DM&E Financing revisited.

[Anonymous]

Say, in two years, someone from Wyoming will be out of a job. His former company could afford, and build, this new DME line. Perhaps DME should hire him as their vice President.  

What?  Is Matt Rose from Wyoming?

Then I remembered - After Matt Rose's tenure at BNSF is done, he'll probably be working  in Washington D.C.......

......as a lobbyist for Shanghai Widget Ltd. 

[Anonymous]

Could Dave Smith be a socialist, without knowing it ?

What now, your Larry Kauffman impression?

[Anonymous]

I suppose that DM&E is the "absolute fool" in your metaphor, wherein the entry of DM&E into the PRB will end up destroying all three railroads?

Such pedanticism!

(*sigh*)  It was you asking how increased competition could be deemed 'anti capitalist', and I merely accomodated you with a reply.

Now you are trying to wage a war of semantics because you resent it?

"Absolute fool" were the words used by the quoted source

We could just as easily ues the expression 'misguided competition serves anticapitalist ends' and be just as accurate.

I think what Matt Rose is (rightly) getting at, is that using Taxpayer money to cut the profit out of hauling PRB coal will do more harm than good.

Clearly, his bias in rooted in his position as a competitor of DM&E, but that doen't mean he is necessarily wrong.

Man oh man, do you ever read what you've just typed before you hit the "Post" button?

Since we've already established that the current PRB denizens used Taxpayer money to build their version of the PRB rail kingdom (from which they are extracting some hefty profits), why is it now harmful to do the same for The New Kid on the Block?

You seem to be supporting the idiotic notion that We the Taxpayers need to supply aid (financial and legal) to prop up a rail duopoly into profitability, and if we now add new (and badly needed by consensus) competitive capacity to the Holy Kingdom via the same finacial and legal avenues, we're heading for Railroad Armeggedon.

Subsidies for Monopolies - it don't get no stupider than that. So much for all that "pro-capitalist" crap.

[nanaimo73]

 

What?  Is Matt Rose from Wyoming?

Then I remembered - After Matt Rose's tenure at BNSF is done, he'll probably be working  in Washington D.C.......

 

FM-

Would you agree BNSF's shareholders are paying Mr Rose to run their railway as profitably as possible, and he has been doing a good job of that ? Shouldn't it be the system you don't like, not the people that implement it ?

[Murphy Siding]

Since we've already established that the current PRB denizens used Taxpayer money to build their version of the PRB rail kingdom (from which they are extracting some hefty profits),

     I'm not sure that I agree with you on this point.  You say that UP and BNSF used taxpayer money to get into the PRB?  Give me some more details on that please.  Did I miss their $2.5B loans?

[Murphy Siding]

FM-

I'm not against DME moving into the PRB. I'm against your terminology, which is backwards. BNSF is being pro-capitalist, because they want to maximize profits. DME is being anti-capitalist, (socialist), if they use Government money to lower BNSF's and UP's profits.

     To the extent that DM&E is not going to produce any *new wealth*.  They are going to use a big government loan to *redistibute the wealth*.

[Murphy Siding]

And what is the "worst" that may come to pass?  That we the taxpayers get to own our own railroad for a change?  And this is bad because..........?

     Because we the taxpayer owned Penn Central and Conrail in the past, and Amtrak in the present.  Given that a *repo* DM&E would be competing with private lines, I think a lot of people would judge this to be the "worst" that may come to pass.

[Anonymous]

idiotic nonsense

[MichaelSol]

And what is the "worst" that may come to pass?  That we the taxpayers get to own our own railroad for a change?  And this is bad because..........?

     Because we the taxpayer owned Penn Central and Conrail in the past, and Amtrak in the present.  Given that a *repo* DM&E would be competing with private lines, I think a lot of people would judge this to be the "worst" that may come to pass.

Well, isn't that in a grand tradition of railroading -- Illinois Central's huge land grants; GN's land grants and the St. Paul & Pacific's bankruptcy; NP's land grants and its bankruptcy; UP's land grants and its bankruptcy.

