Why is America falling behind in global competitiveness? This simple infrastructure spending chart shows why

March 12, 2013 at 4:52 pm

(via Wall Street Journal)

Bridging the investment gap

The U.S. spending on transportation (and infrastructure in general) has flatlined (or some argue that it has declined considerably) over the decades while other countries around the globe, especially in Asia, have ramped up their investment in large-scale infrastructure projects such as building highways and railroads.  So, how does it look when we match our spending versus the other nations.  This chart from Wall Street Journal shows show you how badly we are behind in this race to stay competitive. Recommend reading the related article on WSJ that shows how funding for infrastructure projects may be coming from new sources as ‘wealth advisers are steering clients into infrastructure deals. Let’s not forget that we have already a crazy amount of things to fix and on top of that we have to spend on projects that can cater to the growing need for transportation as the population explodes.  But do we really have the money to fix the broke and embark on starting new projects? With a dwindling highway trust fund account and a political gridlock in Washington, even the basic of needs for keeping the country economically superior seems to be a bigger challenge than ever.

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Chrysler to File for Bankruptcy Following Collapse of Negotiations; President Obama to address the nation

April 30, 2009 at 9:45 am

(Source: Washington Post)

Chrysler, one of the three pillars of the American auto industry, will file for bankruptcy today after last-minute negotiations between the government and the automaker’s creditors broke down last night, an Obama administration official said.

 U.S. officials had offered Chrysler’s secured lenders $2.25 billion in cash if they would agree to writedown the $6.9 in secured debt that the company owed. But a small group of hedge funds refused the 11th-hour deal, forcing an imminent bankruptcy.

An administration official this morning expressed disappointment, saying the holdouts had failed to “do the right thing,” but that “their failure to act in either their own economic interest or the national interest does not diminish the accomplishments made by Chrysler, Fiat and its stakeholders, nor will it impede the new opportunity Chrysler now has to restructure and emerge stronger going forward.”

President Obama is scheduled to address the issue at noon today at the White House.

As talks broke down late last night, it became near certainty that the Obama administration would send Chrysler into bankruptcy under a plan that would replace chief executive Robert L. Nardelli and pump billions of dollars more into the effort, all in hopes that the company could emerge from court proceedings as a re-energized competitor in the global economy.

The U.S. government’s attempt to save the automaker amounts to another extraordinary intervention in the economy and a landmark event in the history of the American auto industry.

Under the administration’s detailed plan for a “surgical bankruptcy,” ownership of Chrysler would be dramatically reorganized, the leadership of Italian automaker Fiat would take over company management and the U.S. and Canadian governments would contribute more than $10 billion in additional funding.

Negotiations between the government and the company’s stakeholders — Chrysler’s lenders, the union and proposed merger partner Fiat — went well into the night, as dealmakers rushed to meet President Obama’s April 30 deadline.

Last night, the United Auto Workers union overwhelmingly ratified the administration proposal to give its retiree health fund the 55 percent equity stake in Chrysler. In exchange, the health fund must give up its claim to much of the $10 billion that Chrysler owes it. Eighty-two percent of production workers and 80 percent of skilled-trades workers voted for the agreement.

While four of Chrysler’s major creditors — J.P. Morgan ChaseCitigroupGoldman Sachs and Morgan Stanley — have agreed to the Treasury’s plan, other lenders, mainly hedge funds, had held out. The holdouts included Oppenheimer Funds, Perella Weinberg Partners and Stairway Capital, two sources said. The last two have funds that invest in “distressed” companies. It is not known what companies ultimately failed to reach agreement with the government.

The hedge funds likely think they could get a better return in a bankruptcy filing or in a sale of Chrysler’s assets, said Sheldon Stone, a turnaround expert at Amherst Partners. The government offer made yesterday would represent a recovery of about 32 cents on the dollar. A recent Standard & Poor’s analysis said the lenders could recover 30 to 50 cents on the dollar.