It’s possible that I shall make an ass of myself. But in that case one can always get out of it with a little dialectic. I have, of course, so worded my proposition as to be right either way (K.Marx, Letter to F.Engels on the Indian Mutiny)
2008 THE GREAT BANK CRASH UK Taxpayer stake in NatWest Group may be slashed to less than 40% as Treasury looks to offload billions in shares over next 12 months
Two £1.1bn share sales were made by the UK Government in March and May
The Treasury sold another two tranches totalling £2.5bn each in 2015 and 2018
Taxpayers are expected to lose £38.8bn from the sale of NatWest Group shares
The Treasury is set to sell more of its stake in NatWest Group in a move that could leave the banking giant in majority private ownership for the first time since before the global financial crisis.
UK Government Investments (UKGI), a Treasury-owned body that administers its NatWest stake, said it had directed Morgan Stanley to gradually offload up to 15 per cent of its shares over a year-long period from next month.
It means the taxpayer's ownership stake might reduce from the 54.7 per cent it currently holds to less than 40 per cent, having already fallen by about 7 per cent this year following two sell-downs. Sell-off: The Government said it had directed Morgan Stanley to gradually offload up to 15 per cent of its shares over a year-long period from next month
In March, the Treasury announced that it had sold £1.1billion worth of shares back to NatWest - previously known as Royal Bank of Scotland (RBS) until July last year - before selling the same amount two months later.
It sold another two tranches totalling £2.5billion each in 2015 and 2018 that cut its ownership share from 78.3 per cent to 62.4 per cent as part of plans to eventually trade its whole stake in the financial services group by 2023-24.
However, these sell-offs ignited considerable controversy as they were all traded at a significant loss compared to the average 502p-per-share price the Government paid to bail out RBS over a decade ago.
NatWest Group's shares were down 1.1 per cent to 197.4p this morning, though they have risen by 24 per cent since the start of the year.
According to recent estimates from the Office for Budget Responsibility, of the £45.8 billion spent to prop up the bank during the crisis, the taxpayer is expected to make a loss of £38.8billion.
The deadline to sell the entire taxpayer stake in NatWest was also pushed back a year when the coronavirus crisis struck the UK, as a global sell-off saw stock markets around the globe collapse.
Saved: NatWest Group was known as RBS until July last year. The UK Government became the bank's majority owner in 2008 after spending £46.8billion bailing it out
The Treasury additionally missed out on a dividend payment last year when regulators decided to ban payouts by financial institutions during the height of the pandemic in order to buffer capital stocks and incorporate potential loan losses.
Those restrictions were partially relaxed in December, and NatWest subsequently declared a dividend in 2021 of 3p a share, handing £225million to the Government as the biggest shareholder.
It later reported pre-tax operating profits surged by 82 per cent to £946million for the first three months of 2021 thanks to expectations for fewer loans to turn sour due to the pandemic and a jump in mortgage lending and customer deposits.
NatWest came close to going bust in 2008 soon after it bought Dutch bank ABN Amro in 2007 - despite investor warnings - as part of a consortium in what was the largest takeover ever in the financial services industry.
Six months afterwards, it launched a record-breaking £12billion rights issue and went on later that year to report a half-year loss of nearly £700mllion, its first loss in four decades, as a result of credit crunch write-downs of £5.9billion.
The UK Government eventually rescued it in October 2008 and took a 43 per cent stake in Lloyds Bank after spending £20.3billion bailing it out. It started selling its shares in Lloyds in 2013 and eventually sold its last stake four years ago.
Well excuse me if I am not surprised that Steady Eddie Alberta's CEO produced a TV show last night that announced nothing new. In fact while some folks bemoan the premier for not being Ralph Klein, including King Ralph his-self, Steady Eddie is living up to his name.
In fact he is the ghost of the Tories Past, the actions of his government are just a rehash of Klein's fiscal renovation, of the 1990's. The government is cutting hospital beds and freezing hiring of nurses and doctors, just as Klein did. The are cutting back funding to schools, just as Klein did. They are cutting funding to post secondary institutions just as Klein did. They are calling for a wage freeze for two years for all public sector workers just as Klein did. The debt and deficit hysteria that launched the Klein regime has returned like Marley's ghost to haunt the Alberta Government. Having no plan Steady Eddie returns to the past to find solutions to the Tories Made In Alberta Recession.
Blaming the economic crash of last year for Alberta's current deficit is of course par for the course, all governments have used the crash to explain away their economic mistakes. But in Alberta that crash should have been expected, since we have experienced boom and busts before, and those who had like former Premier Peter Lougheed warned that the Alberta Government led by his old party, had no plan to deal with the boom. And of course it had no plan to deal with a crash.
The failure to invest the Heritage Trust fund or to fund it adequately led to the current deficit. And yet those in charge of investing both the Trust fund and the new AIMCO investment fund (made up of your and my public sector pension funds) lost the province billions, that now make up part of the current deficit. It was this investment failure that has cost the province much including outrageous buy outs and bonuses to these same fund managers.
The province's Heritage Savings Trust Fund lost the $3 billion between March 2008 and March 2009 in the economic downturn, and currently sits at $14.3 billion. The record loss sent Alberta into a deficit for the first time in 15 years. It was the biggest loss in the fund's 33-year history.
two AIMCo executives earned a combination of more than $5 million last year even as the funds they managed -- including the Heritage Savings Trust Fund -- lost more than $7 billion.
The collapse of oil and gas prices of course added to the deficit but not to the degree that the bad investments of our surpluses did. In fact the decline in natural gas production in the province began back in 2001 and is something that could be planned for, if you had a government that was not adverse to planning.
Sadly, no amount of drilling is going to reverse the decline. Production declined in 2005, despite having a record number of well completions in the WSCB. Take a look for yourself:
If we take a look back, 2005 should have been a huge year for Canadian natural gas. That year, we saw the most active Atlantic hurricane season in recorded history. Fifteen hurricanes blew past us. Five became Category 4 hurricanes and four reached Category 5, including Katrina and Wilma.
