Monday, September 13, 2010

Japan to Lend to California?

Now to the really absurd item of the day. A Japanese state owned bank is planning on lending the state of California billions of dollars to build a high speed train to run from San Francisco to Los Angeles. You just can't make this stuff up. Part of the reason Japan is making the loan is to help Japanese companies in the bidding process. That makes alot of sense. Let a bankrupt country make a loan to a bankrupt state so they can hire a company from your country to paid with money from your country. If we are going to play ponzi why do it in such an inefficient manner? Just give the money directly to the Japanese company?? This money being spent can't possibly be expected to be paid off from earnings. Instead the gamble I am sure is that someone will refinance it down the road. The way our system is run.

From Bloomberg

Japan said it’s ready to lend California money to help pay for a planned high-speed railroad as trainmakers from Asia to Europe compete for work on a project that will cost at least $40 billion.


California won $2.3 billion of federal funds to help build the high-speed train, the biggest award in Obama’s high-speed rail funding program. The state also approved in 2008 a $10 billion bond sale to help fund the line, which is due to start services in 2020.

The California State Auditor has said that the state’s business plan for the high-speed rail network doesn’t include steps to replace all of the $17 billion to $19 billion in federal funds initially envisioned for the system.

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