The existing Western lines all got their starts through extraordinary government benevolence (unprecedented before or since), couldn't be economically justified at the time, shafted their private investors through corruption and bankruptcy, kept entirely their government largesse, and they dominate the railroad scene today -- having put their privately financed rivals out of business or absorbed them. Coincidence?

Don't you think the Western railroad scene would have looked entirely different today if the mostly privately financed railroads had expanded westward as it made economic sense: North Western, Burlington, Rock Island, Milwaukee?

Who is complaining about DM&E?

 

[Murphy Siding]

The existing Western lines all got their starts through extraordinary government benevolence (unprecedented before or since), couldn't be economically justified at the time, shafted their private investors through corruption and bankruptcy, kept entirely their government largesse, and they dominate the railroad scene today -- having put their privately financed rivals out of business or absorbed them. Coincidence?

Who is complaining about DM&E?

     And that would be a case for approving the DM&E loan?  In my opinion, that's a little "out there".  With that kind of logic, you could justify having a 3rd party rob a bank and give you the money, becaus I had robbed the bank?

     You and Dave both seem to be saying that we need to give DM&E the loan simply to *get back* at BNSF and UP for all the *wrong* they've done.  It's sort of like saying a vote for DM&E is a vote against BNSF.  I'd rather see DM&E succeed on it's own merit.

[nanaimo73]

The existing Western lines all got their starts through extraordinary government benevolence (unprecedented before or since), couldn't be economically justified at the time, shafted their private investors through corruption and bankruptcy, kept entirely their government largesse, and they dominate the railroad scene today -- having put their privately financed rivals out of business or absorbed them. Coincidence?

Who is complaining about DM&E?

     And that would be a case for approving the DM&E loan?  In my opinion, that's a little "out there".  With that kind of logic, you could justify having a 3rd party rob a bank and give you the money, becaus I had robbed the bank?

     You and Dave both seem to be saying that we need to give DM&E the loan simply to *get back* at BNSF and UP for all the *wrong* they've done.  It's sort of like saying a vote for DM&E is a vote against BNSF.  I'd rather see DM&E succeed on it's own merit.

The DME loan shold be approved because it grows America's economy, creates jobs, and benefits American consumers. For the same reason, the CREATE plan should go ahead as well.

 

[Anonymous]

The DME loan shold be approved because it grows America's economy, creates jobs, and benefits American consumers. For the same reason, the CREATE plan should go ahead as well.

 

How many newly created jobs are actually certain?

[MichaelSol]

The existing Western lines all got their starts through extraordinary government benevolence (unprecedented before or since), couldn't be economically justified at the time, shafted their private investors through corruption and bankruptcy, kept entirely their government largesse, and they dominate the railroad scene today -- having put their privately financed rivals out of business or absorbed them. Coincidence?

Who is complaining about DM&E?

     And that would be a case for approving the DM&E loan?  In my opinion, that's a little "out there".  With that kind of logic, you could justify having a 3rd party rob a bank and give you the money, becaus I had robbed the bank?

No, what I am suggesting is that in that instance the bank robber "you" [a generic term] should be the last person criticizing someone else for robbing a bank.

The point being that if the government is going to sanction bank robbery, it needs to be consistent and not discriminate in favor of a privileged class of railroads, er, bank robbers.

     You and Dave both seem to be saying that we need to give DM&E the loan simply to *get back* at BNSF and UP for all the *wrong* they've done.  It's sort of like saying a vote for DM&E is a vote against BNSF.  I'd rather see DM&E succeed on it's own merit.

The costs of entry are extraordinarily high for a railroad. Government assistance -- extraordinary government assistance in the form of free land, as well as loans and interest guarantees -- made the surviving railroads possible in the first place, and upset for all time the notion that the privately financed railroads might survive. The playing field was altered permanently by those government gifts.

Continuing a policy of assisting railroad startups is mitigation for the prior policy that inadvertently created a duopoly, with all its attendant impacts.

