Link to article below here. See related story here. See article warning of limited financing and limited profits for toll roads here.

The bailout of private industry by the U.S. taxpayer has stirred-up unparalleled outrage among the grassroots. By hook or by crook, the federal government is aiding and abetting corporate greed that repeatedly runs away with the profits, but leaves the taxpayers with the tab when the bubble bursts. There can be no doubt that the next BIG financial crisis where private industry comes crying to the taxpayers for a bailout will be the emerging “infrastructure market,” aka – toll roads.

With the financial collapse of Wall Street banks, and even the insurance company that insures municipal bonds, AIG, money for infrastructure will be hard to come by and it come at an extremely high cost if it CAN be found. The continued rise in the price of oil coupled with the declining dollar, and rising unemployment, the economic warning signs show few will be able afford an additional toll tax to get to work. Who will bailout the toll roads when they fail to produce the revenues owed to bond investors? You guessed it, the brow-beaten U.S. taxpayer. Time for a true taxpayer revolt at the ballot box this November to avert yet another financial catastrophe!

Bailout uncertainty sinks Wall Street
By Steven C. Johnson
Mon. Sep 22, 2008
Reuters
NEW YORK (Reuters) – Stocks tumbled on Monday as investors worried a $700 billion bailout for the financial sector may not resuscitate a slumping economy, while a record spike in oil prices renewed concern about consumer spending.

Banks, home builders and big manufacturers were among the biggest decliners as negotiations over the government’s rescue plan to mop up bad mortgage debt on banks’ balance sheets heated up in Washington.

Investors also dumped consumer-oriented companies and airlines as oil surged $16.37 to settle at $120.92 a barrel, its biggest one-day jump on record. A sharp fall in the dollar added to oil’s gains.

A Wall Street analyst downgrade hit shares of JPMorgan Chase, the No 3 U.S. bank, which fell 13.3 percent, making it the top drag on both the Dow and the S&P 500. Wells Fargo dropped 11.6 percent. For details, see

The S&P financial index shed 8.5 percent, while an index of airline stocks fell 9.4 percent.

Monday’s market swoon wiped out nearly all the gains seen on Friday when the bailout announcement sparked Wall Street’s best one-day advance since 1987. Only 2 of the Nasdaq 100 stocks end higher.

Investors cited uncertainties about the rescue plan’s details and concern about whether it would provide a lift for the U.S. economy, which many fear is already in recession.

“Here it is Monday and people are waking up from a gigantic hangover, trying to figure out what’s next,” said John Schloegel, vice president of investment strategies for Capital Cities Asset Management in Austin, Texas.

“There’s pain ahead for the economy, pain for the consumer, pain at the gas pump,” he said. “And we’re getting hit with a double whammy today with commodities moving higher.”

The Dow Jones industrial average dropped 372.75 points, or 3.27 percent, to 11,015.69. The Standard & Poor’s 500 Index slid 47.99 points, or 3.82 percent, to 1,207.09. The Nasdaq Composite Index fell 94.92 points, or 4.17 percent, to 2,178.98.

The Bush administration is pressing Congress to approve one of the costliest U.S. bailouts for financial companies since the Great Depression, but debate about the particulars of the plan continues on Capitol Hill.

A top Congressional Democrat on Monday said Treasury had agreed to take an equity stake in the firms that unload assets under the rescue plan, though other details remain unclear.

“There is lingering uncertainty about the overall economy despite the moves to shore up the financial markets,” said Michael James, senior trader at regional investment bank Wedbush Morgan in Los Angeles.

“Clearly the weakness in the financial markets has been part of the drag on the economy in the first nine months, but it has not been the only drag. Merely shoring up the weak financial markets is not necessarily a salve to the overall economy’s problems.”

With oil prices up sharply, investors sold shares of consumer-oriented companies, including Procter & Gamble, down 3.3 percent at $68.04. Shares of Target Corp, the No. 2 U.S. discount retailer, dropped 6.6 percent to $49.80 after Lazard Capital Markets cut the stock to “hold” from buy.” Earlier during the session, U.S. oil futures prices shot up as high as $130 a barrel.

