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Archive for Tuesday, November 25, 2008

Rail example

November 25, 2008

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To the editor:

The financial rescue of the American automobile industry has been big news lately. I am old enough to remember a similar “crisis” back in the 1960s with America’s railroads. Slavish adherence to old ways and old ideas had the industry in shambles.

Two giant icons of the industry, the New York Central Railroad and the Pennsylvania Railroad, merged Feb. 1, 1968, to form the Penn Central Railroad. It lasted until June 21, 1970, when they declared bankruptcy — at the time, the largest in U.S. history. Many other Eastern railroads were in similar circumstances.

In April 1976, the U.S. Congress combined the wreck of the Penn Central with six other bankrupt or nearly bankrupt lines into the Consolidated Railroad Corp. (Conrail), a government-run corporation. There were many dubious “experts” on this action.

But then something absolutely unheard of happened. Some of the most talented minds in the railroad industry were brought in and huge changes were made. Conrail began to show a profit! This created a real problem: what to do with a government project that actually made money?

Well, more experienced people got together and Conrail was split up, doled out to two functional private railroads, CSX and Norfolk Southern, and today these old lines of the NYC and PRR are profitable and operating well. Does it help when the government steps in and takes over? Common attitudes scoff, but with the model of the Consolidated Railroad Corp., there is evidence that it can be done right, and profitably

Fred Whitehead Jr.,
Lawrence

Comments

David Omar 6 years ago

The big SUV's that are/were on the market were designed for rich people, people who had the resources to buy a $45K car and spend the $125 to fill it a couple of times a week. The automakes competed over those types of vehicle and even though Chevy has some new/old cars, they are not as "loaded" as a Toyota or a Honda. This is where the American auto makers have failed. They fail to understand the true needs of the common everyday average Joe on the street. I know it would be a loss of millions of jobs and cause a real strong depression/recession, but they have to know that they are playing on a different court than the 50's and they have to change to the game that is being payed today!If they can do that and convince our lawmakers that their plan will work, and as much as I hate to bail out businesses in a market economy, I say do it. BUT WITH TONS of RESTRICTIONS. Turn in their large salaries and their private jets, and let them drive their smallest, least expensive car so they can see what improvements they need to make. Let them have the money but require them to spend it on systems that are current with the market and on products that will sell and the public wants. IF they do that, they will have viable businesses again and can repay the tax payers for their LOAN.

sjschlag 6 years ago

The only way General Motors is likely to survive is with a government takeover, similar to the Conrail takeover in the 1970s. Wrest control of the auto makers from the current CEOs, hire on some talented designers and management, and send them to work building vehicles for the people. When the company becomes profitable again, sell it off.

just_another_bozo_on_this_bus 6 years ago

The current market value of both the auto companies and the banks that have been bailed out is considerably less than the bailouts they have been asking for, and in the case of the banks, getting.The government should have just bought these banks at market value, which would have saved the taxpayers $billions, and fired all the management that have nearly destroyed the economy. They should do the same with the auto companies.

notajayhawk 6 years ago

just_another_bozo_on_this_bus (Anonymous) says… "The current market value of both the auto companies and the banks that have been bailed out is considerably less than the bailouts they have been asking for"Nice factoid, boohoozo. And so completely meaningless, too.The market value of a corporation has nothing to do with its actual worth. All that number reflects is the total dollar value of the corporations shares, which in turn reflects nothing except what someone is willing to pay for them at any given moment. (Since you apparently haven't been paying much attention lately, boohoozo, I hate to tell you this, but stock values in general are down at the moment - I'm surprised you hadn't heard, it's been in the news a lot recently.) And even that isn't accurate; just because 10,000 shares of XYZ-Corp traded for $100 apiece today doesn't mean you could find someone willing to pay $100 for all 100 million shares.The true worth of a mega-corporation like GM is what it contributes to the economy. And with one in seven jobs in this country being related in some way to the automakers, that's a much bigger impact, at every level, than what they're asking.

just_another_bozo_on_this_bus 6 years ago

That was a really stupid post, even for you, nota. The stock valuation is what the company's stock can be bought for, period.If you really wanted to post a weakness in the idea of buying all the stock, here it is-- as soon as the US Government begins a discussion of buying all of those stocks, speculative pressure would push the value of the stock higher.But even if it does, as you point out, the sum total of actual assets of the corporation would likely still have more value than its stock, which is a good argument for doing exactly what I suggested. It's sure a lot better idea for the taxpayers than just cutting them a check for nothing.I've learned by now that no matter what I say, nota, you'll take the opposite side. But I find that juvenile aspect of your posting personality quite entertaining. Keep it up.

