Where the rubber meets the Hyperloop

Prince Alwaleed bin Talal, the billionaire Saudi Arabian investor, has warned that his country’s oil-dependent economy is increasingly vulnerable to competition from the US shale revolution, setting him at odds with his country’s oil ministry and Opec officials.

In an open letter addressed to Ali Naimi, the Saudi oil minister, the prince called on the government to accelerate plans to diversify the economy….

Alwaleed warns of US shale danger to Saudi

Dear Prince Alwaleed,

I have an idea. The Kingdom should ask Uncle Sam for the national Hyperloop franchise, build it, operate it, then profit. If the quarter of a trillion in T-bonds OPEC nations hold isn’t enough, Japan holds a trillion in T-bonds and those guys know how to run a railroad (and build one too). I figure the route map of the Saudi American Hyperline would look something like is (bear in mind, every double track line is a sort a loop, just a question of how far apart you set the tracks).

Its an inherently (if uniquely) guaranteed investment because you have an automatic put option. Here’s where the magic happens, the President has the authority under the Trading with the Enemy Act of 1917 to block, unwind, take over or force any contract or transaction involving a foreign power. Essentially, if the Hyperloop turns out to be a white elephant, whenever you want out just threaten America (by which I mean airquotes “threaten”, don’t start a war or anything) and the President would be more or less obliged to buy it from you at market price, which could be whatever you and the President have previously agreed is “market price”. I’d suggest the strike price as whatever your investment would be worth at time of sale if it had been left in Treasuries. National Defense eminent domain powers as a tool to create synthetically risk-free investments, I’m sure someone’s written a paper on this.

Now the US Government could easily build out a national Hyperloop system itself, no doubt, but let’s face it, we are a Republic governed by incompetents. The grownups all left years ago. If we were a small country we’d be invaded, if we were an island we’d drown, if we were a mountain kingdom we’d all die in an avalanche. Its no coincidence our space program stopped going to moon about the time the Nazi scientists we hired started retiring. You want to diversify away from oil, arbitrage our stupidity. The point is, we are an absurdly rich country, as Mike Sankowski reminded me this morning, the US holds $128 trillion in oil & gas assets on public lands, public assets worth 8 times as much as our public debt. Have you heard any American public official, ever, make this point? Of course not, because that would not be how a stupid person thinks. We could sell hypothecate future oil & gas earnings (Texas Tea Bonds, ha) and pay off the public debt, build the Hyperloop and get around to rechanneling Canadian rivers from the Arctic Ocean towards Las Vegas, where they belong. I suppose we could go ahead and fix our crumbling infrastructure while we’re at it, but let’s not go crazy.

We could do all of this and more but we’ll end up doing nothing for one simple reasons, incompetent leadership. Listen to me, Prince Alwaleed, arbitrage our stupidity. If you understand, and I know you do, that there are national assets as well as national debts, you already know more about public finance than most congressmen. You’d be doing my country a favor if you took advantage of these rubes as I’ve suggested above. Elon Musk (who’s absolutely disqualified for high office on grounds he’s not stupid) has said he’ll release Hyperloop details on August 12. Get on board, Prince Alwaleed.

Comments

  1. Philip Diehl says:

    This plan won’t do at all. With two pairs of tracks running parallel, one could build a true transcontinental loop with links between the loops to serve small metropolitan areas in the fly-over states. Saudi financing would provide the project the final twist required to give the network the memorable moniker it deserves.

    And there will be no need for threats. Just elect another Bush and he’ll take care of it.

    • beowulf says:

      I admit what made me think of this was going to Burger King last night and the counter girl saying, “Welcome to the kingdom”. :o)

      Just saw interesting interview with your fellow Texan, Jamie Galbraith. He really is a sharp guy.
      “if you’re of the view that money is a physical constraint in the system, then you’re doomed. You’re not going to get there…”
      “In the days before the telegraph, Europe at least one newspaper correspondent who understood the United States rather well, and his name was Karl Marx. He’d never been to the United States, but was a good reader of maps, knew where the railroads were, knew where the mountain ranges were, knew what the political environment was, knew the census reports and the proportion of slaves and free labor in each of the states of the South and the border states. And because he thought clearly and independently about these issues, he was able to write very clearly about the nature of the Civil War, about Abraham Lincoln’s approach, and about the likely military outcome, what a victory of the South would have required and how it quickly became a military impossibility. So it’s very bracing to read Marx on the U.S. Civil War, and particularly in comparison with the mythologized textbook treatments that one gets even now after 150 years.”
      http://www.nakedcapitalism.com/2013/07/james-galbraith-on-social-breakdown-and-financial-stress-in-europe-and-why-the-word-stimulus-needs-to-be-banned.html

  2. I’ll just put this here…
    In an internet conversation this week with Sir Richard Branson, Mr Musk said: “I originally started thinking about it when I read a thing about California’s high speed rail project, which was somewhat disappointing. It is actually worse than taking the plane. I get a little sad when things are not getting better in the future.

    “Another example would be like the Concorde being retired and the fact there is no supersonic passenger transport. I think that is sad. You want the future to be better than the past, or at least I do.”
    http://www.telegraph.co.uk/technology/news/10235261/Inside-the-Hyperloop-the-pneumatic-travel-system-faster-than-the-speed-of-sound.html