Uncertainty about the bailout overshadowed news that Japan’s largest bank, Mitsubishi UFJ Financial Group, planned to buy a stake in Wall Street bank Morgan Stanley.

Goldman Sachs and Morgan Stanley are abandoning their investment bank model of two decades to become bank holding companies regulated by the Federal Reserve.

Morgan Stanley shares fell 0.4 percent to $27.09 after earlier adding more than 10 percent, while Goldman Sachs shares dropped 7 percent to $120.78.

JPMorgan Chase shares fell 13.3 percent to $40.80 while Wells Fargo shares fell 11.6 percent to $35.18.

Among home builders, shares of Hovnanian Enterprises declined 6.5 percent to $8.46.

Meanwhile, shares of Caterpillar Inc , an economic bellwether and a Dow component, lost 2.8 percent to $64.60.

Kraft Foods Inc, a new member of the 30 Dow industrials, effective at Monday’s opening bell, also dropped 4.6 percent to $33.09.

On Nasdaq, shares of Apple fell 7 percent to $131.05 after JPMorgan cut its price target on the iPod and iPhone maker’s stock.

About 1.27 billion shares changed hands, below last year’s estimated daily average of roughly 1.90 billion, on the New York Stock Exchange, while on Nasdaq, about 1.93 billion shares traded, also below last year’s daily average of 2.17 billion.

Declining stocks outnumbered advancing ones on the NYSE by more than 4 to 1. On the Nasdaq, decliners beat advancers by about 3.5 to 1.

Link to article here.

When you read Cintra’s reaction to this news, that the North Texas Toll Authority is overextended financially and may not be able to meet its obligations, it’s not hard to predict where the wind is blowing on toll roads. Despite the near total collapse of the financial markets and subsequent government takeover, these private investors are still salivating over the thought of hijacking our public highways and forcing us to pay homage, a toll tax, to get anywhere.

If you think that because credit is tight and toll road ridership is falling that such conditions should be enough reason for authorities to scrap these toll plans, think again. More than ever, the government will seek private capital, even though cash is tight. How will they pay it back with so few able to pay tolls on a daily basis? Jack up the tolls to make up for fewer drivers. The insidious cycle will continue unless the taxpayers demand change!

Credit crunch puts State Highway 161 toll road in jeopardy

10:53 PM CDT on Wednesday, September 17, 2008

By MICHAEL A. LINDENBERGER / The Dallas Morning News
mlindenberger@dallasnews.com Radically shifting fortunes on Wall Street have left the North Texas Tollway Authority scrambling to keep a key promise it made last year when it won the right to pay $3.2 billion for the State Highway 121 toll road.

On Wednesday, NTTA made clear that its ability to keep that promise has been compromised by the nation’s financial uncertainties.

NTTA chairman Paul Wageman again delayed a decision on whether to build the highly anticipated State Highway 161 toll road. Just months ago, the toll contract was seen as a lucrative sure bet and had been the subject of months of acrimonious negotiations between NTTA and state transportation officials.

“Needless to say, the financial markets are in high stress,” Mr. Wageman told a packed room of more than 150 contractors, consultants and engineers eager to hear which direction the agency is moving. Another delay is “the prudent thing to do,” he said.

The pause gives NTTA another month to seek hundreds of millions of dollars in loans on the terms it needs, which include deferred payments until after construction is complete.

That the agency would be struggling to borrow money for SH 161 is surprising on a number of fronts, not least because that road, like the larger SH 121 deal, is one of the few toll projects NTTA has promised to deliver that is expected to be profitable.

Some critics, including the executives at the Spanish firm NTTA beat out last year for the SH 121 project, allege the authority is simply overextended. To the firm, NTTA’s delays on SH 161 foreshadow problems it will have with finding money to pay for many of the projects it has promised to build.

“They mortgaged every room in the house,” said Jose Lopez, North American president for Cintra. “They don’t have the leverage left to borrow the money they need for the long list of projects they have promised. Sure, there may be value there in 10 or 20 years, but does Dallas-Fort Worth want to wait that long for those roadways?”

