Rattle your tin cup if anyone's out there. The final days of summer are a tough time to provide a distracted world with financial stories. But the show must go on. And Wednesday morning, The New York Times and The Wall Street Journal offered up that relatively rare phenomenon: Stories on the same subject that adopt opposite points of view.
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The Times is all a-flutter about the possibilities of
infrastructure funds helping to rebuild American roads and bridges. Why not? State and local authorities need the cash to fix things up and, given current conditions, private money -- mostly, in the Times' telling, private equity, though the business has been dominated by infrastructure funds from the likes of Australia's Macquarie Bank and Babcock & Brown Ltd. -- needs to invest somewhere. The paper of record predicts a coming boom.
The Journal differs. The fact is, the infrastructure funds have already undergone a sizable boom around the world for the past several years, buying up everything from major airports to toll roads to the London water system. In many ways, that boom was a result of a continuing push toward privatization, governmental fiscal difficulties and an era, now a fond memory, of really easy money. As the Journal "Heard on the Street" points out --
"Infrastructure Takes Hit" reads the headline -- these are tougher times for the infrastructure folks. Projects have been cancelled or delayed; the heavy debt load of infrastructure funds have depressed their shares; and tighter credit and higher inflation have shifted the underlying economics of these deals in an unpromising direction. Where the Times sees only blue skies, the Journal sees masses of thunderheads.
Is there a way to reconcile the two stories? Sure. The Times is looking strictly at the U.S. and is taking a long view. Stories have been written for years predicting an eventual infrastructure boom; after all, the country is apparently crumbling like Babylon. Eventually, it'll happen, and private money will play a part. The Journal is sticking to the near-term. The business right now is suffering a serious hangover. It doesn't really matter if there's lots of possible projects if the economics stinks, which it does. If the Times doesn't acknowledge the present (this is actually uncharacteristic of the Gray Lady, which usually revels in the post-party mess like the neighborhood scold), the Journal doesn't pause to admit that there's probably a a future for this asset class once conditions improve.
And improve they will. When is a different matter.
- Robert Teitelman