That same year, Canada imported 3.7 Tcf of natural gas to the U.S. However, Canadian production of marketable natural gas fell 1.7%, compared to 2001 levels. According to NEB projections for 2009, natural gas production will sit at 5.5 Tcf — 12% lower than in 2001.
Add to that the expansion of infrastructure projects, that under Klein had been halted, as labour costs increased during the boom and you have another reason for the deficit.
Finally we have the creation of Hospital Boards, which were to have been publicly elected and were for one term and then when to0 many liberals and dippers were elected the boards were fired by Klein and replaced with Tory hacks. Steady Eddie's first act as Premier was to follow in Klein's footsteps, firing the regional boards and forming a super board, the cost of which was again payouts resulting in the new super board having a half billion dollar deficit.
The other reason for the deficit is that Alberta is business friendly. The cost of doing business in this province is nil, zilch, nada. The working class taxpayers in Alberta shoulder the burden of business costs. And thanks to the generous tax breaks to business the burden of the deficit is shouldered by you and me, and the solution that some are suggesting is the dreaded of all taxes the sales tax.
The Progressive Conservative government, in power since 1971, has long had a hands-off approach to business. Foreign investors have long been attracted by the lack of sales, payroll or capital taxes, low income taxes and competitive corporate taxes, at 29 per cent and dropping to 25 per cent by 2012. Despite a current deficit, overall net direct and indirect debt is low, totalling C$1bn or 0.3 per cent of GDP on March 31, according to a recent Moody’s report that gave Alberta a triple-A debt rating.
Like the mythical debt and deficit crisis of the Klein years this too is a short term recession, with a temporary deficit. And like then the deficit will be paid off by cutting public sector funding and freezing wages rather than taxing the capitalists. Nothing new here just as there is nothing new with the Tired Old Tories still in power.
Interest Rate Hikes Will Not Save Us from Inflation
by Ellen Brown / July 28th, 2022
Rather than making money harder to get, the U.S. government needs to focus on the other side of the demand vs. supply equation.
In prescribing cures for inflation, economists rely on the diagnosis of Nobel laureate Milton Friedman: inflation is always and everywhere a monetary phenomenon—too much money chasing too few goods. But that equation has three variables: too much money (“demand”) chasing (the “velocity” of spending) too few goods (“supply”). And “orthodox” economists, from Lawrence Summers to the Federal Reserve, seem to be focusing only on the “demand” variable.
M2 money supply surged [in 2020] as the Fed pumped out liquidity to replace businesses’ lost sales and households’ lost paychecks. But bank reserves account for nearly half of the cumulative increase since 2020 began, and the vast majority seem to be excess reserves sitting on deposit at Federal Reserve banks and not backing loans. Excluding bank reserves, M2 money supply is now growing more slowly than it did for most of 2015 – 2019, when inflation was mostly below the Fed’s 2% y/y target, much to policymakers’ chagrin. Weak lending also suggests money isn’t doing much “chasing,” a notion underscored by the historically low velocity of money. US personal consumption expenditures—the broadest measure of household spending—have already slowed from a reopening resurgence to rates more akin to the pre-pandemic norm and surveys show many households used stimulus money to repay debt or build savings they may not spend at all. It doesn’t look like there is a mountain of household liquidity waiting to do more chasing from here. [Emphasis added.]
In March 2022, the Federal Reserve tackled inflation with its traditional tools – raising interest rates and tightening the money supply by selling bonds, pulling dollars out of the economy. But not only have prices not gone down since then, they are going up. As observed in a July 15 article on Seeking Alpha titled “Fed-Induced Recession Looms As Rate Fears Roil All Markets”:
On Wednesday, the Consumer Price Index came in at a 9.1% annual rate. The higher-than-expected reading puts the CPI at a new 41-year high.
The biggest contributors to rising consumer prices are the basic necessities of food, fuel, and shelter. As households struggle to make ends meet, they are trimming discretionary spending, burning through savings, and running up credit card balances.
Businesses are also getting squeezed. On Thursday, the Producer Price Index showed wholesale costs rising at a massive 11.3% year-over-year.
When their own costs go up, producers must raise the prices of their products to cover those costs, regardless of demand. Less money competing for their products won’t bring producer costs down. It will just drive the companies out of business, as happened in the Great Depression. The Seeking Alpha article concludes:
… As both businesses and consumers are forced to tighten their belts, a slowdown looms.
And if the Federal Reserve makes another major policy misstep, then a severe recession and financial crisis may also be coming.
Recession is already evident. The stock market has lost a cumulative $7 trillion in value this year, while the crypto market has lost $2 trillion since last November. Emerging markets are in even worse straits. According to a July 14 article by Larry McDonald on ZeroHedge, “Emerging and frontier market countries currently owe the IMF over $100 billion. US central banking policy plus a strong USD is vaporizing this capital as we speak.… A quarter-trillion dollars of distressed debt is threatening to drag the developing world into a historic cascade of defaults.”
Every time the Fed raises rates, borrowing becomes more expensive. That means higher interest costs not only for governments but for borrowers with mortgages, home equity lines of credit, credit cards, student debt and car loans. For both large and small businesses, loans also get pricier.
To be clear, this is not the same sort of inflation that Paul Volcker was taming in 1980 when he raised the Fed funds rate to 20%. McDonald observes, “In 2021, global debt reached a record $303T, according to the Institute of International Finance .… Volcker was jacking rates into a planet with about $200T LESS debt.” [Emphasis added]
Volcker was also not dealing with the supply shortages we have today, generated by lockdowns that put more than 100,000 U.S. companies out of business; sanctions and war that cut off global supplies of fuel, food and resources; and farming crises such as that in the Netherlands, generated by overly stringent regulations.