I don't like the idea in principle, but the principle was already corrupted by the government land grants that made possible the surviving Western railroads.

 

[Anonymous]

 

What?  Is Matt Rose from Wyoming?

Then I remembered - After Matt Rose's tenure at BNSF is done, he'll probably be working  in Washington D.C.......

 

FM-

Would you agree BNSF's shareholders are paying Mr Rose to run their railway as profitably as possible, and he has been doing a good job of that ? Shouldn't it be the system you don't like, not the people that implement it ?

I would say BNSF's shareholders are, like shareholders of most US corporations, mostly ignorant of the intrinsicallities of operating the business, and thus defer to managerial insiders.  I'm sure the Enron shareholders felt the same way, until the inevitable finally occured.  Don't BNSF shareholders read the news like everyone else?

It could be that most of the non-Pacific Rim BNSF shareholders are short-timers, e.g. maximizing the short term gain, then getting out before BNSF's actions result in re-regulation or worse.

The fact that BNSF has now injected itself into public policy debate on the NIMBY side of things shows me a company that is sweating the fact that it's government sanctioned fiefdom may be coming to an end.

[Anonymous]

The existing Western lines all got their starts through extraordinary government benevolence (unprecedented before or since), couldn't be economically justified at the time, shafted their private investors through corruption and bankruptcy, kept entirely their government largesse, and they dominate the railroad scene today -- having put their privately financed rivals out of business or absorbed them. Coincidence?

Who is complaining about DM&E?

     And that would be a case for approving the DM&E loan?  In my opinion, that's a little "out there".  With that kind of logic, you could justify having a 3rd party rob a bank and give you the money, becaus I had robbed the bank?

     You and Dave both seem to be saying that we need to give DM&E the loan simply to *get back* at BNSF and UP for all the *wrong* they've done.  It's sort of like saying a vote for DM&E is a vote against BNSF.  I'd rather see DM&E succeed on it's own merit.

Sometimes I wonder just where and how you end up with your particular POV on these issues.  Correcting injustice is not *getting back* at someone.  And the *wrong* such as it is was committed by the regulators in allowing the creation of this subsidized duopoly known as UP and BNSF.

Why is it *wrong* to right a wrong?

[Anonymous]

Since we've already established that the current PRB denizens used Taxpayer money to build their version of the PRB rail kingdom (from which they are extracting some hefty profits),

     I'm not sure that I agree with you on this point.  You say that UP and BNSF used taxpayer money to get into the PRB?  Give me some more details on that please.  Did I miss their $2.5B loans?

This was posted a while back in this thread, but here it is again.....

http://www.gotrac.org/index.cfm?page=267

"In fact, parts of the Burlington Northern Santa Fe (BNSF) and Union Pacific (UP) coal hauling lines were built with FRA loans like the one that DM&E has applied for. In today’s dollars, the FRA loan for the UP line alone was $1.5 billion."

So yes, they used Taxpayer money to get into PRB.  No, not $2.5 billion.

Hey, costs of construction is a lot more today (greater than the general rate of inflation)than back in the 70's!  You know, because of the greater NIMBY factor today than back then.

Did I mention that BNSF is the NIMBY in this case?

[Anonymous]

idiotic nonsense

....and we see that when the NIMBY's run out of substance, they turn to these cheap tricks.

Congrats AG, you've just been nominated for membership in the Fratricidal Order of the Ilks!

[Anonymous]

FM-

I'm not against DME moving into the PRB. I'm against your terminology, which is backwards. BNSF is being pro-capitalist, because they want to maximize profits. DME is being anti-capitalist, (socialist), if they use Government money to lower BNSF's and UP's profits.

     To the extent that DM&E is not going to produce any *new wealth*.  They are going to use a big government loan to *redistibute the wealth*.

Is anything getting through?

Didn't BNSF and UP also use "big government" to also "redistribute the wealth"?

None of you has yet explained or justified the apparent hypocrasy of your positions, which seems to boil down to this synopsis.....

