Grassy Highways

Everyone points to the Interstate system as the ideal infrastructure project. Sixty years ago, America was choking on roadway bottlenecks. Dwight Eisenhower once oversaw a coast-to-coast army convoy that took three weeks. As president, his highway initiative cut that time from weeks to days.

Now our highways facilitate commerce from around the world to every part of the country. Most places can be accessed in a matter of hours. This is an example of a productivity-enhancing government program. It’s what economists mean by a multiplier.

But imagine that money being spent 50 years earlier. Without a fleet of road-warriors to use them, those highways would have gone to seed and rotted away. The multiplier would have been zero. That’s why the kind and timing of infrastructure spending is so important. Ten years ago Japan tried to stimulate itself out of its funk, but it spent the money on wasteful projects like redirecting rivers and paving over mountains. No multiplier there.

So the stimulus money had better be spent right. Or we’ll end up with a lot of grassy highways.

Douglas R. Tengdin, CFA
Chief Investment Officer
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By | 2014-09-12T10:57:56+00:00 August 2nd, 2009|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. - Leave a comment if you have any questions—I read them all! - And Follow me on Twitter @GlobalMarketUpd

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