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Uk's Great Austerity Sell Off Of State-Owned Assets Begins

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More here: Channel Tunnel rail link sale begins UK's big sell off

The deal means the consortium has won a 30-year concession to run the 68-mile stretch of rail between London and the Channel Tunnel, as well as the stations on the line, St Pancras International, Stratford, Ashford and Ebbsfleet.

Philip Hammond, the Transport Secretary, on Friday called the deal "great news for taxpayers and rail passengers". The £2.1bn price is above analysts' estimates of £1.5bn to £2bn.

High Speed One was put on the block in June and was seen as one of the most attractive assets likely to be sold by the Coalition as it seeks to reduce Britain's national debt of £952bn. Other assets earmarked for potential privatisation are the Dartford Crossing, the Tote, the state's 49pc holding in National Air Traffic Services – to which the Government has appointed Bank of America Merrill Lynch to advise on its strategic options – and Royal Mail.

Under Friday's rail agreement, Ontario Teachers' Pension Plan and Borealis, the infrastructure arm of the Ontario Municipal Employees Retirement System, will receive the track access charges paid by the train operators that use the high-speed line – Eurostar and Southeastern Trains. They will also have the right to sell further access to the track and the stations. High Speed One is generating annual earnings before interest, tax, depreciation and amortisation of £135m.

The Department for Transport played down fears the deal could lead to higher passenger fares through the consortium increasing charges for train operators. The charges on the line are capped by the Secretary of State and the Office of Rail Regulation, which monitors the performance of High Speed One.

Mr Hammond said the consortium's business plan "very clearly" shows the desire for extra services on the line. Deutsche Bahn aims to launch services to Frankfurt and Amsterdam from 2013 that use the track. "It is a big vote of confidence in UK plc and a big vote of market confidence in the future of high speed railway," he added.

The Canadian consortium saw off competition from Eurotunnel and Allianz-led consortiums to win the line. It is expected to pay the proceeds to the Treasury this month.

How do you feel about a Canadian mutual-come-pension fund running the show here? This owners of this fund ARE profit driven, in case you didn't know that already.

30 years? Does that not seem out of order?

http://en.wikipedia.org/wiki/Ontario_Teachers%27_Pension_Plan

Edited by cashinmattress

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Sad state of affairs, but there will be a lot of deals done that we will never hear about.

There are a lot of options rather than fire sales. They could have gone to the public to raise prices, which would have allowed ownership to stay with the British people.

What does this achieve on the balance sheet? An asset valued at X billion, sold for X billion. Nets out. So now you've got cash. Can you earn income from that cash? Are you going to pay down debt (at zero percent interest) with the cash?

Whereas if the asset stays on the books it will have an income stream almost indefinitely.

I think that these guys are just trying to sell off the silver cheaply to their chums.

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I think that these guys are just trying to sell off the silver cheaply to their chums.

Of course they are.

Problem is when our chummy gov't gets the punt, dies off, etc... and the gentleman's handshake that made the deal on the 16th hole on some posh golf course is no longer....

What do the foreign 'owners' of the UK's very important transit lines do to the citizens here when that happens?

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2.1bn....thats a return of about 6.4% for the operator.

and if they sell more usage, they get all the benefit.

I wonder why our own current owners couldnt possibly sell more usage.

Eurotunnel wont allow German TGVs through the tunnel becuase the trains dont break into two in an emergency....not that during the recent incidents, they actually decoupled stranded trains.

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From Griftopia by Matt Taibbi

In the summer of 2009 I got a call from an acquaintance who worked in the Middle East. He was a young American who worked for something called a sovereign wealth fund, a giant state-owned pile of money that swims around the world in search of things to buy.

Sovereign wealth funds, or SWFs, are huge in the Middle East. Most of the bigger oil-producing states have massive SWFs that act as cash repositories (with holdings often kept in dollars) for the revenues generated by, for instance, state-owned oil companies. Unlike the central banks of most Western countries, whose main function is to accumulate reserves in an attempt to stabilize the domestic currency, most SWFs have a mission to invest aggressively and generate huge long-term returns. Imagine the biggest and most aggressive hedge fund on Wall Street, then imagine that that same fund is fifty or sixty times bigger and outside the reach of the SEC or any other major regulatory authority, and you've got a pretty good idea of what an SWF is.

