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2006 - The Year of Re-Regulation of Railroads?

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[quote]QUOTE: Originally posted by futuremodal [quote]QUOTE: Originally posted by up829 FM, I think you're missing the point about DME. For better ot worse, de-regulation has been the trend since the 80's. DME shows the market is working.....[/quote] Except if the market was really working, DM&E (and any other railroad company who could conceivably stretch their rails into the PRB) would have been able to build their extension entirely with private funds. The question then is what is the primary reason for this need for government backing for rail projects? Is it perhaps that railroads have never really had the private sector viability capable of a nationwide network (otherwise why did we need the land grants and why do we need the anti-trust exemption)? Should a nation's rail network be reflective of it's total multi-modal package of infrastructure, rather than trying to exemplify a quasi-private sector investment? What we do know is this: The current private closed access rail system does not engender the ideal of a genuine working free market, either historically or presently. [/quote] Loan guarantees aren't direct subsidies and there's an alphabet soup list of them available. Everything from SBA and FHA backed loans to the FDIC and PBGC insurance programs. People sometimes think of them as bailouts, but like land grants, what they do is lower the risk premium companies pay for capital. They may mean the difference between selling investment grade bonds and junk bonds. Capital markets today are focused on short term returns rather than long term growth. The large number of 401Ks and mutual funds is partly to blame along with Federal tax policy that favors earnings instead of long term capital gains.
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