Liquidity is king and the Feds are emperors

By Fester:

Right now the only people and organizations that are able to function effectively in this economic environment are people with ready access to cash.  Cash or US Treasuries, which are being treated as cash, is so valuable that banks won't lend it at near trend rates, and creditors will lend for almost no profit in order to gain access to cash from the US government.  Being nominally wealthy but illiquid in this environment means being effectively broke as the only route to accessing cash is to sell assets at a significant discount over and above their probable long run value in order to pay the fear/distrust premium. 

So anyone with cash right now should be able to buy up lots of assets fairly cheaply.  Not all of these assets will be good, as the sovereign wealth funds have found out in their purchases of chunks of US investment banks.  But they are available cheaply, and the more tangible and physical assets should be able to hold their long run value.  Parking meters, roads, bridges and airports are public assets that may be auctioned off for a song as states and local governments scramble to raise cash. 

Stirling Newberry takes this to a logical and probably desirable end --- let the Feds, who have access to the most cash, bid for these assets as well as the private sector. 

it seems straight forward to create the Federal Infrastructure Finance Corporation, where aid to states would be swapped with equity in infrastructure. Either the Federal government could purchase outright, or get bonds in the infrastructure or other state asset backed by revenues. This way assets bought at high prices would not go to private hands in an orgy offloading. We don't need the nation Norquisted, and this would both prop up states, and allow economies of scale and management to be applied.

Comments

[zak822]

Far too good an idea to go anywhere.

[zak822]

Sorry for the double post, but I'm was surprised to read that Morgan Stanley is buying Chicago's parking meters as a concession, for a little over a billion.

Didn't Morgan get TARP money? If so,should they be doing any kind of acquisition?

[Dave Nichols]

Re: the Chicago parking meter concession: I wonder who will be responsible for issuing tickets (or tow orders) to violators - the city police, or a private security force? If the former, then we have yet another case of privatizing benefits and socializing costs.