Higher interest rates don’t alleviate cost/push inflation caused by supply crises; they make it worse. Rather than making money harder to get, the government needs to focus on the supply side of the equation, stimulating local production to bring supply levels up. Rather than Volcker’s solution, what we need is that pioneered by Alexander Hamilton, Abraham Lincoln, and Franklin D. Roosevelt, who pulled us out of similar crises with public banking institutions designed to stimulate infrastructure and development.
For foreign models, we can look to the infrastructure-funding central banks of Australia, New Zealand and Canada in the first half of the 20th century; and to China, which salvaged the global economy following the 2008 banking crisis with massive infrastructure and development funded through its state-owned development banks.
China Did It
In the last 40 years, China has exploded from one of the world’s poorest countries to a global economic powerhouse. Among other notable achievements, from 2008 to 2022 it built 23,500 miles of high-speed rail, at a time when U.S. infrastructure projects were stalled for lack of funding. How did China pull this off? Rather than relying on taxpayer funds or foreign debt, it borrowed from its own banks.
China has three massive state-owned infrastructure and development banks – the China Development Bank, the Export-Import Bank of China, and the Agricultural Development Bank of China. Called “policy banks,” they get their liquidity either (a) directly from the People’s Bank of China (PBOC) in the form of “Pledged Supplementary Lending,” or (b) by issuing bonds, which have higher credit ratings than commercial bank bonds and are in demand because they can be used as collateral to borrow from the central bank. China’s policy banks are limited to funding certain specific government policies; and these policies are all productive and public-purpose-driven, unlike the short-term private profit-maximization driving Wall Street banks.
Besides its big state-owned banks, China has an extensive network of local banks, which know their local markets. The PBOC website lists seven tools it can use for adjusting monetary policy, including not just a short-term lending facility like the U.S. Fed’s discount window, but a facility to inject liquidity into banks for medium-term loans, as well as the “pledged supplementary lending” to fund long-term loans from the three policy lenders for specific sectors, including agriculture, small businesses, and shanty town re-development.
Yet all this stimulus has not driven up Chinese prices. In fact, consumer prices initially fell in 2008 and have hovered around 2% ever since. [See chart below.]
Prices are creeping up now, as is happening everywhere; but they have reached only 2.5%—far below the 9.7% seen in the U.S. in July.
Our Forebears Did It Too
State-owned infrastructure banks are not unique to China. In the United States, a similar model was initiated by Alexander Hamilton, the first U.S. Treasury Secretary. The “American System” of government-issued money and credit was key both to winning the American Revolutionary War and to transforming the nation from a collection of agrarian colonies to an industrial powerhouse. But after the War, the federal government was $70 million in debt, including $44 million from the colonies-turned-states.
Hamilton solved the debt problem with debt-for-equity swaps. Debt instruments were accepted in partial payment for stock in the First U.S. Bank. This capital was then leveraged into credit, issued as the first U.S. currency. Loans were based on the fractional reserve model. Hamilton wrote, “It is a well established fact, that Banks in good credit can circulate a far greater sum than the actual quantum of their capital in Gold & Silver.”
The BOE was chartered to fund a national war and was capitalized exclusively by public debt. The government would pay private lenders, who controlled what policies could be funded. Hamilton’s BUS, by contrast, was to be a commercial bank, funding itself by generating credit for infrastructure and development.
Under Hamilton’s system of “Public Credit,” the primary function of the BUS would be to issue credit to the government and private interests for internal improvements and other economic development. Hamilton said a bank’s function was to generate active capital for agriculture and manufactures, increasing the quantity and quality of labor and industry. The BUS would establish a sovereign currency, a banking system, and a source of credit to build the nation, creating productive wealth, not just financial profit.
The BUS was chartered for only 20 years, after which it lapsed. When economic hardships and monetary pressures followed, the Second Bank of the United States was founded in 1816 under President John Quincy Adams, basically on the Hamiltonian model. It funded one of the most intense periods of economic progress in history, investing directly in canals, railroads, roads, and coal and iron enterprises; lending money to states and cities engaged in such projects; and managing credit so that it continually flowed into needed productive activities.
After the Second BUS was shut down, Abraham Lincoln’s government issued Greenbacks (U.S. Notes) directly, funding both the Civil War and extensive infrastructure and development. The National Banking System was also established, under which national banks would be partially capitalized with federal securities.
An International Movement Is Born
The American System and its leaders not only allowed the American colonists to break free of British control but inspired an international movement. Other British colonies revolted, including Australia, New Zealand and Canada; and other countries rebelled against the British imperial free-trade doctrines and developed their own infrastructure and manufacturing, including Germany, Ireland, Russia, Japan, India, Mexico, and South America.
The Commonwealth Bank of Australia (CBA), founded in 1911, followed the Hamiltonian model. It was masterminded by an American named King O’Malley, who called Hamilton “the greatest financial man who ever walked the earth.” The CBA funded major national development and Australia’s participation in World War I, simply with national credit issued by the bank.
In Canada from 1939-74, the government borrowed from its own Bank of Canada, effectively interest-free. Major government projects were funded without increasing the national debt, including aircraft production during and after World War II, education benefits for returning soldiers, family allowances, old age pensions, the Trans-Canada Highway, the St. Lawrence Seaway project, and universal health care for all Canadians.
Meanwhile in the U.S., we got the Federal Reserve – and the worst banking crisis and economic depression ever in 1929-33. Pres. Franklin D. Roosevelt then rebuilt the U.S. economy financed through the Reconstruction Finance Corporation, again funded on the Hamiltonian model. Initially capitalized with $500 million, from 1932 to 1957 it lent or invested over $40 billion for infrastructure and development of all kinds; funded the New Deal and World War II; and turned a net profit to the government of $690 million.
Solving Today’s Price Inflation
That could be done again, assuming the political will. Some pundits predict that the Fed will back off its aggressive interest rate hikes when the carnage from that approach becomes painfully evident, but it seems to be a phase we have to go through to convince policymakers that the Fed’s current tools are not able to curb the price inflation we have today. We need to stimulate local development with a national infrastructure and development bank like China’s; and for that, Congress needs to pass an infrastructure bank bill.