The federal aid for BNSF and UP over the years is akin to true pro-capitalism, free market, hot dogs, apple pie, God Bless the USA, etc.....

...But....

The federal aid for DM&E is conversely akin to anti-capitalism, communism, command market, redistribution of wealth, Death to America The Great Satan, etc......

Rather ironic, wouldn't  you say, especially given BNSF's special service over the last decade to the heirs of Chairman Mao?

[Anonymous]

The costs of entry are extraordinarily high for a railroad. Government assistance -- extraordinary government assistance in the form of free land,

You and Milton Friedman were not the best of friends I take it?
The  land wasn't "free",  it was stolen from the Native Americans

[Anonymous]

.

Congrats AG, you've just been nominated for membership in the Fratricidal Order of the Ilks!

Hey  that's quite an honor, coming from you especially.

[MichaelSol]

The costs of entry are extraordinarily high for a railroad. Government assistance -- extraordinary government assistance in the form of free land,

You and Milton Friedman were not the best of friends I take it?
The  land wasn't "free",  it was stolen from the Native Americans

Well, that does make it second hand bank robbery ...

[n012944]

idiotic nonsense

....and we see that when the NIMBY's run out of substance, they turn to these cheap tricks.

Congrats AG, you've just been nominated for membership in the Fratricidal Order of the Ilks!

And to think I was yelled at for posting something that had nothing to do with the DME  Anyway, I don't understand this thinking that since railroads were gived land grants over a HUNDRED years ago, that the DME is somehow entitled to an automatic loan from the goverment.  Look I'm a railfan, and I hope that DME line gets built, but not because they are "owed" the same thing that the UP and NP got back in the 1800's.  I think that the DME should be built because it can make a profit, which I have my doubts about.  If the line is such a slam dunk in the money making catagory, why are private banks not funding the entire project? 

[Murphy Siding]

This was posted a while back in this thread, but here it is again.....

http://www.gotrac.org/index.cfm?page=267

"In fact, parts of the Burlington Northern Santa Fe (BNSF) and Union Pacific (UP) coal hauling lines were built with FRA loans like the one that DM&E has applied for. In today’s dollars, the FRA loan for the UP line alone was $1.5 billion."

     OK.  I went back and re-read the link.  I see what you're saying now.

    

Did I mention that BNSF is the NIMBY in this case?

     Can you explain this thought a little better?  Is BNSF openly opposing the DM&E loan?

[Murphy Siding]

The existing Western lines all got their starts through extraordinary government benevolence (unprecedented before or since), couldn't be economically justified at the time, shafted their private investors through corruption and bankruptcy, kept entirely their government largesse, and they dominate the railroad scene today -- having put their privately financed rivals out of business or absorbed them. Coincidence?

Who is complaining about DM&E?

     And that would be a case for approving the DM&E loan?  In my opinion, that's a little "out there".  With that kind of logic, you could justify having a 3rd party rob a bank and give you the money, becaus I had robbed the bank?

     You and Dave both seem to be saying that we need to give DM&E the loan simply to *get back* at BNSF and UP for all the *wrong* they've done.  It's sort of like saying a vote for DM&E is a vote against BNSF.  I'd rather see DM&E succeed on it's own merit.

Sometimes I wonder just where and how you end up with your particular POV on these issues.  Correcting injustice is not *getting back* at someone.  And the *wrong* such as it is was committed by the regulators in allowing the creation of this subsidized duopoly known as UP and BNSF.

Why is it *wrong* to right a wrong?

     My particular POV is based on my understanding of the opinion put forth by you and Michael.  Note that Michael replied to the same post, and did a pretty fair job of expaining his POV on the subject.  Your POV...(shrugs)....I'm not quite sure I understand that yet.  More than anything, it sounds to me, at least, to be little more than anti-BNSF ranting at times.

     As far as "Why is it *wrong* to right a wrong?".  That is the flip side of the cliche:  Do two wrongs make a right?

[Murphy Siding]

idiotic nonsense

....and we see that when the NIMBY's run out of substance, they turn to these cheap tricks.

