Nick Greiner Fails Public Finance.

The iron law of privatization is that:

“Public assets must NEVER be sold with the motive of raising money.”

But there is an old has-been out there who thinks differently:

“INFRASTRUCTURE NSW chairman Nick Greiner has declared that further privatisation will be “absolutely” unavoidable in NSW to tap funds for new projects, while urging the community to “get real” about the role of congestion charges, asset sales and other unpopular policies.

Mr Greiner, a former NSW premier, said that to fix the state’s infrastructure woes, “you’ve got to get money from somewhere” and that politicians, bureaucrats and the wider community “need to get real about all this”.

“I think asset sales are an absolutely unavoidable part, an absolutely essential part if, in fact, the government wants to increase infrastructure spending by a step function,” Mr Greiner said.

The comments signal the growing pressure that the O’Farrell government is likely to come under to broaden its privatisation program.

Potentially attractive assets could include the buses, parts of the rail network such as station management, Forests NSW, Macquarie Generation and some of Delta Electricity’s assets.

But most attention is focused on the electricity poles and wires and transmission network, which lobby group Infrastructure Partnerships Australia has claimed would unlock tens of billions of dollars.”

Clearly this is all the talk of an imbecile.   Lets go through this step by step.

“INFRASTRUCTURE NSW chairman Nick Greiner has declared that further privatisation will be “absolutely” unavoidable in NSW to tap funds for new projects,”

Completely untrue. We can get funds from spending cuts, increasing royalties to get the loot before the Feds grasp it, and if a trend starts ………  from defaulting to Northern Hemisphere banks on prior debt.  But the reality is that government spending ought to come from taxation. Consider the vicious circle the Nick Greiner is implying.

He wants us to sell what we built in the past to bigshots.  Then we are to build something with the funds.  Then the logic can only be that we sell what we just built to bigshots. What is missing from this imbecilic approach to public finance?:

1. Cutting spending through department closures.

2. Developing the conditions wherein these infrastructure goods will be built by the private sector.

So the twin problems will never get solved under the approach of fools and bank-butt-lickers. The private sector will never get the environment they need to expand our infrastructure. The government will never get the good budgeting it needs to pay for such infrastructure as they are unable to get the private sector to make.

But its much worse than that.  The key to privatization and the public financing of infrastructure is the following:

Public assets must NEVER be sold with the motive of raising money.  To sell public assets which such a motive is to destroy utterly the possibility of a functioning industry post-sale.

How can we make sense of the Greiner stupidity on this matter?  Well politicians and consultants are conditioned to work under the implicit rules, that everything ought to be done in such a way as to enrich bankers.  Everything within the banks, nothing outside the banks, nothing against the banks.

Public assets must NEVER be sold with the motive of raising money.

The State government announced a little while back that they were thinking of selling the States second biggest port for two billion dollars.

Supposing I’m Premier, and I do everything I can to make it easy for the private sector to build many ports? Question: How much would I then get if I decided to sell this port? Answer: Much less than 2 billion dollars. Because the new owner would then be buying into a business that was destined to quickly become cutthroat competitive. And with a 2 billion debt around his neck he wouldn’t be able to compete.

We can see clearly now that the entire privatisation period has been a disgrace.  Because during this time we haven’t done the hard yards to get the rules and incentives right so that the private sector would now be swimming in infrastructure, that was swamping the government stuff, that the government ought to have held onto.

The government value of their assets ought to have reduced as a percentage of infrastructure. But not by privatisation. Rather the value of these assets ought to have been competed into the floor. And any attempt to sell more of this stuff off is locking in the dysfunction, that is stopping the reform, needed to get the private stuff built.

In fact a private market for infrastructure is about the hardest thing for economic science to effect. Its not something that people have done much work on.  I tried to do some theoretical work on this matter, but I gave up because all the economists I talked to were too dim to understand where I was coming from. What is difficult is to imagine how we are to get the rules right so that the market will not become cronyist. All people wanting to sell off our gear right now are gunning for a cronyist market, since they refuse to say why the private sector ought not develop its own infrastructure, and how to go about making this dream a reality.

Now there is another thing. Since it will take a long time to get the private infrastructure market humming and non-cronyist, the safest thing to do for the meantime is to hold onto the government assets. That way you have a government sector still there as a way of keeping the industry “honest” and reasonably competitive, supposing you don’t “get matters right” immediately.

Later on you’d sell of these assets at a pretty feeble price just to get a problem off your hands. There is simply no way to use asset sales as a means of finance without fucking the future of the nation up.

Now its not merely enough to note that Nick Greiner is being an idiot and has no clue of which he speaks.  Because its a more sinister matter then the mere stupidity of economists and ex-Premiers.  You see the bankers always get their way.

THE BANKERS ALWAYS GET THEIR WAY

Look at the NBN.  Consultant Paul Budde had a good idea BEFORE  Telecom got sold. And that was to think of the underground, and infrastructural properties of Telecom, as the roads, and the business of telecom as the trucking company. And it made no sense to sell off the roads to the trucking company if we wanted a functioning industry. We had to keep the two businesses separate and we were safer to hang onto the “roads” as it were, until we had some sort of a clue as to what we were doing.

But he wasn’t listened to.  So the people who thought that the idea of privatisation was to raise funds won out. The market was permanently buggered AND THE BANKERS WON.

Now then comes along the idea of the NBN.  A good enough idea, but the idea was perverted, AND THE BANKERS WON.  But the bankers always win. Their gain comes from finding anything that is a good thing and attaching debt to it. The NBN was a good idea that became a terrible reality and this is because the bankers are always winning and will continue to do so until we start seeing them as our enemy.  Well at least the Northern Hemisphere bankers have to be regarded this way.

So when it comes to privatisation we always screw it up. A moratorium on asset sales AND governments borrowing is therefore essential.  All privatisations are being done to benefit the bankers. Thats why the former head of Macquarie bank used to pay himself 5000 bucks an hour. Thats why Rothschilds and Merryl-Lynch worm-tongues, managed to get the Queensland Premier, to sell off the rail and trains AS ONE BIG BLOCK making sure that this states rail transport can never develop until such time as a banker rebellion takes off.

Always these guys will fuck up our privatisations because they only like attaching debt to sure things. And sure things are not assets in a screamingly competitive market.

Now how can you doubt me on this matter when we have the following quote above?:

“But most attention is focused on the electricity poles and wires and transmission network, which lobby group Infrastructure Partnerships Australia has claimed would unlock tens of billions of dollars.”

You see the insanity of it? We don’t have any capacity for private sector operators to compete by setting up a parallel network. So they want to sell off, what will be for all relevant purposes, A PROTECTED MONOPOLY.

Public assets must NEVER be sold with the motive of raising money.

NEVER NEVER NEVER NEVER NEVER.  And let me tell you straight. Any company that indulgences themselves by buying assets in such a corrupted situation has to expect that they will be taken back off them at a considerable discount. Fuck you assholes. You don’t deserve a protected monopoly. You are just asking for trouble.

Build your own fucking network you cunts.  And if you cannot do that, you ought not be bribing stupid and corrupt politicians to sell you ours.