My buddy was a young guy who'd come up working on the derivatives desk of one of the more dastardly American investment banks. After a few years of that he decided to take a step up morally and flee to the Middle East to go to work advising a bunch of sheiks on how to spend their oil billions.

Aside from the hot weather, it wasn't such a bad gig. But on one of his trips home, we met in a restaurant and he mentioned that the work had gotten a little, well, weird.

"I was in a meeting where a bunch of American investment bankers were trying to sell us the Pennsylvania Turnpike," he said. "They even had a slide show. They were showing these Arabs what a nice highway we had for sale, what the toll booths looked like . . ."

I dropped my fork. "The Pennsylvania Turnpike is for sale?"

He nodded. "Yeah," he said. "We didn't do the deal, though. But, you know, there are some other deals that have gotten done. Or didn't you know about this?"

As it turns out, the Pennsylvania Turnpike deal almost went through, only to be killed by the state legislature, but there were others just like it that did go through, most notably the sale of all the parking meters in Chicago to a consortium that included the Abu Dhabi Investment Authority, from the United Arab Emirates.

There were others: A toll highway in Indiana. The Chicago Skyway. A stretch of highway in Florida. Parking meters in Nashville, Pittsburgh, Los Angeles, and other cities. A port in Virginia. And a whole bevy of Californian public infrastructure projects, all either already leased or set to be leased for fifty or seventy-five years or more in exchange for one-off lump sum payments of a few billion bucks at best, usually just to help patch a hole or two in a single budget year.

America is quite literally for sale, at rock-bottom prices, and the buyers increasingly are the very people who scored big in the oil bubble. Thanks to Goldman Sachs and Morgan Stanley and the other investment banks that artificially jacked up the price of gasoline over the course of the last decade, Americans delivered a lot of their excess cash into the coffers of sovereign wealth funds like the Qatar Investment Authority, the Libyan Investment Authority, Saudi Arabia’s SAMA Foreign Holdings, and the UAE’s Abu Dhabi Investment Authority.

Here’s yet another diabolic cycle for ordinary Americans, engineered by the grifter class. A Pennsylvanian like Robert Lukens sees his business decline thanks to soaring oil prices that have been jacked up by a handful of banks that paid off a few politicians to hand them the right to manipulate the market. Lukens has no say in this; he pays what he has to pay. Some of that money of his goes into the pockets of the banks that disenfranchise him politically, and the rest of it goes increasingly into the pockets of Middle Eastern oil companies. And since he’s making less money now, Lukens is paying less in taxes to the state of Pennsylvania, leaving the state in a budget shortfall. Next thing you know, Governor Ed Rendell is traveling to the Middle East, trying to sell the Pennsylvania Turnpike to the same oil states who’ve been pocketing Bob Lukens’s gas dollars. It’s an almost frictionless machine for stripping wealth out of the heart of the country, one that perfectly encapsulates where we are as a nation.

Coming to a street near you....

Edited by Toto deVeer

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Philip Hammond, the Transport Secretary, on Friday called the deal "great news for taxpayers and rail passengers". The £2.1bn price is above analysts' estimates of £1.5bn to £2bn.

Yeah a great deal for rail passengers that it was sold for over the odds so the buyers either need to put the price of tickets up or won't have enough to run a good service perhaps. In what way could it be better for passengers that it sold for more?

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I love the confusion. The OTPP (Ontario Teachers' Pension Plan) is a fully funded retirement scheme which tries to ensure that retired teachers in Ontario will receive the pension incomes that were suggested to them.

As opposed to unfunded or underfunded UK schemes, they have hired people to work for them who will try to ensure that the returns on their portfolio will be adequate to roughly meet their requirements.

Canada is quite a liberal country. Teachers in Ontario are probably to the left of the general population in the UK.

Unlike many UK schemes, they are trying to shift the burden resulting from retiree committments to market returns which have a duration roughly related to the expected requirements from retirees rather than having an unscaled, unfunded, open ended demand on tax payers like many schemes in the UK. Their approach probably results from a realisation that taxpayer largesse is finite.