Four such bills are currently before Congress. Only one, however, is capable of generating the nearly $6 trillion that the American Society of Civil Engineers says is needed over the next decade for U.S. infrastructure investment. This is HR 3339: The National Infrastructure Bank Act of 2021, which would effectively be self-funded on the American System model – a critical feature given that the federal debt is at record levels. The bank would be capitalized with federal debt acquired in debt-for-equity swaps – federal securities for non-voting bank shares paying a 2% dividend. This capital would then be leveraged at 10 to 1 into low-interest loans, essentially at cost. The bank would be anti-inflationary, by bringing supply up to meet demand; would not require new taxes but would rather increase the tax base, by increasing GDP; and would require only a small Congressional outlay for startup costs, which would quickly be repaid. For more information on HR 3339, see the National Infrastructure Bank Coalition website.
An electric car fire is like 'a trick birthday candle' — and a nightmare for firefighters
Cyrus Farivar
·11 min read
It’s the kind of blaze that veteran Chief Palmer Buck of The Woodlands Township Fire Department in suburban Houston compared to “a trick birthday candle.”
On April 17, when firefighters responded to a 911 call at around 9:30 p.m., they came upon a Tesla Model S that had crashed, killing two people, and was now on fire.
They extinguished it, but then a small flare shot out of the bottom of the charred hulk. Firefighters quickly put out those flames. Not long after, the car reignited for a third time.
“What the heck? How do we make this stop?’” Buck asked his team. They quickly consulted Tesla’s first responder guide and realized that it would take far more personnel and water than they could have imagined. Eight firefighters ultimately spent seven hours putting out the fire. They also used up 28,000 gallons of water — an amount the department normally uses in a month. That same volume of water serves an average American home for nearly two years.
By comparison, a typical fire involving an internal combustion car can often be quickly put out with approximately 300 gallons of water, well within the capacity of a single fire engine.
As the popularity of electric vehicles grows, firefighters nationwide are realizing that they are not fully equipped to deal with them. So they have been banding together, largely informally, to share information to help one another out. In fact, Buck recently spoke on Zoom about the incident before a group of Colorado firefighters.
That’s because the way that electric vehicles are powered triggers longer-burning fires when they crash and get into serious accidents. Electric cars rely on a bank of lithium-ion batteries, similar to batteries found in a cellphone or computer. But unlike a small phone battery, the large batteries found in the Tesla Model X, for instance, contain enough energy to power an average American home for more than two days.
The remains of a Tesla vehicle are seen after it crashed in The Woodlands, Texas (Scott J. Enlge / via Reuters)
So when an electric vehicle gets in a high-speed accident and catches on fire, damaged energy cells cause temperatures to rise out of control, and the resulting blaze can require a significant amount of water to put out. Such vehicles, given their large electrical energy storage capacity, can be a considerable hazard, known as “stranded energy,” to first responders.
But training to put out these fires can’t come fast enough as more electric vehicles arrive on U.S. roads every day. According to IHS Insight, an industry analysis firm, the number of registered electric vehicles reached a record market share in the United States of 1.8 percent and is forecast to double to 3.5 percent by the end of this year. But IHS notes that 1 in 10 cars are expected to be electric by 2025.
Still, most firefighters across America have not been adequately trained in the key differences between putting fires out in gas and electric cars. Some counterparts in Europe have developed a different approach, sometimes even putting a burning electric vehicle into a converted shipping container or dumpster -- essentially giving it a bath -- so that it cannot do further harm. Tesla says in its publicly available first responders guide that this method is not advisable and that departments should just use lots of water to put fires out.
Tesla S Car Crash in The Netherlands (Caspar Huurdeman / Hollandse Hoogt via Redux)
The problem has become widespread enough that late last year the National Transportation Safety Board published a report noting the “inadequacy” of all car manufacturers’ first responder guides. The agency further noted that while there are electric disconnection mechanisms, known as “cut loops,” they are often damaged in serious crashes. Finally, the NTSB also said that first responders generally lack an understanding of how to put out fires that can result from such crashes.
“The instructions in most manufacturers’ emergency response guides for fighting high-voltage lithium-ion battery fires lack necessary, vehicle-specific details on suppressing the fires,” the NTSB said
But there’s little that the board can do to fix the problem.
“We do not have any regulatory power, we do not have any enforcement power,” said NTSB spokesperson Eric Weiss, pointing out that such authority sits with the National Highway Traffic Safety Administration, or NHTSA.
In an email, Lucia Sanchez, a spokesperson for the safety administration, said that this topic remains important for the agency, one that it is “actively engaged in with our stakeholders including members of the first responder community.” In recent correspondence with the NTSB, the regulatory agency said that it continues to conduct research on “developing practical strategies for responders.”
Tesla, the largest electric-vehicle seller in the United States, did not respond to requests for comment about the NTSB report. But Capt. Cory Wilson, a 14-year veteran of the fire department in Fremont, California, where all U.S.-made Teslas are manufactured, said that Tesla has worked directly with his department for the past eight years. Still the best advice that Wilson gave was to advise firefighters to print out and keep Tesla safety guides in their trucks.
“Tesla has done a good job trying to get first responders educated,” he said.
Benedikt Griffig, a Volkswagen spokesperson, said in an email that German firefighting authorities have largely reached the same conclusion as their American counterparts, noting that they, too, may need considerable volumes of water to put out such a fire. Nissan spokesperson Ashli Bobo declined to respond to questions, but pointed to the company’s publicly available first responder guide. David McAlpine, a General Motors spokesman, said the company has actively worked on providing guidance for first responders working with electric vehicles and that "General Motors is committed to developing products that are safe and enjoyable for all our customers." Ford did not respond to requests for comment.
