Larson: We Are All Debtors

ABSTRACT:

For the last three decades, cities and towns across the United States have grappled with a severe reduction in public funding which has weakened municipalities’ ability to provide basic services. As a result, municipal governments are increasingly financed by debt. Public Authorities (PA), such as New York’s Empire State Development Corporation, are authorized to issue debt backed by tax dollars. There are tens of thousands of such entities across the United States, a “shadow government” not accountable to voters. PAs operate based on a corporate model in which overleveraged holdings are hidden in subsidiary corporations. Such entities have proved so profitable to the investor class that a new brand of PAs has been created for the sole purpose of issuing “phantom bonds,” money that never reaches the public but is instead siphoned off by investors and bond insurers. The transformation of PAs from vehicles of reform to tools of exploitation illustrates that the solution to the debt crisis is a new economy in which our debts are to our families and our communities, not Wall Street.

 

Available for download here.

Tagliapietra: Financing the European Energy Infrastructure of the Future

ABSTRACT:

Europe is in need of massive infrastructure investments. Only in the energy sector, EUR 1.1 trillion will be needed by 2020 to finance an infrastructure able to match future demand for energy, to ensure security of supply and to comply with the decarbonisation targets. However, the EU infrastructure-funding model is congested by a mix of financial, regulatory and institutional constrains. Given the crucial role played by energy infrastructure in an economic system, this bottleneck could seriously undermine the recovery of the EU economy and its future prospects of growth. For this reason, it is necessary and urgent to find new ways to promote private sector financing of energy infrastructure projects, through innovative tools such as the Connecting Europe Facility and the Europe 2020 Project Bond Initiative.

 

Available for download here.

Chang: Public–private partnerships in China: A case of the Beijing No.4 Metro line

ABSTRACT:

Through a case study on Beijing’s No. 4 Metro line, this paper illustrates benefits, costs, opportunities and risks in public–private partnerships (PPP) in China. It describes the process to land a concession agreement; demonstrates the consequences for revenue and costs from using a private entrepreneur; and estimates the benefits to the public sector. By using a PPP model, the public sector may save up to 31% of its initial investment and 9.4% of total expenses during the concession. The private investor may earn a profit, but bears a risk due to absence of the rule of law.

 

Available for download here (paywall).