What If Cintra and Macquarie Had Financial Trouble and Went Under, Enron Style? Somervell County Salon-Glen Rose, Rainbow, Nemo, Glass....Texas


What If Cintra and Macquarie Had Financial Trouble and Went Under, Enron Style?

4 June 2007 at 4:06:58 PM

Article about the Indiana toll road says that the money was already paid up front so even if, say, Indiana had to take back the roads, they'd be fine.

An investor known for predicting the collapse of the Enron energy company says one of the partners leasing the Indiana Toll Road could be headed for serious financial trouble, 6News' Norman Cox reported Friday.

New York hedge fund manager Jim Chanos said he thinks Australia-based Macquarie Bank -- which, along with Spanish company Cintra, last year paid Indiana $3.8 billion to operate the toll road for 75 years -- cannot survive if continues to do business as it does.

The bank buys things such as toll roads and bowling alleys and repackages them into trusts, in which it sells shares to other investors while collecting fees. Chanos said that won't work in the long run

He told the Australian Broadcasting Co. that Macquarie doesn't care what it pays for properties such as the toll road, and that he believes the bank is a house of cards that can exist only in a world of cheap credit and asset inflation.

"The underlying economics, in my opinion, are flawed," Chanos said. "Being the top bidder for these assets and then flipping them into the trusts leads to an unsustainable economic engine at the trust level, and when that breaks down, all of the fees and whatever's being paid begin to break down."

But here's what I wonder. We know that people's pension funds are being used to invest in Cintra and Macquarie-if they went under, would people's retirement funds be out the window?

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