It is ironic to me that the left in this country are complaining that people further left than they are in other countries are seeking market rather than taxpayer supported solutions to the coming pensions crisis.

As I have posted before, the OTPP are not alone. Calpers, Calsters and many other US based schemes in very liberal states are taking similar approaches.

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Pah railways in the UK should be destroyed anyway. The rails torn up repaved with indestructable concrete completely and replaced with trolly buses or conventional buses which do not compete with cars thus can be faster.

In that railways are a parasite organisation they cannot run without massive state support which means gun pointing by the tax man at me and you. Anything which requires 25bn of support is untenable. It boggles the mind how Shinkansen in Japan is private yet they don't need the major gouging of tax payer AND tickets to make money. And Japan is an insanely expensive place to live to boot!

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Pah railways in the UK should be destroyed anyway. The rails torn up repaved with indestructable concrete completely and replaced with trolly buses or conventional buses which do not compete with cars thus can be faster.

In that railways are a parasite organisation they cannot run without massive state support which means gun pointing by the tax man at me and you. Anything which requires 25bn of support is untenable. It boggles the mind how Shinkansen in Japan is private yet they don't need the major gouging of tax payer AND tickets to make money. And Japan is an insanely expensive place to live to boot!

If its like other areas of the economy I've seen our railway will have an administration of 5,000 people making huge money, incredible benefits, etc.. Whereas the Japanese administration will have say 500 people making huge money, incredible benefits, etc..

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I love the confusion. The OTPP (Ontario Teachers' Pension Plan) is a fully funded retirement scheme which tries to ensure that retired teachers in Ontario will receive the pension incomes that were suggested to them.

As opposed to unfunded or underfunded UK schemes, they have hired people to work for them who will try to ensure that the returns on their portfolio will be adequate to roughly meet their requirements.

Canada is quite a liberal country. Teachers in Ontario are probably to the left of the general population in the UK.

Unlike many UK schemes, they are trying to shift the burden resulting from retiree committments to market returns which have a duration roughly related to the expected requirements from retirees rather than having an unscaled, unfunded, open ended demand on tax payers like many schemes in the UK. Their approach probably results from a realisation that taxpayer largesse is finite.

It is ironic to me that the left in this country are complaining that people further left than they are in other countries are seeking market rather than taxpayer supported solutions to the coming pensions crisis.

As I have posted before, the OTPP are not alone. Calpers, Calsters and many other US based schemes in very liberal states are taking similar approaches.

course, our own pension funds ( the ones with funds, not just "Provisions" out of budgets) are able to buy far superior products from the Banking industry...based on no effort by anyone whatsoever.

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More here: Channel Tunnel rail link sale begins UK's big sell off

How do you feel about a Canadian mutual-come-pension fund running the show here? This owners of this fund ARE profit driven, in case you didn't know that already.

30 years? Does that not seem out of order?

http://en.wikipedia.org/wiki/Ontario_Teachers%27_Pension_Plan

It will be interesting to see whether the coalition can break the cycle of the past 30 years in the UK. Sell off assets, create ponzi wealth, austerity......repeat until you reach Sri Lankan living standards.

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If its like other areas of the economy I've seen our railway will have an administration of 5,000 people making huge money, incredible benefits, etc.. Whereas the Japanese administration will have say 500 people making huge money, incredible benefits, etc..

And yet 5000 * 100,000 is 5 billion pounds and that's assuming between their salary and benefits they are on 100,000 each. And I doubt the railways themselves would be losing 20 billion per year without huge corruption involved. The ticket prices alone should be giving them a comfortable profit, though I have heard the rolling stock is expensive kind of like how people have to pay to rent houses- train companies need to pay artificially inflated prices to big private leasers (banks) of rolling stock and I think aren't legally allowed to just buy their own otherwise surely they would.

One big scam, and another hidden tax on the taxpayer benefitting private hands. Trains are actually much more efficient than cars and so there are very artificial powers at work here making British trains expensive. Look how cheap China's railway services are to get an idea of how expensive ours is, they are an order of magnitude cheaper in terms of distance considering how small England is compared to the vast distances in China.

I would say a rail ticket in China is 20-30x cheaper than in the UK for equivalent distances.

