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Bait And Switch: California High-Speed Rail to Nowhere
It started out benign enough. In November 2008, California voters passed Proposition 1A, which authorized the issuance of $9.95 billion in general obligation bonds to fund the first stage of a high-speed rail link between Los Angeles and San Francisco, with extensions to San Diego and Sacramento. The project would cost $35.7 billion. The federal government would pick up a chunk. And it would be profitable.
High-speed rail works if it links big urban areas, has lots of riders, and covers medium distances so that travel times are shorter than driving or flying. The most successful is the Shinkansen between Tokyo and Osaka, which transports 150 million passengers per year. Even Amtrak’s slower route between New York City and Washington DC is profitable, though the rest of Amtrak is not.
In theory, California’s project falls into that category. In theory—because in reality, it’s already mucked up. And now, we even have to listen to radio spots by the California Alliance for Jobs, which represents construction contractors and unions, the recipients of the forthcoming flood of taxpayer money. The spots are trying to bamboozle us, the restive people, into overlooking the nightmarish problems of the project.
In three years, the budget for phase one has nearly tripled to $98.5 billion—though construction hasn’t even started yet. This came out last November when the California High-Speed Rail Authority (CHSRA) published an updated Draft Business Plan.
Nay, it has more than tripled to $117.6 billion. The $98.5 billion that has been bandied about in public is the low end of the estimate. Over 100 pages into the business plan, on page 8 - 2, we find the high end: $117.6 billion.
The business plan was part of the formal request to the Legislature for $2.7 billion, the first tranche of the Prop 1A bond money. It would be matched by $3.5 billion in federal money and would be plowed into building the initial section—130 miles of track in the Central Valley from just north of Fresno down to Bakersfield. It would lack electrification and high-speed-train control and communication systems. Hence, only regular diesel trains could use it.
Then on January 3, the California High-Speed Rail Peer Review Group sent a letter to the Legislature, recommending that the project be put on hold for a variety of reasons, particularly funding. Only $12.5 billion have been secured. But if future funding doesn’t miraculously materialize, that initial section in the Central Valley will become an icon of high-cost rail from nowhere to nowhere.
But even $117.6 billion might not be enough. January 24, State Auditor Elaine Howle issued her audit report of the CHSRA (Fact Sheet, Full Report). Turns out, the business plan left out the nominal sum of $97 billion in operating and maintenance costs from 2025 to 2060. Oops. The plan says that revenues would cover all such costs starting 2022, the year trains are projected to roll on the initial section. What if revenues fall short? Is anyone going to take a diesel train from Bakersfield to Fresno? Elegantly, no operating losses are figured into the plan. And if there are losses, funding requirements would jump.
The business plan "assumes that federal funds must cover 80 percent" of the cost, according to the audit report. Highways might receive that level of federal funding via the Highway Trust Fund. But Congress is considering legislation to would make it impossible for highway funds to be used for the California High-Speed Rail project. Maybe the CHSRA should form a bank holding company; the Fed is handing them money for free. For that never-ending debacle, read.... The Fed’s Rain Dance at the Bottom of the Stairs.
And then, there's San Francisco to Sacramento. To avoid having to cross the Bay, the ingenious plan turns the 87-mile drive into a whopping 300-mile train ride. I mean, come on. No one will use it. It’s a joke.
And now we learn, to top it off, if that were even possible, that the CHSRA paid taxpayer money to Ogilvy Public Relations Worldwide to lobby the Legislature to get more taxpayer money—the $2.7 billion mentioned above.
"It just doesn't pass the smell test," said Assemblyman Jerry Hill, D-San Mateo.
Meanwhile, life goes on in California. It's broke again. Out-of-money date is March 8. $3.3 billion must be dug up, pronto. Now all eyes are on Facebook. Its IPO will singlehandedly solve all budget problems forever—just like Google’s IPO had done. Ha! Read.... Broke California: Give Us The Facebook Manna Now.
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In November 2008, California voters passed Preparation 1h
California is like a bowl of cereal- what isn't fruit and nuts, is flakes.