Recent discovery
While the first Tesla vehicles hit American streets in 2008, the National Transportation Safety Board did not investigate its first electric-vehicle battery fires until after an Aug. 25, 2017, crash of a Tesla Model X. That car was driving an estimated 70 mph or more down a residential street in Lake Forest, California, about an hour’s drive southeast of downtown Los Angeles.
According to the NTSB, the driver lost control of the car, crossed a sidewalk, traveled down a drainage ditch, hit a culvert and a property wall, and finally zoomed into an open garage and collided with a parked BMW, narrowly missing a man inside.
The Tesla caught fire, which spread to the BMW, then the garage and the house itself.
While Orange County Fire Authority’s firefighters put out most of the fire within 20 minutes, they found that a fire continued to burn in the attic above the fire, fueled by the burning Tesla. It took another 30 minutes for them to get the Tesla out of the garage, after which it reignited.
Firefighters battle a blaze sparked by a Tesla in Lake Forest, Calif., on Aug. 25, 2017. (Orange County Fire Authority)
But 45 minutes after the flames on the Tesla were extinguished, it reignited again. Firefighters began hosing it down with copious amounts of water, up to 200 gallons per minute, but “that did not extinguish the flames,” according to the NTSB. At approximately 9:13 p.m., nearly three hours after the first alarm was received, firefighters had to pour out more than 600 gallons of water per minute. In the end, two firefighters sustained minor smoke inhalation-related injuries, and the agency used 20,000 gallons of water.
Capt. Sean Doran, the spokesperson for the Orange County Fire Authority, said that electric vehicle-related fires are a “game changer,” given that they require such huge amounts of water, and incidents can last hours longer than what most departments may be used to.
“One of the concepts in firefighting is don’t start what you can’t finish,” he said. “We don’t want to start applying water before we have a water source.”
It’s also often difficult for firefighters to get that volume of water outside of a mid-size city with adequate hydrants or other natural sources. That’s also what The Woodlands Township Fire Department, which responded to the Tesla crash in April, concluded.
“On a highway, to figure out how you’re going to get 20,000 gallons is a planning and logistics nightmare,” Buck, the fire chief, said.
Seeking help
Fire department officials say one of the biggest problems they face is that Tesla and other major car manufacturers often don’t include enough detail in their model guides for first responders as some fire agencies would like.On May 8, 2018, a 2014 Tesla Model S took a curve at 116 mph in a 30-mph zone in Fort Lauderdale, Florida. The car hit a wall in a residential area before it erupted in flames, then continued down the road and hit a light pole, finally stopping in a driveway. The driver and front passenger were both killed, while the rear passenger was seriously injured.
Fort Lauderdale Fire Rescue arrived four minutes after a 911 call was placed and began hosing down the car.
According to Asst. Fire Marshal Stephen Gollan, his agency had “minimal training” before this incident, but he knew enough to consult the Tesla online emergency response guide, which describes the “cut loops” that shut down the high voltage system. But firefighters couldn’t reach the loops.
The instructions for this model also includes the warning: “use large amounts of water to cool the battery. DO NOT extinguish fire with a small amount of water,” according to Tesla.
But Gollan said that not only does Tesla's manual lack a definition of “large amounts” of water, it also provides little detail about what firefighters should do with the remaining damaged batteries that may still contain dangerous stranded energy. In the end, Fort Lauderdale Fire Rescue used a combination of water and firefighting foam, even though Tesla does not recommend using foam.
“The Tesla manuals only say to use copious amounts of water,” he said. “They don't provide any direction as to how to remove that energy.”
In the end, the Tesla was loaded onto a tow truck for removal from the crash site. But the battery reignited twice during that process.
Like Buck in The Woodlands case, Gollan found himself quickly fielding calls from numerous agencies trying to learn more about how to put out electrical vehicle fires from someone who had done it firsthand.
“Following the incident we did substantial debriefings with NTSB and other municipal fire departments,” he said. “And since that time I've had multiple calls with other agencies from across the U.S.”
Support groups
While some firefighters are now turning to one another for help, like Buck speaking to his counterparts in Colorado, other groups like the National Fire Protection Association (NFPA), a lobbying and research arm for the fire insurance and firefighting community, are also trying to address the growing demand for their firefighter courses.
While the NFPA has trained approximately 250,000 firefighters and emergency responders in the last 12 years on this issue, that leaves nearly 80 percent of the more than 1.1 million firefighters nationwide left to train, according to the organization. Of those, approximately two-thirds are volunteers and may be harder to reach.
The scene where an Oregon man crashed a Tesla while going about 100 mph, destroying the vehicle, a power pole and starting a fire when some of the hundreds of batteries from the vehicle broke windows and landed in residences in Corvallis, Ore., in November 2020. (Corvallis Police Dept. via AP)
“With EVs (electric vehicles), especially for the fire service, it’s a new paradigm,” said Andrew Klock, the group’s emerging issues lead manager.
Robert Swaim, who retired nearly two years ago, spent more than 30 years at the NTSB. He began digging into the issue with lithium-ion batteries after a Boeing 787 caught fire in Boston in 2013.
Swaim has been offering his own training, comparable to ones offered by NFPA, except his classes are live -- and he brings his own Chevy Volt to class. He points out that his in-person and hands-on training is considerably more helpful than the myriad of PDFs that various manufacturers put out. He said that after recently posting some of his presentation slides, traffic to his website has jumped by more than a factor of 10.
“You’re going to tell me that a volunteer firefighter is going to go to the Ford website and learn about Ford’s emergency response guide?” he said. “That’s not going to happen.”
Continuing problems
In the meantime, fire departments are facing far more time-intensive fires. In the past, most car fires were put out in well under an hour. Then the scene was turned over to local law enforcement, and a tow company moved the car.
“Then we are going to have to sit on scene usually for 45 minutes to an hour with our [thermal imaging camera] to make sure the battery is not continuing to heat up,” said Wilson, the Fremont Fire captain.
Later this summer, Buck is set to give another presentation to his former agency, the Austin Fire Department, where he worked for 27 years. The Texas capital is set to become Tesla’s new manufacturing hub, known as Gigafactory Texas, where the company’s new all-electric Cybertruck is expected to be produced.