NTTA says it’s not overextended. Instead, the NTTA is facing a temporary credit crunch that will ease once the credit market rights itself, officials there said.

But NTTA president Jorge Figueredo has said that the agency’s ability to keep promises made a year ago will probably depend on how soon the credit markets stabilize.

“We have been looking at all the projects on our list, and looking at when will these projects be ready to go, when will we actually need the money to get started?” he said. “But if the markets continue to go sour and TxDOT and RTC and ourselves don’t have ability to leverage each other, then what we thought was possible a year will likely not be possible.”

What NTTA promised is that in addition to paying for SH 121, the agency would borrow another $7 billion to pay for six additional toll roads that would open by 2015.

But almost immediately after winning the SH 121 contract, the credit markets began to act unexpectedly. And as some companies stopped dealing in municipal bonds, others began trimming back the kinds of loans they offer.

NTTA has scrambled to not only find money for new projects, but also to retire short-term debt it took out for SH 121.

Wednesday’s delay won’t immediately slow the completion of SH 161, which is under construction, news that will probably reassure Grand Prairie commuters anxious for an alternative to jammed State Highway 360.

But NTTA is looking hard at other projects, including the big Southwest Parkway Corridor toll project in Fort Worth. Delays to that project will cost $10 million a month. But on Wednesday, NTTA opted to study again the finances for that project, given that costs have gone up as available tax dollars for the project have gone down.

Michael Morris, transportation director for the North Central Texas Council of Governments, said NTTA’s delays are worrisome, especially because other sources of road funds – including the state – are also under increasing strain.

“This is very important,” Mr. Morris said, noting that NTTA’s original plan included paying billions for SH 121, while still having enough available for additional projects. “If you go back to last summer, when the vote for 121 was held, I think the regional transportation council said, ‘We know there are some risks out there, but we want to vote for our partner. And NTTA is our partner.’ ”

Now it’s time for NTTA to figure out a way to reward that faith, said Mr. Morris, who was among the fiercest advocates for letting Cintra build SH 121.

He has since supported NTTA in its negotiations with the state and says the region has no choice but to work together.

That’s what NTTA vice chairman Victor Vandergriff had in mind Wednesday. Looking at the billions of dollars the agency will need to borrow to make good on its promises, he suggested it may need help from the state or regional partners.

“That’s a lot of money, and while we can expect profits to flow, they aren’t going to be seen for maybe 40 or 50 years,” Mr. Vandergriff said Wednesday. “I urge us as we are proceeding forward to talk with our regional partners and with TxDOT, to think through how we do these projects.”

It must be election season and the signs show incumbents are feeling the heat. Senate Finance Committee Chair, Steve Ogden, makes it plain that he plans to vote to toll urban areas as long as the Trans Texas Corridor doesn’t come through his district. Can you say, backroom deal? He’s voted for every major piece of toll road legislation, including the bill that authorized the Trans Texas Corridor (HB 3588), now he seeks to cover his own tail by selling out the millions of Texans in urban areas with crippling toll taxes just to get to work!

Don’t believe the TTC is dead for ONE MINUTE. Read why here.
Ogden: TTC plans may be scrapped
By Philip Jankowski
Taylor Daily Press
September 12, 2008

In an interview with the Taylor Daily Press, State Sen. Steve Ogden revealed a possible new course for the controversial Trans-Texas Corridor.

Instead of building superhighways across the state, Ogden said, the state may opt to augment the Texas Trunk System, a web of rural highways that includes U.S. 79.

The plan would expand those highways to four-lane divided highways, while expanding urban infrastructure with toll roads.

“We need to limit that concept to existing highways,” Ogden said of the proposed network of superhighways and tiered rail systems. “I passed a bill last session that did that, but [Gov. Rick Perry] vetoed it. I’m happy to report that he may have changed his mind.”