Last year was the first November in a long time that California did not issue Revenue Anticipation Notes....about $5Billion in each of 09 and 10.......
which they repaid in June last year.........so California finances are in an unusually good condition just now.
Kinda amazing they are not issuing billions of bonds into this unprecedently strong muni market.
Please! Thats the way large infrastructure projects in third world countries proceed.
By the time its over, the politicians and unions will have pocketed 90% of the money and CA will be left with a narrow guage line operating by steam engine between LA and SD ... and it will be deemed a marvelous success!
http://youtu.be/sm1Jyusyoqk
Hurumph, hurumph, hurumph
There are very few people in the central valley that commute. It is all farm land. High speed rail would only work if it is cheaper than driving, faster than driving, and stays within a large population center (i.e. So Cal) Currently there is a metrolink rail system for those who commute locally.
In Japan the roads are small and cannot handle the traffic from Osaka to Tokyo. This is why Japans system is profitable. Destroying the California highway system might make the trains profitable and necessary.
3rd World countries excel at increasing ridership! Now if only Amtrak would follow their examples maybe they could turn a profit!
http://totallycoolpix.com/2011/03/overloaded-and-overcrowded/
California: The Citibank of States
Too Big To Fail, insolvent, constantly needs taxpayer bailouts...
And well past time to break this sucker up...
Just give the southern half back to Mexico. Nobody will even notice.
Exactly what I was thinking. Time for Utah, and Colorado to shut off the water to L.A.. Utah is already planning for the collapse of the currency and allows transactions in gold and silver. Most folks here (~70%) are mormon and have one year's supply of fresh canned goods. Utah is definitely a state that is well-positioned. They have natural gas and coal (which can be sold for gold and silver - this was also in the PM bill) and have been investing in advanced biofuel technology through the USTAR program.
Fresh canned goods? There's an oxymoron.
One year canned goods!??! Sounds like a bunch of extremists and terrorists to me!! :)
Would not be the first time that the Federal government has considered the people of Utah as such.
High speed rail is a vital part of implementing Agenda 21.
http://www.americanthinker.com/2009/10/un_agenda_21_coming_to_a_neigh.html
(This is kind of a neocon site, but it reports on A21 quite well.)
Why do you think Warren Buffet (BHFC) purchased Union Pacific? There will be plenty of trips across the Country up to Alaska real soon, March to be exact.
Drugs may be the rail road to nowhere, but at least they're the scenic route. ~Author Unknown ...
Didn't know California had that amount of stash to throw down on such a big project like that.
Cali just needs to complete the project before the debt jubilee is declared. They could also wait for the great devaluation of the dollar, which would then put the budget in a better light, as the cost would fall dramatically- not that anyone would have any currency anymore, but hey...when we started using FRN's instead of money, you had to see this coming...ok, after a hundred years?...no...if a central bank QE's, but you don't see it recorded anywhere- did it really debase the currency?
"great devaluation of the dollar, which would then put the budget in a better light, as the cost would fall dramatically"
-----------
Care to explain how the destruction of purchasing power is going to make the project cheaper? I may be a simple farmer, but I think you got this exactly backwards. Seriously, you don't know if the currency has been debased? Right, fiat backed by debt, in today's college of eCONomics this is "winning" - LMFAO
Well Brainiac,
You might want to look up the difference between debasing and devaluation.
Hey fucknut, does it matter when the world decides it does not want the fucking paper period? Good luck idiot.
This kind of ignorance gives us small farmers a bad name. It is eCONomics to those that have never studied it. Now, I was having a bit of fun up there, but do take the time to understand the difference. Monetary policy effects all of us.
Un-huh, so what you are saying is DOW 100000, coffee and donuts $900. Like I said before, "winning" - LMFAO
Debasing would be dow 100000, but devaluation would be dow 1000. They are completely different. You are either incredibly stupid or too lazy to learn.
Wrong, provide evidence for one time in history where the devaluation of the dollar (weaker purchasing power) resulted in a decrease in the DOW.
Monetary policy is not attached to reality and ignores the first and second laws of thermodynamics (one reason why total debt worldwide has grown exponentially since the world hit peak energy production in 2006).