Buck fears that as electric cars become larger, they’re going to need bigger batteries, which could mean even longer-burning fires. He notes that this is too big a burden on small fire departments.
“The time on scene is more concerning than even the amount of water — the fact that I might have a unit tied up for multiple hours while it cools down,” he said. “I'm just babysitting, and that’s problematic.”
Tuesday, April 21, 2020
WHY CORONAVIRUS COULD SPARK A CAPITALIST SUPERNOVA
“Global yields lowest in 500 years of recorded history. $10 trillion of negative rate bonds. This is a supernova that will explode one day,” tweeted Bill Gross, the ‘bond king’, in 2016.
This day has come closer. Capitalism now faces the deepest crisis in its several centuries of existence. A global slump has begun that is already devastating the lives of hundreds of millions of working people on all continents. The consequences for workers and poor people in Asia, Africa, and Latin America will be even more extreme than for those living in Europe and North America, both with respect to lives lost to coronavirus and to the existential threats to the billions of people already living in extreme poverty. Capitalism, an economic system based on selfishness, greed and dog-eat-dog competition, will more clearly than ever reveal itself to be incompatible with civilisation.
Why is supernova – the explosion and death of a star – an apt metaphor for what could now be about to unfold? Why could the coronavirus, an organism 1000th the diameter of a human hair, be the catalyst for such a cataclysm? And what can workers, youth and the dispossessed of the world do to defend ourselves and to ‘bring to birth a new world from the ashes of the old’, in the words of the US labour hymn, Solidarity Forever?
To find answers to these questions, we need to understand why the ‘global financial crisis’ that began in 2007 was much more than a financial crisis, and why the extreme measures taken by G7 governments and central banks to restore a modicum of stability – in particular the ‘zero interest rate policy’, described by a Goldman Sachs banker as “crack cocaine for the financial markets” – have created the conditions for today’s crisis.
GLOBAL CAPITALISM’S ‘UNDERLYING HEALTH ISSUES’
The first stage of a supernova is implosion, analogous to the long-term decline in interest rates that began well before the onset of systemic crisis in 2007, which has accelerated since then, and which fell off a cliff just as coronavirus began its rampage in early January 2020. Falling interest rates are fundamentally the result of two factors: falling rates of profit, and the hypertrophy of capital, i.e. its tendency grow faster than the capacity of workers and farmers to supply it with the fresh blood it needs to live. As Marx said, in Capital vol. 1, “capital’s sole driving force [is] the drive to valorise itself, to create surplus-value… capital is dead labour which, vampire-like, only lives by sucking living labour, and lives the more, the more labour it sucks.”
These two factors combine to form a doom loop of awesome destructive power. Let us examine its most important linkages.
Many things both mask and counteract the falling rate of profit, turning this into a tendency that only reveals itself in times of crisis, of which the most important has been the shift of production from Europe, North America and Japan to take advantage of the much higher rates of exploitation available in low-wage countries. The falling rate of profit manifests itself in a growing reluctance of capitalists to invest in production; more and more of what they do invest in is branding, intellectual property and other parasitic and non-productive activities. This long-running capitalist investment strike is amplified by the global shift of production – boosting profits by slashing wages rather than by building new factories and deploying new technologies. This enables huge mark-ups, turbo-charging the accumulation of vast wealth for which capitalists have no productive use – hence the hypertrophy of capital.
This, in turn, results in declining interest rates – as capitalists compete with each other to purchase financial assets, they bid up their price, and the revenue streams they generate fall in proportion – hence falling interest rates. Falling interest rates and rising asset values have created what is, for capitalist investors, the ultimate virtuous circle – they can borrow vast sums to invest in financial assets of all kinds, further inflating their ‘value’.
Falling interest rates therefore have two fundamental consequences: the inflation of asset bubbles and the piling up of debt mountains. In fact, these are two sides of the same coin: for every debtor there is a creditor; every debt is someone else’s asset. Asset bubbles could deflate (if productivity increases), or else they will burst; economic growth could, over time, erode debt mountains, or else they will come crashing down.
Since 2008, productivity has stagnated across the world and GDP growth has been lower than in any decade since World War II, resulting in what Nouriel Roubini has called “the mother of all asset bubbles,” while aggregate debt (the total debt of governments, corporations and households), already mountainous before the 2008 financial crash, has since then more than doubled in size. The growth of debt has been particularly pronounced in the countries of the global South. Total debt for the 30 largest of them reached $72.5tn in 2019 – a 168% rise over the past 10 years, according to Bank of International Settlements data. China accounts for $43tn of this, up from $10tn a decade ago. In sum, well before coronavirus, global capitalism already had ‘underlying health issues’, it was already in intensive care.
Global capitalism – which is more imperialist than ever, since it is both more parasitic and more reliant than ever before on the proceeds of super-exploitation in low-wage countries – is therefore inexorably heading to supernova, towards the bursting of assets bubbles and the crashing of debt mountains. Everything that imperialist central banks have done since 2008 has been designed to postpone the inevitable day of reckoning. But now that day has come.
10-year US Treasury bonds are considered the safest of havens and the ultimate benchmark against which all other debt is priced. In times of great uncertainty, investors invariably stampede out of stock markets and into the safest bond markets, so as share prices fall, bond prices – otherwise known as ‘fixed income securities’ – rise. As they do, the fixed income they yield translates into a falling rate of interest. But not on March 9, when, in the midst of plummeting stock markets, 10-year US Treasury bond interest rates spiked upwards. According to one bond trader, “statistically speaking, [this] should only happen every few millennia.” Even in the darkest moment of the global financial crisis, when Lehman Brothers (a big merchant bank) went bankrupt in September 2008, this did not happen.