Congrats AG, you've just been nominated for membership in the Fratricidal Order of the Ilks!

And to think I was yelled at for posting something that had nothing to do with the DME 

Bert- Sorry if you took that as being yelled at.  Now would be a good time to ask everybody on this thread to please keep a civil discussion going.  We're all capable, I believe, of having a good discussion, with calling names, you muttonheads!()

 Anyway, I don't understand this thinking that since railroads were gived land grants over a HUNDRED years ago, that the DME is somehow entitled to an automatic loan from the goverment.  Look I'm a railfan, and I hope that DME line gets built, but not because they are "owed" the same thing that the UP and NP got back in the 1800's.  I think that the DME should be built because it can make a profit, which I have my doubts about.  If the line is such a slam dunk in the money making catagory, why are private banks not funding the entire project? 

I couldn't agree with you more.

[Poppa_Zit]

The  land wasn't "free",  it was stolen from the Native Americans

And they came from where, got it how, and from whom?

I seriously doubt there were any indigenous people on this land mass. The so-called Native Americans were here before the Europeans showed up, which is something totally different from originating here and therefore having such claiming rights. 

[solzrules]

idiotic nonsense

....and we see that when the NIMBY's run out of substance, they turn to these cheap tricks.

Congrats AG, you've just been nominated for membership in the Fratricidal Order of the Ilks!

And to think I was yelled at for posting something that had nothing to do with the DME 

Bert- Sorry if you took that as being yelled at.  Now would be a good time to ask everybody on this thread to please keep a civil discussion going.  We're all capable, I believe, of having a good discussion, with calling names, you muttonheads!()

 Anyway, I don't understand this thinking that since railroads were gived land grants over a HUNDRED years ago, that the DME is somehow entitled to an automatic loan from the goverment.  Look I'm a railfan, and I hope that DME line gets built, but not because they are "owed" the same thing that the UP and NP got back in the 1800's.  I think that the DME should be built because it can make a profit, which I have my doubts about.  If the line is such a slam dunk in the money making catagory, why are private banks not funding the entire project? 

I couldn't agree with you more.

 

Keep in mind that private banks ARE bankrolling over half of the project, although I admit the numbers do not add up based on what I have read.  Estimated cost of construction = 1-2 billion. Total project cost?  6 billion.  I am not sure what DME is doing with all of the money, but assuming they are responsible businessmen I don't think they would take on more debt then what they need. 

As for the government providing loans to rr's-I am not sure what the big argument is.  Again, the FRA's history on this is impeccable.  Certainly that doesn't mean they couldn't make a mistake in the future, but their past track record indicates they know how to make a loan.  I would trust their decision. 

The FRA has made loans to the UP, BNSF and a host of other railroads.  Is this capitalism?  No, not really.  If the rr's couldn't sell people on the project in the private sector then we have passed the point of calling this a purely capitalist project.  However, the private sector also has a history of abusing railroads.  Projects that entail such massive amounts of capitol with a long period before the rr or the bank would see any return on investment may turn a lot of instant gratification investors off - or they will sign on but only with a very high interest rate.  Speculative interest rates like that will hamstring the rr from fully utilizing the line - a big chunk of money would have to go to pay to fund the debt instead.  The government's loan serves to reign in speculative interest rates and keep the railroad in a realistic ball park of interest payments.  Besides, if you had the opportunity to borrow 3 billion at 4% instead of 8 % in the private sector wouldn't you do it?  (Numbers are fictional).  What if the the DME COULD finance the whole project with private investors but instead they are trying to save tens of millions of dollars in interest costs by funding part of the project with low interest loans?  Makes smart business sense to me.  If the loans are available why not use it? 

Besides - this amount of money absolutely pails in comparison to the airline industry - and industry that has defaulted more than once on loans from the government and private investors.  Not only that, after 9/11 we gave the airlines what amounted to a 40 billion dollar present right?  Who paid that back?  I would be far more concerned about my tax dollars going to an industry that has major business model problems like the airlines instead of it going to rr's as loans that have to be paid back with interest. 