There is a HUGE difference between available energy and the FLUX of energy that is required to sustain things as they are now. You sir do not understand exponential equations and what that implies for real growth. Yeah, I am stupid. Like I said before, good luck fucknut, I have wasted enough time with you and have a busness to run.
The dollar has never been devalued. More important, devaluation does not equate with less purchasing power. You are confusing terms. You are talking about DEBASING. The Deutch Mark was. It was replaced by the Rentenmark. In this process, which is usually at the last gasp of a currency, large numbers are traded in for a smaller denomination of the same currency or another newly created one.
Some currencies, Argentina or Zimbabwe for example, will adopt another currency in its' place ( the Dollar in both cases).
Since stocks would be priced in the new dollar amounts, the value of the dow would be at a lower number. Please explain how monetary policy is not "attached to reality'.
Energy and resource economics is another issue alltogether. You have no idea of what level of mathematics I understand. It is difficult to face the consequences of ignorance, but they are easily overcome with education- which is never a waste of time.
The dollar has never been devalued? - Troll harder.
"Energy and resource economics is another issue alltogether." - This is where you fail.
It is you that are acting the troll- you continue to make assertions without a single proof or argument in favor of them. How are energy and resource economics the same as monetary policy? You are clearly ignorant of economics, I am merely trying to help you understand.
By the way, fiat currency are an excellent example of entropy. Do you know the laws of thermodynamics?
I can't do it all, you need to put forth a little effort. Learn the terms.
I taught thermodynamics and physical chemistry for ten years before starting an Ag. company becuase people in academics are idiots. Why don't explain to us all how the current economic model of infinite growth in finite world works again? while you are at it, please explain the sulfur cycle, the nitrogen cycle, the phosphorus cycle, and the carbon cycle to eveyone, how much energy goes into simply turning these cycles so that life (at least in it's present form) can continue to exist.
You sound like a board graduate student in academics. Again, troll harder.
Well, you are incapable of providing an argument.
You probably feel that a degree in hard science is "better" than other degrees- makes you smarter?
I am sorry if you are not intelligent enough to understand economics. I realize it is a difficult science, though the most essential to the establishment of civilization (political economy to be more precise). However, I never provided an argument regarding resource economics and considering your unwillingness to learn basic terms, do not see the benefit in writing one. Read a book.
You sound like an arrogant, know it all that when pushed to back up his statements has to resort to changing the subject or insults. All puffery and zero substance. When you learn "how" to argue, come on back and give it try...
Survive it will.
"To avoid having to cross the Bay, the ingenious plan turns the 87-mile drive into a whopping 300-mile train ride."
You've never driven on 80 when there's an accident, have you? That 87-mile drive can take four hours.
Let them ride busses. We already built the infrastructure for them. Just increase the speed limit in the HOV lanes tp 120 mph. Problem solved. Move on.
the easiest solution is always hiding in plain sight
Maybe in a decade or so, the time will be ripe to swoop into the California countryside and buy up hillside mansions for $100,000 apiece. Well, if you don't mind the view of burned-out rubble from a once-great civilization, I guess.
...dirtiest word in the English language: politician....can turn gold into dirt with the flick of the wrist or the click of a bic.
I hear pack mules are still available for a nominal price. Hey, if it was good for my great-grandpa I'm sure it's ok for us. "Go Burro! Leave the driving to us!"
Only a jackass would use that service...
i got an idea, put the public schools in Cali. on the rails
I got an idea..put your ass on a rail to a public school; your first trip through 3rd grade didn't take.
ah, sweet memories
Wait Wait, California screwed up the estimates of how much the rail line is going to cost. I am shocked, shocked I tell you.
How on Earth do these idiots keep their jobs, let alone get them in the first place?
The ballot initiative process.
Now you know why it is so crucial for schools to utterly fail in educating children. The State only needs a small cadre that can help the Hoi Poloi fill out the welfare apps, after that, well, Braack & Jerry will just take care of everyone. Until the money runs out...
I love the smell of napalm in the morning.
The crazy sheet just doesn't stop!!!
Holy fiat money batman