The immediate cause of this minor heart attack was the scale of asset-destruction in other share and bond markets, causing investors to scramble to turn their speculative investments into cash. To satisfy their demands, fund managers were obliged to sell their most easily-exchangeable assets, thereby negating their safe-haven status, and this jolted governments and central banks to take extreme action and fire their ‘big bazookas’, namely the multi-trillion dollar rescue packages – including a pledge to print money without limit to ensure the supply of cash to the markets. But this event also provided a premonition for what is down the road. In the end, dollar bills, like bond and share certificates, are just pieces of paper. As trillions more of them flood into the system, events in March 2020 bring closer the day when investors will lose faith in cash itself – and in the power of the economy and state standing behind it. Then the supernova moment will have arrived.
THE LEFT’S IMPERIALISM-DENIAL, AND ITS BELIEF IN THE ‘MAGIC MONEY TREE’
The gamut of the left in imperialist countries – the Jeremy Corbyn-led wing of the Labour Party in the UK; the motley crew of left-Keynesians such as Ann Pettifor, Paul Mason, Yanis Varoufakis; supporters of Bernie Sanders in USA – are united on two things: they all acknowledge, to one degree or another, that imperialist plunder of colonies and neocolonies happened in the past but do not acknowledge that imperialism continues in any meaningful way to define relations between rich and poor countries.
And they believe in one or other version of the ‘magic money tree’, in other words, they see the decline of interest rates into negative territory not as a flashing red light showing the extremity of the crisis, i.e. not as the implosion phase of a supernova, but as a green light to borrow money to finance increased state investment, social spending, a Green New Deal, and even a bit more foreign aid. In fact, there is no magic money tree. Capitalism cannot escape from this crisis, no matter how many trillions of dollars governments borrow or central banks print. The neoliberals rejected magical thinking, now they embrace it – this shows the extent of their panic, but it does not make magical thinking any less fantastical. The trillions they spent after 2007-8 bought another decade of zombie-like life for their vile system. This time they will be lucky to get 10 months, or even 10 weeks, before the explosion phase of the supernova begins.
CORONAVIRUS – CATALYST FOR CATACLYSM
The coronavirus pandemic occurred at the worst possible time: growth in the eurozone had shrunk to zero; much of Latin America and sub-Saharan Africa were already in recession; the sugar-high from Trump’s huge tax-giveaways to US corporations was fading; the US-China trade war was causing serious disruption to supply chains and was threatening to entangle the EU; and tens of millions of people joined mass protests in dozens of countries across the world.
Interest rates are now deep in negative territory – but not if you are Italy, facing an enormous increase in its debt/GDP ratio, not if you are an indebted corporation trying to refinance your debts, not if you are an ‘emerging market’. Since March 9, corporate interest rates have gone through the roof; in fact few corporations can borrow money at any price. Investors are refusing to lend to them. Corporations are now facing a credit crunch – in the midst of global negative interest rates! That’s why the ECB decided to borrow €750 billion from these same investors, and use it to buy the corporate bonds which these same investors now refuse to purchase, and why the USA’s Federal Reserve is doing the same on an even bigger scale. Italy’s (and the EU’s) fate now depends on the willingness of the Bundesbank to replace its private creditors. Their refusal to do this would be the final stage of the EU’s death agony.
During the middle two weeks of March, imperialist governments announced plans to spend $4.5 trillion bailing out their own bankrupt economies. An emergency online summit of the G20 (the G7 imperialist nations plus a dozen or so ‘emerging’ nations, including Russia, India, China, Brazil, and Indonesia) on 26 March, declared “we are injecting over $5 trillion into the global economy.” These are weasel words; by ‘global’ they actually mean ‘domestic’! The response of the ‘left’ in the imperialist countries is to clap its hands and say, we were right all along! There is a magic money tree after all! – apparently not realising that this is exactly what happened post-2008: the socialisation of private debt. Or that, unlike post-2008, this time it will not work.
Yet, as imperialist governments belatedly mobilise – and monopolise – medical resources to confront the coronavirus crisis in their own countries, they’ve abandoned poor countries to their fate. The left in the imperialist countries (or we could just say ‘imperialist left’, for short) has also ignored the fact that there is nothing in these emergency cash injections for the poor of the global South. If you are an ‘emerging market’, well, fuck off and join the queue for an IMF bail-out! As of March 24, 80 countries were standing in this queue, waiting for some of its $1tr lending capacity. $1 trillion sounds like a lot of money, and indeed it is, but, as Martin Wolf, chief economic correspondent for the Financial Times, points out, “the aggregate external financing gaps of emerging and developing countries are likely to be far beyond the IMF’s lending capacity.”
Furthermore, as Wolf suggests, the purpose of IMF loans is to help with “external financing gaps” – in other words, to bail out imperialist creditors, not the peoples of debtor nations; and they invariably come with harsh and humiliating conditions that add to the crushing burden already pressing down on the peoples of those countries. In this sense, they are just like the vast government bailouts of private capital in the rich countries – but without anything added on to finance welfare payments or partially replace wages. The aim of the latter is to purchase the docility of the working class in the imperialist nations, but they have no intention of doing this in Africa, Asia and Latin America.
On March 24, the United Nations issued an appeal for $2bn to fight the coronavirus pandemic in Africa, Asia and Latin America. This money, which the U.N. hopes to raise over the next nine months, is 1/80 of the annual budget of the U.K.’s NHS, and less than 1/2000 of the $4.5tr they plan to spend keeping their own capitalist economies alive. It is also less than 1/40 of the money which imperialist investors have taken out of ‘emerging markets’ during the first three weeks of March, “the largest capital outflow ever recorded,” according to IMF managing director Kristalina Georgieva.
The maximum extent of relief for the collateral effects of the coronavirus epidemic on the peoples of poor countries in Africa, Asia and Latin America was indicated by World Bank president, David Malpass, who said after the G20 summit ended that his board is putting together a rescue package valued at “up to $160 billion” spread out over the next 15 months – a minuscule fraction of the economic losses that the coming global slump will impose on the peoples of the absurdly-named ‘emerging markets’.
