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Government Sticking Too Much of Its Nose Into Transportation .. Again!

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Posted by Convicted One on Wednesday, July 14, 2021 11:36 AM

Euclid
Certainly someone would notice if their railroad got stolen right out from under them.  It should not require flashing signs to reveal the caper. 

Depends upon if they understand what they are looking at

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Posted by tree68 on Wednesday, July 14, 2021 12:15 PM

Euclid
It is widely agreed to include cost cutting, which includes cutting jobs. 

The problem that has been reported here is that all too many of the jobs that have been cut have been those that contribute to long-term growth, such as sales/marketing.  

Add to that the apparently intentional shedding of lower yield customers and it's not hard to imagine that PSR is, as has been suggested, all about moving money to the bottom line where it can be harvested.

One has to wonder how many rail customers share the feelings of ShadowtheCat with regard to reduced service levels, or even the complete loss of service.  Presumably such service is being charged a realistic price, but apparently the profit margin is not large enough to continue providing it.

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Posted by jeffhergert on Wednesday, July 14, 2021 7:01 PM

CMStPnP

 

 
Juniata Man
UP has used debt to finance stock repurchases. There may be others. CW  

 

But not causing deferred maintenence which was the other half of the assertion.   

 

As most of you probably can tell, my favorite railroad was the Rock Island.  I grew up along their Chicago/Denver main line in Iowa.

As most of you probably know, I work for Uncle Pete.

A lot of times I'm seeing things that make me think I'm seeing a replay of the Rock Island.

Jeff       

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Posted by BaltACD on Wednesday, July 14, 2021 7:39 PM

jeffhergert
 
CMStPnP 
Juniata Man
UP has used debt to finance stock repurchases. There may be others. CW   

But not causing deferred maintenence which was the other half of the assertion.    

As most of you probably can tell, my favorite railroad was the Rock Island.  I grew up along their Chicago/Denver main line in Iowa.

As most of you probably know, I work for Uncle Pete.

A lot of times I'm seeing things that make me think I'm seeing a replay of the Rock Island.

Jeff       

When you spend $1M on maintenance but should have spent $5M - you are deferring maintenance.

Hired out on the B&O in the mid 60's - at that time I THOUGHT the property was in 'good repair' - as I found out throughout my career the state of the B&O at that time was far from 'good repair'.  Maintenance, while being performed, was not being performed to the extent that was really necessary.

If the funds MofW request for 'good maintenance' are not being provided at the level MofW requests - Maintenance is being deferred!

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Posted by Convicted One on Tuesday, July 20, 2021 11:13 AM

Euclid
It almost has the ring of a conspriacy theory. 

Perhaps so, but the same issues seem to be coming to the attention of many separate and disparate people.

 

https://transportation.house.gov/imo/media/doc/2021-5-12%20Letter%20to%20GAO%20on%20PSR%20Study.pdf

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Posted by charlie hebdo on Tuesday, July 20, 2021 1:11 PM

BaltACD

 

 
jeffhergert
 
CMStPnP 
Juniata Man
UP has used debt to finance stock repurchases. There may be others. CW   

But not causing deferred maintenence which was the other half of the assertion.    

As most of you probably can tell, my favorite railroad was the Rock Island.  I grew up along their Chicago/Denver main line in Iowa.

As most of you probably know, I work for Uncle Pete.

A lot of times I'm seeing things that make me think I'm seeing a replay of the Rock Island.

Jeff       

 

When you spend $1M on maintenance but should have spent $5M - you are deferring maintenance.

Hired out on the B&O in the mid 60's - at that time I THOUGHT the property was in 'good repair' - as I found out throughout my career the state of the B&O at that time was far from 'good repair'.  Maintenance, while being performed, was not being performed to the extent that was really necessary.

If the funds MofW request for 'good maintenance' are not being provided at the level MofW requests - Maintenance is being deferred!

 

The huge increase in weight of freight cars and length of trains likely takes a toll on track and thus requires more maintenance. 

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Posted by Euclid on Tuesday, July 20, 2021 1:14 PM

Convicted One
 
Euclid
It almost has the ring of a conspriacy theory. 

 

Perhaps so, but the same issues seem to be coming to the attention of many separate and disparate people.

 

https://transportation.house.gov/imo/media/doc/2021-5-12%20Letter%20to%20GAO%20on%20PSR%20Study.pdf

 

Well that is the list of grievances often presented by the labor unions.  However, it is not a list that confirms those problems are actually real.  Obviously Labor is focused on jobs, and part of PSR will eliminate jobs.  So they have a vested interest in finding the greatest number of reasons why PSR should be eliminated.  So even if it reads like a conspiracy theory, it does have a purpose.

The key would be to hear the response to this request to investigate the list of charges.  Can you find that response?   A formal investigation might confirm or deny these charges. 

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Posted by charlie hebdo on Tuesday, July 20, 2021 1:24 PM

Juniata Man

They have reduced their capex concurrent with borrowing money to buy back stock. They may not be deferring critical maintenance but, the capital reduction can be an indication they have decided to defer some projects.

CW

 

 
CMStPnP

 

 
Juniata Man
UP has used debt to finance stock repurchases. There may be others. CW  

 

But not causing deferred maintenence which was the other half of the assertion.   

 

 

 

CW: Using debt to finance stock buybacks is just another legal trick to get the stock price to increase.  Fewer shares =  a higher eps which attracts buyers.  Debt should be used for infrastructure and equipment investment to grow the business. 

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Posted by adkrr64 on Tuesday, July 20, 2021 1:38 PM

charlie hebdo
CW: Using debt to finance stock buybacks is just another legal trick to get the stock price to increase.  Fewer shares =  a higher eps which attracts buyers.  Debt should be used for infrastructure and equipment investment to grow the business.

What is so bad about using debt to finance the purchase of equity, especialy when interest rates are so low? Yes, financing the purchase puts debt on the books, but it also puts equity on the books; equity that has value and which can be sold in the future to repay the debt or return cash to the organization. If the re-purchase of shares also causes the value of the stock to rise, then the value of the just purchased equities increase, increasing the overall market value of the company.

Like anything, it is entirely possible to do this in an irresponsible way, creating excessive and possibly debilitating debt load, especially if the stock price drops substantially. But as a basic financial strategy, I see nothing wrong or unethical about it when done responsibly.

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Posted by Overmod on Tuesday, July 20, 2021 2:01 PM

adkrr64
What is so bad about using debt to finance the purchase of equity...

What he's saying is something rather different: that using that debt to maintain the critical income-generating aspects of the company might be a better opportunity use.  The market cap of the company doesn't matter if the company can't do the business that generates its income effectively.

 

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Posted by charlie hebdo on Tuesday, July 20, 2021 2:28 PM

It's interesting how Wall Street types in the past in corporations used to use watered stock to line their own pockets at the expense of its ongoing business growth. Now they use stock buybacks, often in disregard for it's ongoing (beyond a few quarters) business growth.  

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Posted by Convicted One on Tuesday, July 20, 2021 2:59 PM

adkrr64
I see nothing wrong or unethical about it when done responsibly.

'There's quite a few folks out there who feel little responsibilty other than to their own prioritites.

 

Pump, dump, and leave a debt riddled mess behind after they execute their exit

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