As a side note I was out hunting Saturday and this morning.  I didn't get a shot off but on the way home from hunting I hit a huge buck with my truck.  Of course, it was probably just  a wake-up bump for the deer - he just got up and ran away (I think he was smiling at me too).  Now I have a truck with a mashed front end, and no vension to show for it. 

[MichaelSol]

Good points.

The FRA has been directed by Congress to loan money to the rail industry.

From the FRA website:

"The Transportation Infrastructure Finance and Innovation Act of 1998 (TIFIA), via the Department of Transportation (DOT), makes three forms of credit assistance available – secured (direct) loans, loan guarantees and standby lines of credit – for surface transportation projects of national or regional significance. 

"The TIFIA credit program’s fundamental goal is to leverage Federal funds by attracting substantial private and other non-Federal investment in critical improvements to the nation’s surface transportation system."

I imagine that DM&E's private bankers no doubt made it a condition of private financing to apply for such loans -- that would be almost a given that they would -- in order to spread out the risk, which is what private bankers like to do.

Also:

"The Railroad Rehabilitation & Improvement Financing (RRIF) Program was established by the Transportation Equity Act for the 21st Century (TEA-21) and amended by the Safe Accountable, Flexible and Efficient Transportation Equity Act: a Legacy for Users (SAFETEA-LU) . Under this program the Administrator is authorized to provide direct loans and loan guarantees up to $35.0 billion. Up to $7.0 billion is reserved for projects benefiting freight railroads other than Class I carriers.

"The funding may be used to:

• Acquire, improve, or rehabilitate intermodal or rail equipment or facilities, including track, components of track, bridges, yards, buildings and shops;
  
  
• Refinance outstanding debt incurred for the purposes listed above; and
  
  
• Develop or establish new intermodal or railroad facilities

"Direct loans can fund up to 100% of a railroad project with repayment periods of up to 25 years and interest rates equal to the cost of borrowing to the government.

"Eligible borrowers include railroads, state and local governments, government-sponsored authorities and corporations, joint ventures that include at least one railroad, and limited option freight shippers who intend to construct a new rail connection."

This certainly all fits with noises that Matt Rose has been making lately about government "partnerships" with railroads for funding railroad projects upon the idea that such projects benefit society.

He probably didn't mean this one, however.

[Anonymous]

The  land wasn't "free",  it was stolen from the Native Americans

And they came from where, got it how, and from whom?

I seriously doubt there were any indigenous people on this land mass. The so-called Native Americans were here before the Europeans showed up, 

At least the "so called" native americans did not take the land under force or duress when they originally occupied it.

Yes, I consider euro-occupation of North America to be a "stolen" presence.

  and therefore having such claiming rights.

My my, now THERE is convenient thinking , if ever there was such a case.

I'm sure you, Pizarro, and the whole "manifest destiny" bunch  could have had an orgy of self indulgence with that one.

First possession might indicate otherwise.

Seems like even the hucksters who bartered trinkets and beads for manhattan island had a more ethical view than the one you propose

[solzrules]

The  land wasn't "free",  it was stolen from the Native Americans

And they came from where, got it how, and from whom?

I seriously doubt there were any indigenous people on this land mass. The so-called Native Americans were here before the Europeans showed up, 

At least the "so called" native americans did not take the land under force or duress when they originally occupied it.

Yes, I consider euro-occupation of North America to be a "stolen" presence.

totally different from originating here and therefore having such claiming rights.

My my, now THERE is convenient thinking , if ever there was such a case.

I'm sure you, Pizarro, and the whole "manifest destiny" bunch  could have had an orgy of self indulgence with that one.

 

So does this mean that in order to ease your pained conscience you will lead the way and give your property back to the native americans?  ('Native' is questionable- I have heard it said that the native americans most likely crossed from the present day Russia via the Bearing Straight - before it was flooded over with a rise in the sea level.  I guess global warming was a problem back in the year 100 A.D. too, then, huh?)