July 18, 2006 at 10:25 AM #6916
Roads and bridges built by U.S. taxpayers are starting to be sold off, and so far foreign-owned companies are doing the buying” according to an article today by the Associated Press.
The buyers are Australian companies, I believe flush with cash as their natural resources sales have escalated. Uranium, gold, etc.
But why aren’t US companies buying these assets? US companies are flush with cash. Why are US corporations hoarding their cash, instead of investing in their R&D, or buying US assets?
Is Australia buying US assets, because they don’t want to appreciate their currency by converting dollars into their own currency? Or are they bullish on US roads?July 18, 2006 at 10:34 AM #28708lindismithParticipant
I don’t know these answers, but I do know Australians know how to build roads.
I once dated a road-builder from Australia (swear to God), and he couldn’t believe 1) how many roads we have and 2) how crappy they are in some parts of the country.
So, my best guess is that they see an enormous opportunity to make money doing something they know very well, and perhaps they think they can make them more efficiently, or using better technology, so maintainance costs will be less.
These are all just guesses though.
As to why we’re not doing it???? I have no idea. We’re too busy building roads in the Middle East???July 18, 2006 at 10:57 AM #28716
Lindi, the Australians purchased existing roads. They are buying roads built by US taxpayers.July 18, 2006 at 12:29 PM #28726lindismithParticipant
Yes, I should have been more clear. I think they can service them better and therefore make the money via the tolls they need to earn.
I believe in privatizing some things like this – we all know the stories of our governments paying out too much money to companies like Halliburton.
Why shouldn’t the taxpayers get a better deal?July 18, 2006 at 8:35 PM #28783
I wrote to Bill Fleckenstein in his daily Ask Fleck column:
What do you think about our toll roads and bridges being purchased by Australian companies? Are they trying to find something to do with their US dollars, or are they bullish on US assets?
• The former, I would guess.July 18, 2006 at 9:05 PM #28786rankandfileParticipant
I work in managing infrastructure and without having a lock on the Aussie market, I do know that they have a reputation for being very proactive in managing and maintaining their infrastructure assets. America, and California in particular, are more or less the exact opposite. We tend to not want to spend any money on anything until it breaks (ex. San Diego sewer lines, Big Dig, etc.). I remember hearing a little while ago, I think around the time of the Davis Recall, that California used to spend something like 15-20% of its budget on capital improvement projects like roads, bridges, water & sewer systems, etc. Now it’s something like 3-5%. Perhaps the Aussie’s see our infrastructure assets like any other asset: buy low and sell high.July 18, 2006 at 9:24 PM #28787hsParticipant
What is the impact could be that the foreign companies are buying the US roads and bridges? Is this good for the US or not?July 18, 2006 at 9:50 PM #28789SDLaw06Participant
Selling off pieces of our country is never good. However, I believe I read ( I can’t find it anymore) they are doing this more for their economy’s sake than for any adverse effect on the US.July 18, 2006 at 10:16 PM #28794equalizerParticipant
There was an article in Barrons this year about the Australian companies. The investing overseas is related to to forced contribution into retirement system for all workers this is something like 10%+ of salary. Since the Aussie stock market is too small to accomodate all that money, they are investing directly in companies instead of simple stocks. Another reason is the high prices the cities are getting for their roads.July 18, 2006 at 10:18 PM #28795hsParticipant
If it is not good for our country, why our government let this happen?July 18, 2006 at 10:29 PM #28799
The Dubai ports deal would have passed, except many in Congress opposed it due to concerns that a Saudi company would compromise US port security. Bush and other high officials were in favor of the deal.
So the question remains: why aren’t our government officials concerned that foreign companies are buying our assets, and why don’t US companies buy these assets? Why doesn’t Warren Buffett buy US assets, instead of diversifying outside of the US?July 19, 2006 at 8:23 AM #28815SDLaw06Participant
My guess is that the Bush administration lets it happen because it makes their numbers look good. Buffet does it because there is more growth potential in a developing country as opposed to the US which has limited growth. China is doing it so some day the can cause the American dollar to plummet when they decide they want all the money they have bought up.July 19, 2006 at 8:21 PM #28908PerryChaseParticipant
I believe it’s unquote.July 19, 2006 at 8:46 PM #28903
SDLaw – what do you mean about the Chinese letting the dollar plummet? Can you explain?
Here is another comment from Fleck about this question. Another reader gave his opinion. I don’t understand the reader’s comment, nor Flecks’.
Re: ‘What do you think about our toll roads and bridges being purchased by Australian companies? Are they trying to find something to do with their US dollars, or are they bullish on US assets?’
Neither of the above. Like so many other things, it is purely a function of the availability of credit. There will be a price to pay at some point.
Go get ’em, son.
• Good point.
NOTE: I changed END QUOTE to UNQUOTE. That is better English…thanks.July 19, 2006 at 11:50 PM #28941AnonymousGuest
From a land downunder
This is my first post here so please be kind!
I found this site as I too believe that housing is overvalued.
As a 45 year old Australian who lives in Melbourne (a city of some 3 million people), we have also seen our property prices go through the roof. This has made it almost impossible for our young to get into the market. Anyhow I digress as the topic is about Aussies buying your roads
The purchaser is an Australian listed company with a market value of A$ 7,700 million. They have not had the greatest 12 months with the share price down 20% in the past 12 months. Their main focus is about buying assets that are not to volatile and have a fair upside as far as income/profit goes.
I dont think you guys need worry about one of our companies buying some of your assets as American companies have bought so much of our country, both physical and intellectual it would astound you. You may not be aware but our countries have a free trade agreement which is currently I believe way in your favour
If anybody would like to now about property down here, please feel free to ask and I’ll do my best
- You must be logged in to reply to this topic.