High Speed Rail

Let's Pay for Our Extremely Speculative High-Speed Train with Retirement Money!

California pursues pension investments into its expensive boondoggle

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A fast one-way trip for investors?

What happens when California's various fiscal disasters collide? The state starts courting pension funds to invest in its $68 billion high-speed train in order to get it built. Bloomberg has the frightening details:

California is courting sovereign wealth funds, pensions and endowments for more than $50 billion to build Gov. Jerry Brown's proposed bullet train to link the state's largest cities, the most expensive public works project in U.S. history.

High-speed rail ventures such as California's, which has weathered management shake-ups and fluctuating cost estimates, pose attractive opportunities for such investors, who together have $6 trillion in assets, said Andy Kunz, president and CEO of the U.S. High Speed Rail Association, a non-profit advocacy group meeting this week in Los Angeles.

California is the only U.S. state working to lay tracks for trains running as fast as 220 mph. The $68.4 billion project, linking San Francisco with Los Angeles, is counting on $10 billion in bonds authorized by voters, $3.3 billion committed by the federal government and as much as $55.1 billion from private sources.

Bloomberg notes that the state's non-partisan Legislative Analyst's Office has labeled the high-speed train's funding model as "highly speculative." The office actually went even further than that, discouraging the legislature from approving any funding until details on how to pay for the train beyond the initial $10 billion in state bond money and federal stimulus dollars were hammered out.

As Reason has reported extensively – everything about this boondoggle is "highly speculative." Ridership numbers are completely unreliable. The touted benefits to the environment are non-existent.

Adrian Moore (of the Reason Foundation, which publishes this site), Wendell Cox, and Joseph Vranich wrote a list of reasons why the project shouldn't get any more money, as well as a report detailing the many flawed assumptions used by the California High-Speed Rail Authority to justify the train's construction. They predict that by 2030, the train would be losing $4.17 billion a year. It might not be the best place to let your money ride for the long-term.

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  1. The state starts courting pension funds to invest in its $68 billion high-speed train in order to get it built.

    Do it. Fucking do it. Rape the pension funds. Rape them until they can’t be raped any more. Take every dollar from those pension funds and call it “The Public Sector Paying their Fair Share”.

    1. Democracy is the theory that the common people know what they want and deserve to get it good and hard.

  2. Beautiful! If the unions voluntarily loan their pension money to government waste, that is actually a brilliant plan.

    1. Don’t you see the magic at work? Public sector unions invest in projects built by public sector unions. The money just recycles and grows everytime!

  3. The bonds will be overseen by the Bank of Greece.

    1. Any audits must be performed by the Spanish accountants union.

  4. L’il problem with this cunning plan:

    Pension trustees are fiduciaries, who are allowed to invest the pension fund’s money only in ventures that a reasonably prudent investor would invest in.

    I see no way that investing in this boondoggle meets that test.

    1. Just convince the unions that former Lehman Bros fund managers need jobs.

    2. What do you mean? This is the ultimate fucking test of government unions and employees believing in the total state. If you really believe in your government expansion, invest your own money in it.

    3. Wouldn’t this be illeagl if a private company did this?

    4. Pension trustees are fiduciaries, who are allowed to invest the pension fund’s money only in ventures that a reasonably prudent investor would invest in.

      I see no way that investing in this boondoggle meets that test.

      I see an initiative in the near future that requires CALPERS to invest 40% of it’s money in CA state and municipal bonds.

      MWWWAHAHAHAHAHAHAHA

  5. This train does not connect San Francisco and LA. If it did it would make slightly more sense; or should I say, slightly less negative sense, since the value of the thing, fiscally and logically, is less than zero.

  6. It’s simple. The pension funds are backed by the state. It’s entirely sound. No matter how lousy the investment, the state will make up the difference.

    The value of the individual thing is irrelevant. Thevalue of the whole has no relation to the sum of the value of the parts.

  7. When the state defaults on the Bonds the unions will get their political cronies to bail them out. However theend up paying for it, the real loser will always be the taxpayers.

  8. As Reason has reported extensively ? everything about this boondoggle is “highly speculative.”

    Predicting that it won’t get built to the extent it’s supposed to be isn’t highly speculative.

  9. Hey its only money, no big deal lol

    http://www.IPMask.tk

  10. Is it really “investing” when you know the money has to be stolen from California citizens to pay you back? Doesn’t that make anyone who “invests” in the high speed train to the middle of nowhere bonds an accomplice to the criminals in Sacramento?

  11. Why in fuck would anyone invest in something that can’t possibly turn a profit, ever?

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