One of the main reasons for backing away from the Trans-Texas Corridor concept is the daunting amount of funding necessary to complete the 4,000 mile road project, he said. In 2002, the project was estimated to cost the state $145.2 billion to $183.5 billion. In today’s dollars that amount has grown to about $169.9 billion to $214.7 billion, according to current inflation figures.

Included in the price is the cost of acquiring more than half a million acres of right of way for the 1,200 foot wide corridor, which has drawn much ire from communities – including Taylor, Granger and Coupland – that lay in study areas.

“I don’t think there ever was a possibility that that could occur,” Ogden said. “There never was the funding.”

Despite the possible change in direction for transportation, Taylor already is a step ahead of the rest of the trunk system as far as expansion goes. The county and city recently approved an interlocal agreement that effectively took portions of U.S. 79 in East Williamson County out of the Texas Department of Transportation’s jurisdiction for construction purposes so they could be expanded at a quicker pace.

Construction has already begun east of Taylor.

Ogden said he will work to avoid budget shortages that led the county and city to turn their backs on TxDOT by placing more oversight on how the department spends its money. The Texas Legislature’s Transportation Committee recently decided to give the problem-beleaguered department a cash infusion of $1.5 billion.

Currently the Legislature writes TxDOT’s budget, but the department has not followed recommended appropriations, Ogden said.

“Except for the bottom line, the way TxDOT spends their money is not how we appropriate it,” he said.

Ogden said there is legislation in the works that would require TxDOT’s spending to fall more in line with legislative recommendations.

And as chairman of the Finance Committee, Ogden is in a unique position to be influential on how that money is spent.

“I’ll write their budget,” he said. “We’re going to better align their budget with the state’s budget.”

Link to article here. It seems the bad news just keeps comin’ for toll roads and toll operators. We’ve been warning for years that increasing the cost of transportation hurts the economy and the evidence is now EVERYWHERE. There’s only so much money in the family budget to devote to transportation before it takes away from necessities. Restaurants, clothiers, auto makers and many other industries are taking a hit due to high gas prices (and the subsequent rise in food prices). Now even toll road concessionaires that proponents have touted as bullet-proof because “people HAVE to get to work,” are taking a hit, too. We’re building an unsustainable transportation system with toll roads. Time to change course.

Cintra’s August traffic falls on main concessions
Reuters
Thu. Sep 11, 2008MADRID, Sept 10 (Reuters) – Spanish toll road operator Cintra (CCIT.MC: Quote, Profile, Research, Stock Buzz) said on Thursday that traffic fell for nearly all of its main concessions in August.

On Canada’s 407-ETR road, traffic measured in daily journeys fell 4.8 percent in August from a year earlier, affected by the economic downturn and the fact there were two less working days in the month, the company said.

On the Indiana Toll road, traffic measured in daily journeys dropped 6.89 percent, and 6.66 percent on the Chicago Skyway, reflecting tariff increases and the economic slowdown in the United States.

Cintra’s Spanish motorways reflected the impact of the domestic economic slowdown, with traffic measured in daily journeys dropping 7.25 percent on its Ausol I concession from a year earlier and 4.67 percent for Ausol II. The only motorways to show rises in traffic were the Madrid-Levante and the M4-M6.

At 0952 GMT, Cintra shares were 0.89 percent lower at 7.78 euros, while the blue-chip IBEX-35 had lost 0.71 percent. (Reporting by Judy MacInnes; editing by Rory Channing)

Link to article here. No matter what, selling off our infrastructure to the highest bidder on Wall Street means higher taxes, sweetheart deals for special interests, and taxpayer bailouts when the risky deals fail. Just like the mortgage and banking bailouts, government is facilitating the taxpayer rip-off by privatizing toll profits and socializing the losses (or the risk).

The Trouble with Transportation
High gas prices have dimmed private equity’s hopes of rosy returns on infrastructure and transportation projects.
Government could be the loser
By Catherine Holahan
Businessweek
September 5, 2008
For private equity investors, the sheen is wearing off purchases of public asphalt. A year ago, banks and private investment firms were racing to pour money into infrastructure projects such as highways and light-rail systems. Compared with an investment in stocks, buying or leasing a highway seemed like a low-risk bet with easily estimated, long-term returns. After all, competing highways or mass transit systems couldn’t just spring up overnight to divert toll- and ticket-paying customers.