notajayhawk 6 years ago

JackRipper (Anonymous) says… "So if jobs are important enough to bailout a dying industry then surely creating the jobs of the future by the a serious effort by the government to build a new passenger train system over the dying skeleton of the past car centric economy makes even more sense."Right. Instead of investing in a 'dying' business, we should invest in one that's been dead for decades. That's what we've all come to expect from jack___ripper's interpretation of "sense.""Instead of sinking money that nota says is ok to spend for jobs on an industry that thinks innovation is four wheel drive, gps, and heated seats then he shouldn't have a problem building a new industry that will provide jobs, new innovation, and be in tune with the resource limitations of the future."Jacquie, sweetheart, I know you believe education shouldn't go beyond age 15, but did you even make it to the third grade? You don't have the reading comprehension of a weasel. Or perhaps you can cite the part of my post where I said it was "ok" to spend the money on the bailout? I was merely disputing boohoozo's contention that the money being asked for by the car companies was more than they are worth, I never said they should give it to them. But keep trying, jacquie - maybe you'll come up with another delusional pipedream that your choo-choos will ever create as many jobs as the auto industry did.*****just_another_bozo_on_this_bus (Anonymous) says… "If you really wanted to post a weakness in the idea of buying all the stock, here it is—"I see clown_rants_from_bus went to the same schools as jackie. I believe the automakers were in Washington asking for a loan, boohoozo, they didn't go there trying to sell their stock. I'd share your sentiment that your post was unusually stupid, but sadly, clown-boy, stupid is hardly unusual for you. Even stupidity of this magnitude.

just_another_bozo_on_this_bus 6 years ago

"Washington asking for a loan, boohoozo, they didn't go there trying to sell their stock. "And where did I say they went there to sell their stock? Clearly, they'd much rather have a gift from taxpayers rather than getting booted from their jobs for lousy performance. I was wrong in my earlier post. You don't take the opposite side from whatever I post. You take no discernible position at all-- just vitriolic diatribe mixed with nonsensical strawmen.

notajayhawk 6 years ago

JackRipper (Anonymous) says… "Well nota, at least you aren't disputing the facts anymore. Perhaps I did read more into that then I should have but since you supported the bailout for financial sector and you have a love of cars that I came to that conclusion."Hmm. Not sure whether it's your reading comprehension or your memory that's the problem here - both of them are so pitiful. What I said about the TARP bailout, jacquie, was that not only was it the taxpayers who were affected by the financial market problems, but it was their own doing (through both electing the legislators who allowed/encouraged the actions of the financial organizations and handing their money over to investors without watching or caring what they were doing with it), so they shouldn't b**ch about the bailout money. Please do try to keep up."See the jobs created by the mega corporations that have a dilemma of building cars that last longer but still have to depend on people upgrading every year..."I know facts confuse you, jacquie, but the number of registered cars grows by millions every year. Auto makers don't 'depend on people upgrading every year,' although many do. Now, you might be wearing the same set of coveralls you had on the last time you held a job (maybe in the 40's?), you might still be watching the same black-and-white console television with the rabbit ears on top, and your washing machine might still have a hand-cranked wringer attached to it, but people 'upgrade' a lot of the products they own from year to year, including their cars. Why? Because they can, and they want to.By the way, jacquie, do you drive an Edsel or a DeSoto?"But see the train still kept arollin all night long and will continue too and the jobs will be sound because people will still be traveling but the necessity of having to purchase a new vehicle to keep the monster fed is not there."Confusing as always, jacquie. Didn't you say above "...surely creating the jobs of the future by the a serious effort by the government to build a new passenger train system...?" So which is it, jacquie, let the trains 'keep arollin' with the same old dying technology people rejected decades ago, or spend mega-billions "creating" this all new rail system? Talk out of both sides of your adult-diaper much?

notajayhawk 6 years ago

just_another_bozo_on_this_bus (Anonymous) says… "I was wrong in my earlier post."You could (and should) have stopped there, boohoozo. Still, admitting you have a problem is an important first step, no matter how small. Keep up the good work."And where did I say they went there to sell their stock?"Maybe when you said "If you really wanted to post a weakness in the idea of buying all the stock, here it is..." (I know jackie-boy can't remember what I said before trying to dispute it, but you can't even keep up with what YOU say before trying to defend it.) Nobody else (including the automakers, or the LTE writer) had suggested any such thing, so other than from your posterior opening (where most of your moronic posts are pulled from), where did YOU get that from boohoozo? Amusing how you constantly introduce strawman arguments that have nothing to do with anything and then accuse others of doing so.My first reply to your post was to dispute your pointless mention that the amount being requested for loans was more than the "market value" of the companies themselves. Your post was actually a siamese twin of a strawman, one statement whose purpose was to make two distractions from the issue. First of all, there are thousands if not millions of businesses who take out loans in excess of the worth of their capital assets, loans which are routinely granted because the business itself has value. Second, as I said (and you parroted as if it was somehow your original idea), the "market value" is a meaningless number that has little (and not necessarily anything at all) to do with even a company's liquidation value.I said the $25B was far lower than the contribution the automaking industry makes to this economy, boohoozo. Instead of constantly trying to distract from issues when you don't have an answer (which seems to be pretty much all the time), are you going to try to dispute that, or are you going to continue to blather? (That was a rhetorical question, boohoozo, everyone familiar with your posts already knows the answer.)

just_another_bozo_on_this_bus 6 years ago

Careful, nota, those bulging veins on the side of your neck are not a good sign.

just_another_bozo_on_this_bus 6 years ago

And maybe you should take your computer in to see how it's holding up to the diarrhea that emanates from your keyboard. Can't be good for it.

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