It all started well enough:

Indiana Governor Mitch Daniels basked in the applause as he entered a room full of state officials and reporters to officially announce the close of the state’s $US3.8 billion toll road privatisation.It was June 29, 2006, and Daniels had received the final payment from Macquarie Infrastructure Group and its Spanish partner, Cintra, which had taken over a 75-year lease on the Indiana Toll Road, the so-called “Main street of the Midwest”.

Since that day, Gov. Daniels has been quick to pat himself on the back for the deal, and even quicker to deny the increasingly numerous criticisms of the long-term “sale” of the state asset. But while the prospect of Major Moves funding drying up prior to its ten year conclusion has been the main story up until now, the Australian press — home of the international conglomerate who purchased the Indiana Toll Road — is buzzing with talk that all may not be quiet on the far-eastern front.

However, the world changed in September last year, with the collapse of US investment bank Lehman Brothers, which ended any hopes that the subprime mortgage crisis would blow over.Funding dried up, asset valuations started plummeting and debt became a dirty word, leaving the “Macquarie Model” all but dead and its management team scrambling to avoid disaster.

The US roads, a cause of so much celebration 2½ years ago, are struggling to repay their debts and Macquarie’s share price, held hostage to a market awash with capital raising rumours, slumped this week to its lowest level since June 1999.

It is not just day traders and rumour mongers selling the stock; long-term investors, including its biggest US shareholder, Capital Group, have been abandoning ship. The shine has well and truly come off the silver doughnut.

Republicans have reacted giddily to the news, breathlessly explaining how this is all according to plan. Macquarie going belly-up would just result in the ITR being returned to Hoosiers cost-free, they tell us.

Well, not exactly.

While the “Failure=Success” model is appealing, it leaves out the potential for a protracted legal battle, a state asset that will likely have been stripped of all profit-generating potential, and a statewide lifeline that will suffer in the meantime. And yet, we haven’t heard a peep from Gov. Daniels or his administration about what they might be doing to prepare for a Macquarie Meltdown.

Bueller…Bueller?