Share this page with your friends:


Please note: The Frank Talk articles listed below contain historical material. The data provided was current at the time of publication. For current information regarding any of the funds mentioned in these presentations, please visit the appropriate fund performance page.

Poor Infrastructure a Pothole for Russian Economy
August 27, 2009

Russian Economy 082709The deadly collapse of a freeway bridge in Minneapolis in 2007 brought to national attention that our vital infrastructure was falling apart.

Perhaps last week’s disaster at a major hydroelectric power station in Siberia that killed 69 people will get Russia moving to update its crumbling infrastructure. But the challenges are many.

The vast majority of Russia’s roads, bridges, railways and power grid date back to the Cold War era, and it’s estimated that more than 60 percent need to be replaced.

Heat and power outages during winter months are common, and Moscow is plagued with world-class traffic-jams. But at least Muscovites have places to drive—as of last year, more than 10 percent of the country’s population had no access to roads at all.

And while other BRIC (Brazil, Russia, India and China) nations have rapidly expanded their highways and rail systems over the past several years, the length of Russia’s usable roads actually declined by 31,000 kilometers (19,375 miles) from 2000 to 2006.

Roads in Russia Graph 082709

Safety and quality of life aren’t the only reasons Russia should invest heavily in its infrastructure. Looking at the economics, estimates are that annual GDP growth is reduced by up to 6 percent by the country’s poor infrastructure.

One infrastructure challenge facing Russia is its government incompetence and “unfathomable levels of corruption” that add huge cost to projects, according to the Moscow-based Center for Research of Post-Industrial Studies.

It cites figures that the cost of building one kilometer of a four-lane highway in Russia is about $13 million, about four times that of Brazil or China. For some sections of a highway connecting Moscow and St. Petersburg, the construction cost exceeded $130 million per kilometer due to government waste and palm-greasing.

Another problem is finding the big sums needed to get the work done. Prime Minister Putin proposed a 10-year, $1 trillion plan last year but that was prior to fallout in global markets and commodities.

Since then, more than $13 billion in infrastructure projects have been delayed or canceled, with the government spending most of the money earmarked for infrastructure on shoring up the country’s banking system instead. Rather than embarking on a comprehensive upgrade program, Putin now pledges to address “vital parts” of Russia’s infrastructure.

This means much of the funding for Russia’s infrastructure repairs will need to come from public-private partnerships (PPPs) and other innovative non-government sources. But these projects too will be vulnerable to costly corruption demands involving political entities and bureaucrats that would cut returns to investors.


Share “Poor Infrastructure a Pothole for Russian Economy”

What’s New in Global Markets
June 18, 2009

Many years ago, when I first traveled to China, the presence of construction cranes as far as the eye could see really solidified in my mind that something special and enduring was going on there.

With the power of first-hand experience in mind, we’ve set up a webcast double feature for investors.

Next Thursday, I will share what I’ve learned on recent trips to Europe and Asia. What signs of recovery are out there? Have the actions of global governments been enough to pump life back into these economies?

And on Friday, my good friend Andy Rothman, CLSA’s China macro strategist, will fill you in on what’s happening on the ground in China.

Has the Beijing government’s infrastructure-focused stimulus been effective as reported? Will more stimulus be needed for growth to continue in the second half of 2009?

Andy is one of the most knowledgeable sources on China. He spent 17 years following China’s economic policy while working in the U.S. foreign service. He’s been CLSA’s China macro strategist since 2000.

I urge you to take advantage of this opportunity to expand your global perspective. Registration for both webcasts is below.

 Recovery Webcast 061809

China Webcast 061809

Register Now

Thursday, June 25, 2009
11:00 AM ET (10:00 AM CT)

Register Now

Friday, June 26, 2009
10:00 AM ET (9:00 AM CT)

I also wanted to share with you a slideshow of ongoing construction projects in China that I found on It’s really interesting to see how the unique Chinese culture mixes with the rapid changes that are taking place.

Watch the Slideshow


Share “What’s New in Global Markets”

New Jersey’s ARC de Triomphe
June 11, 2009

The Obama administration is looking toward infrastructure as a way to kickstart the U.S. economy, so this week’s start to the nation’s largest mass transit project is a significant event.