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And yet 5000 * 100,000 is 5 billion pounds and that's assuming between their salary and benefits they are on 100,000 each. And I doubt the railways themselves would be losing 20 billion per year without huge corruption involved. The ticket prices alone should be giving them a comfortable profit, though I have heard the rolling stock is expensive kind of like how people have to pay to rent houses- train companies need to pay artificially inflated prices to big private leasers (banks) of rolling stock and I think aren't legally allowed to just buy their own otherwise surely they would.

One big scam, and another hidden tax on the taxpayer benefitting private hands. Trains are actually much more efficient than cars and so there are very artificial powers at work here making British trains expensive. Look how cheap China's railway services are to get an idea of how expensive ours is, they are an order of magnitude cheaper in terms of distance considering how small England is compared to the vast distances in China.

I would say a rail ticket in China is 20-30x cheaper than in the UK for equivalent distances.

Not only China, the rest of Europe has rail systems that are cheaper and more efficient. Some of this is down to geater taxpayer subsidy but those funny Europeans see that having an efficient and affordable transport network is actually a benefit to wealth creation in other areas of the economy rather than a cash cow for foreign investors at the expense of a shagged out workforce.

Edited by campervanman

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Not only China, the rest of Europe has rail systems that are cheaper and more efficient. Some of this is down to geater taxpayer subsidy but those funny Europeans see that having an efficient and affordable transport network is actually a benefit to wealth creation in other areas of the economy rather than a cash cow for foreign investors at the expense of a shagged out workforce.

2008 Article

http://www.guardian.co.uk/business/2008/jul/09/rail.sncf.montblancexpress

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course, our own pension funds ( the ones with funds, not just "Provisions" out of budgets) are able to buy far superior products from the Banking industry...based on no effort by anyone whatsoever.

One of the biggest challenges that funded pensions funds face is that the longevity of their members seems to be extending continually. Another is that inflation is both an unknown and is probably not correctly measured by governments

The good ones came to the conclusion at least a decade ago that undated assets like infrastructure are a very good asset to hold as they have a very long duration and offer reasonable inflation proptection.

The good ones also understand that they don't need all of the liquidity provided by more traditional products so they are trading better returns for lower liquidity in their infrastructure investments.

Quite honestly, the best people that I know in this sector are better than the best people that I know in the banking sector.

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Yeah a great deal for rail passengers that it was sold for over the odds so the buyers either need to put the price of tickets up or won't have enough to run a good service perhaps. In what way could it be better for passengers that it sold for more?

The buyers aren't running the service. They are simply charging others to do so. If they put the prices up they are in danger of getting less revenue

tim

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2.1bn....thats a return of about 6.4% for the operator.

and if they sell more usage, they get all the benefit.

I wonder why our own current owners couldnt possibly sell more usage.

Because they couldn't. ISTM quite resonable to let someone else have a go if you are failing and pretty smart to charge them a big fee to try.

Eurotunnel wont allow German TGVs through the tunnel becuase the trains dont break into two in an emergency....not that during the recent incidents, they actually decoupled stranded trains.

These rules are being changed

tim

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One of the biggest challenges that funded pensions funds face is that the longevity of their members seems to be extending continually. Another is that inflation is both an unknown and is probably not correctly measured by governments

The good ones came to the conclusion at least a decade ago that undated assets like infrastructure are a very good asset to hold as they have a very long duration and offer reasonable inflation proptection.

This might be true if you've bought it, but not if you're leasing it.

In 30 years time they have to give it back gratis, so in that time they have to generate enough income to pay them back their stake PLUS the interest on that money.

At the price in question ISTM that HMG got the best part of this deal and the Canadians have paid a lot of money for a very big risk.

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Pah railways in the UK should be destroyed anyway. The rails torn up repaved with indestructable concrete completely and replaced with trolly buses or conventional buses which do not compete with cars thus can be faster.

Ooooh, that's a REALLY good idea.

I wonder if that's been done yet.

Oh, it has. In Cambridge.

A complete and utter failure, 60m over budget and still no sign of opening. Still, it's not all bad news if it destroyed a railway that could have delivered a better service for less money.

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  • 259 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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