macquarie Bank's Infrastructure Group withdrew its bid on May 16, due to "financing problems." One of the Spanish companies in on the final bid has been denounced by the Spanish parliament for its slave-labor practices under the fascist regime of Generalissimo Francisco Franco.

The "winning" buyout bid by Spanish toll operator Abertis Infraestructuras, Citigroup's Citi Infrastructure Investors, and Australia's Babcock & Brown, came in a full 30% below the minimum Rendell said he needed, $18 billion, to win support for his scheme. Even at $18 billion, the plan would have resulted in the state's giving up 45% of turnpike revenues of nearly $33 billion over the 75 years. As it now stands, the "winning" bid would result in Pennsylvania giving up 61% of the 75-year revenues, to get up-front cash for the remainder—if the state legislature is foolish enough to accept the deal.

That is unlikely. Of the bid, State Rep. Joseph Markosek (D), chairman of the House Transportation Committee, said, "Not even close. It doesn't appear to be the premium the Commonwealth should demand to give up control of one of its most valuable assets." State Senate Majority Leader Dominic Pileggi (R) also indicated a thumbs-down, and challenged Rendell's claim that the state could invest its pitiful toll buyout and earn 12% interest on it, in the current financial crisis.

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