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Investor Jim Chanos: Trump Infrastructure Plan Is 'Fake Fiscal News'

Image: Investor Jim Chanos: Trump Infrastructure Plan Is 'Fake Fiscal News'
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By    |   Monday, 03 Jul 2017 04:17 PM

President Donald Trump's infrastructure plan is "fake fiscal news," and won't spark the economic growth envisioned for America, according to a famed investor who was one of the first to spot the fraud that ballooned into the Enron scandal.

In an interview with the Institute for New Economic Thinking, short-seller Jim Chanos of Kynikos Associates said the proposed infrastructure plan will be "public-private partnerships, and "because private investors need high rates of return, these deals generally haven't been good deals for anybody."

"In reality, we already have something [that] create[s] these infrastructure projects: It's called municipal finance, where municipalities and states can set up funding vehicles and sell bonds to finance the projects," he said.

"Now we're told that the private sector will be able to do this better. Well, they might be able to do it better and faster, but only for a small number of projects."

"Real projects that we need — repairing, refurbishing, whatever — are tougher," he continued. "You're not going to get private investors to sign up for those without definable cash flows.

"It's something that sounds good but when we actually start looking at projects that make sense for private investors leveraged up with state-backed or federally-backed bonds to do a project, we're going to find that it winnows down the list dramatically."

According to Chanos, Trump's "core supporters" will be disappointed and rural areas will be left out.

"In my own view, these public-private projects are not what core supporters thought they were getting with Trump," he said. "It's going to be great for Wall Street investment banks, but I'm skeptical that a lot of people are going to be able to get excited about the economic growth coming from them."

"Rural people won't benefit from them," he added. "They won't be happening in the Deep South, where you might need new levees. This is for parking garages at [New York's John F. Kennedy airport]. The reconstruction of New York City's Tappan Zee Bridge is being funded this way, a public-private partnership."

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President Donald Trump's infrastructure plan is "fake fiscal news," and won't spark the economic growth envisioned for America, according to a famed investor who was one of the first to spot the fraud that ballooned into the Enron scandal.
jim chanos, trump, infrastructure, plan
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2017-17-03
Monday, 03 Jul 2017 04:17 PM
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