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Trump Infrastructure Strategy

November 12, 2016

At the moment it appears Trump favors the idea of Private Investment towards fixing the crumbling infrastructure of the USA. His advisors want to launch  $1 trillion in private sector infrastructure spending via $140 billion in tax credits for the companies willing to do the work.

The concept of P3’s (Public Private Partnerships) is not a new strategy  https://redrundrain.wordpress.com/2014/02/01/infrastructure-costs/

There is a catch – the Private Sector is just not interested due to the low return on investment. Trump’s team acknowledges that fact : “For infrastructure construction to be financeable privately, it needs a revenue stream from which to pay operating costs, the interest and principal on the debt, and the dividends on the equity.”

Partnerships.png

There is extreme difficulty forecasting a revenue stream from a P3 endeavor.  It comes from attempting to determine the pricing, utilization rates, and operating costs over time. With the high risk of lending comes the necessity for  large equity expectations. Trumps advisors claim the leverage will be about five times equity. In order to finance a trillion dollars of infrastructure – it is necessary to ask for an equity investment of $167 billion.

You can read all about Trumps advisors analysis here

http://peternavarro.com/sitebuildercontent/sitebuilderfiles/infrastructurereport.pdf

 

 

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