But $4-a-gallon gasoline slowed the enthusiasm for such projects. Many commuters are choosing to leave their cars in the garage and take mass transit, or don’t have a job to drive to anymore. “If you look at the publicly reported forecasts for the Chicago Skyway or Wall Street estimates of global traffic, they are completely different now,” said George Bilicic, a managing director at NYC private equity firm Kohlberg, Kravis, Roberts who spoke on a panel held Sept. 3 at the University of Minnesota. “It goes into the risk assessment associated with the investment decision.”

The purpose of the panel was to bring politicians in town for the Republican National Convention together with business representatives in a discussion that fits into GOP efforts to find privatized solutions to large public problems such as crumbling infrastructure. “Transportation is both broke and broken,” said panelist Bruce Katz, vice-president and director of metropolitan policy at independent research firm the Brookings Institution. “How do we have the collaboration with the private sector so we can really deal with the totality of this issue?”

Power to Private Equity

One answer may be to accept that private equity gets to dictate more terms, and use up-front revenues from long-term infrastructure leases to provide tax breaks offsetting higher commuting costs. That solution dovetails with the Republican convention theme of lower taxes.

But higher risk means investors are going to demand larger returns. And that’s not welcome news for government officials. Some of those present at the panel discussion said they don’t want to slam voters with higher commuting costs but do want private investment to fund improvements in roads and mass-transit systems (BusinessWeek, 5/7/07) not to mention provide immediate cash for other government projects. “We are acutely aware of transportation challenges in this community,” said St. Paul Mayor Chris Coleman, referring to the difficulty of getting a light-rail system constructed between St. Paul and Minneapolis. “I think there is a lot of room for private investors to invest in our community.”

Despite the economic downturn, private sources could still account for $240 billion of the capital needed for infrastructure worldwide each year, according to a September 2007 report by Ernst & Young. “The pools of private capital are gathering,” says Bilicic. “And these pools are forming with a global point of view.”

Renegotiating the Terms

But investors are adjusting by lowering their bids on long-term public infrastructure leases and demanding more assurances that the managing firms can raise tolls or adopt controversial measures such as peak toll pricing. (On one privately owned road in California, tolls jump from less than $2 to more than $20 during rush hour under the peak pricing model.) “Nobody will bid on [a toll road] at the fare of $1.50 per person,” said panelist and former Washington Senator Slade Gorton.

Strapped commuters obviously are in no mood to pay for higher tolls. What investors are counting on is that taxpayers are even more averse to paying the higher taxes needed to repair century-old roads, bridges, and other public facilities. The American Society of Civil Engineers estimated in 2005 that it would cost $1.6 trillion to simply bring the nation’s infrastructure up to “good” condition. That doesn’t include the amount it would cost to add environmentally friendly mass-transit systems and other infrastructure upgrades needed to help people move closer to the cities where they work, thereby reducing vehicle-related pollution.

Many taxpayers are already skeptical about federal and state transportation expenditures, panelists said, because they often get allocated to politically powerful districts rather than where they are most needed. “It never made sense to me why we would tax ordinary people and use that money to subsidize this type of sprawl development,” said panelist Tom Darden, CEO of Cherokee Investment Partners, a firm that works with government to invest in land development around new transportation hubs.

Congestion Plagues Cities

“It’s hell trying to get around any city in America today, from sea to shining sea. We are just at a stall in congestion,” said panelist John Mica, the ranking Republican on the U.S. House Transportation & Infrastructure Committee. “Some people think I have been smoking the funny weed and hanging out with college students when I say we need more than a trillion dollars… But we have got to do something.”

Link to article here.