The $8.7 billion Access to the Region’s Core Project (known as the ARC) will connect New York and New Jersey via a new tunnel under the Hudson River. Transit agencies in the two states are putting up about two-thirds of the construction money, with the federal government providing the rest. Construction is scheduled to finished by 2017.

An expansion project of ARC’s magnitude is long overdue. The existing tunnel was built a century ago and was never intended for commuter use. Meanwhile, New Jersey’s rail ridership has quadrupled since 1984 to 44 million trips annually.

The system is so strained that one five minute train disruption during peak time can delay up to 15 trains and affect more than 10,000 passengers, according to

 Doubling Rail Capacity 061109

The ARC project is expected to create 3,000 jobs on each side of the Hudson and produce an additional $660 million annually in economic benefit for the region.  There’s also an environmental upside, as access to more trains is projected to reduce auto traffic and emissions.


Share “New Jersey’s ARC de Triomphe”

Where Have My Highway Trust Funds Gone?
June 4, 2009

Highway Trust 060409The Highway Trust Fund said this week it will need an additional $7 billion by August to finance projects already promised to states and keep the fund from going bankrupt.

The HTF is the primary source of funding for road and bridge projects across the United States. It is funded through gasoline taxes and special taxes, mostly on heavy-use vehicles like trucks.

This means that HTF relies on highway use for its funding. Traffic volume, however, has been generally trending downward since before the credit crisis began, according to federal statistics.

Travel U.S. Highways chart 060409

This isn’t the first time the HTF has been on the edge of solvency. Just last September Congress approved a special $8 billion rescue to keep it from going broke.

And more bailouts are possible. The federal gas tax has been 18.4 cents per gallon since 1993, but chances are slim that it would be raised any time soon, given the struggling economy.

One alternative would be to unlock stimulus funds sent out to the states. As it stands now, these funds can’t be used to cover state highway budget shortfalls.

A longer-term solution recommended by Congressional panels is a mileage-based tax system under which the distance a vehicle travels is calculated using a GPS-like tracker. This would be a complex and costly solution that would take a decade or more to put in place.


Share “Where Have My Highway Trust Funds Gone?”

All Aboard the Rail Revival
April 17, 2009

President Obama is asking for $13 billion for a high-speed passenger rail system, saying its creation “will lead to innovations that change the way we travel in America.”

Proposed plans include linking Los Angeles and San Francisco with a high-speed rail that would make it only a two-hour trip. Below is a map of the ten high-speed corridors outlined in the President’s plan.

High-Speed Rail 041709

Train travel is already more popular than most people realize. Amtrak carried nearly 30 million passengers last year, up 11 percent from 2007. The chart below shows a steady upward trend since the mid-1990s.

Amtrak chart 041709

The fastest growth has been on rail lines linking major cities less than 500 miles apart, according to the American Society of Civil Engineers. Such routes include the Boston-Washington corridor, the Bay Area to Sacramento and Milwaukee-Chicago.

In its 2009 infrastructure report, the ASCE gave America’s rail network a grade of “C-,” which is mediocre but nevertheless better than the “D” earned by America’s overall infrastructure.

The ASCE estimates that $63 billion in rail investment will be needed over the next five years to meet increasing passenger and freight demand.

About $51 billion has already been budgeted for rails, according to estimates, leaving roughly $12 billion in unmet need. That’s where President Obama’s proposal comes in—if it’s approved, there will be more than enough money for the necessary upgrades.


Share “All Aboard the Rail Revival”

Net Asset Value
as of 11/22/2017

Global Resources Fund PSPFX $5.97 0.03 Gold and Precious Metals Fund USERX $7.36 No Change World Precious Minerals Fund UNWPX $5.76 0.03 China Region Fund USCOX $12.18 0.03 Emerging Europe Fund EUROX $7.09 0.04 All American Equity Fund GBTFX $24.06 -0.05 Holmes Macro Trends Fund MEGAX $21.36 -0.06 Near-Term Tax Free Fund NEARX $2.21 -0.01 U.S. Government Securities Ultra-Short Bond Fund UGSDX $2.00 No Change