After spending the last 4-5 years pushing toll roads on San Antonio in earnest, ex-Greater Chamber President, Joe Krier, will return to work for toll road law firm extraordinaire, Bracewell & Giuliani. The firm is the sole legal firm for Cintra, who has the development rights to build 5-6 segments of the Trans Texas Corridor, TTC-35, the first being SH 130 segments 5 & 6.

Chamber-ex Krier takes new job
By David Hendricks
Express-News
09/05/2008
Ten months after departing as president and chief executive of the Greater San Antonio Chamber of Commerce, Joe Krier is back on a payroll, returning to a law firm he served early in his career.

Krier will head the new Public Issues Management Group at Houston-based Bracewell & Giuliani. Working from the law firm’s San Antonio office, Krier said he will continue where he left off after two decades at the helm of the chamber, giving advice to businesses.

“Corporate America has figured out it must do business with the federal, state and local governments every day,” Krier said in an interview at his new downtown offices. “Whether directly regulated or regulated through your customers and clients, it is important to how government and the public feels about you.”

Krier said his main job is to offer advice to senior management at large corporations “to get from you are to where you want to be ….. to get across the goal line.” That could involve polling, public relations, lobbying or work with regulatory challenges or corporate transactions.

While at the chamber, Krier headed a 36-member staff with a $4 million annual budget. At Bracewell & Giuliani, he will work with 30 lawyers in the San Antonio office and 430 total in offices in Houston, Austin, Dallas and six other cities.

Similar services are offered to corporate clients by Texas firms, including Public Strategies Inc. of Austin, founded by San Antonio native Jack Martin, and San Antonio-based The Loeffler Group, founded by former U.S. Rep. Tom Loeffler. The Loeffler Group, which specializes in lobbying, is affiliated with the law firm of Loeffler Tuggey Pauerstein Rosenthal.

J. Tullos Wells, managing partner of Bracewell & Giuliani’s San Antonio office, said Krier’s new group has the advantages of lawyer-client confidentiality privileges and the worldwide research of the Bracewell & Giuliani firm.

While the law firm will not conduct services like public relations and polling directly, it will hire outside companies for those purposes and serve as a central coordination point for corporate campaigns and projects.

“Joe Krier has worked at the intersection of business, government and public issues for 20-plus years and will significantly enhance our ability to deliver these capabilities,” Wells said.

Although Bracewell & Giuliani’s Public Issues Management Group will be positioned to serve Texas corporations, it will concentrate on the Interstate 35 corridor and issues that affect the corridor. Krier noted the international corporate partnerships bidding on highway construction as examples.

Krier will work closely with Scott Segal and former East Texas congressman Jim Chapman, who co-chair the law firm’s 16-professional government relations practice, and Milam Mabry, who is transferring from the firm’s Washington office to Austin to work on legislative and public policy matters.

Former New York Mayor and ex-presidential candidate Rudy Giuliani became a name partner for the law firm in 2005 and adds a public policy role at the law firm, Wells noted.

After graduating from the University of Texas at Austin and its law school, Krier worked from 1971 to 1973 in Houston for what then was called Bracewell & Patterson. He moved to San Antonio to practice law for a dozen years before taking the top job at the Greater San Antonio Chamber of Commerce.

While at the chamber, Krier was twice elected chairman of the Metro 8, representing Texas’s eight largest chambers of commerce. The chamber was involved in setting strategies for military base-closing rounds and finding funding for the Alamodome and AT&T Center. It also helped start several industry institutions, including the San Antonio Technology Accelerator Initiative, during Krier’s tenure.

Business leaders said Krier was a good fit for the position.

“Joe’s group will offer clients invaluable insight into the direction of public policy issues, from economic development to infrastructure to tax,” said Jim Greenwood, government relations vice president at San Antonio-based Valero Energy Corp. “I doubt there are many issues Joe does not have a good grasp of.”

Tom Frost, chairman emeritus of Cullen/Frost Bankers Inc., said: “It’s valuable to have this counseling. It’s a growing area. Business executives are focused on pricing and holding down costs, but they need someone to tell them what is happening in the world. ….. I’m tickled to death that Joe Krier is working for this community again. He’s good at it.”