“WE HAVE A REVOLUTIONARY DUTY TO FULFILL" – LEONARDO FERNANDEZ, CUBAN DOCTOR IN ITALY
So, what is to be done? Instead of applauding the bailout of big corporations, we should expropriate them. Instead of endorsing a temporary moratorium on evictions and the accumulation of rent arrears, we should confiscate real estate so as to protect workers and small businesses. These, and many other struggles to assert our right to life over the rights of capitalists to their property, are for the near future.
Right now the priority is to do whatever is necessary to save life and defeat the coronavirus. This means extending solidarity to those who are most vulnerable to the pandemic – homeless people, prisoners, asylum seekers enduring ‘hostile environments’ – and to the dispossessed and victims of imperialism in the slums, shantytowns and refugee camps of the global South. Raghuram Rajan, former governor of the Bank of India, points out that “pending a cure or a reliable vaccine, the world needs to fight the virus into submission everywhere in order to relax measures anywhere.” The Economist concurs: “If covid-19 is left to ravage the emerging world, it will soon spread back to the rich one.”
The coronavirus pandemic is just the latest proof that we need not so much an NHS, but a GHS – a Global Health Service. The only country that is acting on this imperative is revolutionary Cuba. They already have more than 28,000 doctors providing free health care in 61 poor countries – more than the G7 nations combined – and 52 in Italy, 120 more to Jamaica, and are helping scores of other countries to prepare for the pandemic. Even the far-right Bolsonaro government in Brazil, which last year expelled 10000 Cuban doctors, branding them terrorists, is now begging them to return.
To defeat coronavirus we must emulate Cuba’s medical internationalism. If we are to defeat this pandemic we must join with its revolutionary doctors and revolutionary people, and we must prepare do what Cuba did to make this internationalism possible – in other words, we must replace the dictatorship of capital with the power of working people. The coronavirus supernova makes socialist revolution – in imperialist countries and across the world – into a necessity, an urgent practical task, a life and death question if human civilisation is to survive and if the capitalist destruction of nature, of which the coronavirus epidemic is merely the latest symptom, is to be ended.
Thanks to Andy Higginbottom, Shih-yu Chou, and Walter Daum for comments on earlier drafts of this article.
Monday, March 06, 2023
How D.C. Swamp Money Made Trains More Dangerous
I CHOO-CHOOSE YOU
The Norfolk Southern crash has brought renewed focus on how the rail industry has evaded some regulations. That story has been playing out for decades.
Roger Sollenberger Political Reporter Updated Mar. 05, 2023 Photo Illustration by Erin O’Flynn/The Daily Beast/Getty Images, James St. John/Wikimedia Commons, and Public Domain
After the catastrophic Norfolk Southern train derailment in East Palestine, Ohio, it didn’t take long for the supercharged partisan atmosphere in Washington to morph the disaster into a political blame game.
Republicans castigated President Joe Biden’s administration for falling asleep at the switch. Biden officials pointed to deregulation under former President Donald Trump. And all the while, the rail industry knew that, even though new safety regulations would seem like an obvious response to the crash and subsequent release of toxic chemicals into the air, new regulations were far from a given.
Although it’s far from the most influential lobby in Washington, the rail industry has spent more than $700 million in the last 25 years, according to data maintained by OpenSecrets. And it’s those hundreds of millions spent pushing back against government safety regulations—primarily but not exclusively through Republicans—that has purchased considerable influence in the U.S. Capitol.
A review by The Daily Beast of lobbying and campaign finance filings tells a story of a decades-long ideological push and pull. The review shows that, while it’s sometimes difficult to draw straight lines between an acute event and its cause, entrenched corporate and political cultures still have an overwhelming influence.
For instance, one major requirement now on the books—an automated braking technology called “positive train control” (PTC)—debuted on the National Transportation Safety Board’s “most wanted” list in 1990. But under industry pressure, PTC wasn’t fully implemented for 30 years.
As the dust, debris, and various poisons settle from this Norfolk Southern crash, it appears the Trump administration’s specific anti-regulatory moves may not be directly responsible for the wreck, which the National Transportation Safety Bureau’s preliminary report blamed on an overheated wheel bearing.
That’s perhaps the most profound revelation to emerge from the financial data: meaningful changes are almost always reactive, in response to catastrophes instead of anticipating and preventing them before they happen.
In the wake of the crash, federal regulators disclosed that there have been five similar derailments since 2021, two involving Norfolk Southern, the American Journal of Transportation reported on Thursday. The article also said that current track monitoring relies on “antiquated technology” with “a mixed record of preventing accidents.”
But it’s difficult to rein in an industry that’s as vital to everyday American life as railroads are, let alone convince the industry to support forward-looking regulations that would eat into its bottom line. It’s hard to overstate the leverage that this special interest group wields—if railroads stop working, America stops eating.
And yet, the railroad industry’s culture of resistance is most immediately and easily identified in the money.
Over the years, the industry has poured hundreds of millions of dollars into blocking and stalling new rules and legislation, including measures designed to strengthen and modernize rail safety. But a side-by-side comparison of rail lobby spending and government action also suggests that money alone doesn’t explain everything. Instead, the larger baked-in political ideology of the governing party appears to have carried the day on key issues. Feds Order Rail Company to Pay Up for Toxic Train ‘Mess’ ‘NO GOODNESS IN THEIR HEART’ Josh Fiallo
This is reflected in the fact that the rail industry’s lobbying expenditures soared under Barack Obama—most specifically his first term—and then fell, most notably after Obama unilaterally enacted key safety regulations in 2015. The spending stayed at those same lower levels after Trump took office, and have continued at that rate under Biden.
According to OpenSecrets data, the railroad industry shelled out nearly $185 million on lobbying during Obama’s first four years. During Trump’s one term in office, that spending totaled around $107 million. (Rail lobbying during Obama’s second term was about $127 million, according to OpenSecrets.) And railroad lobbyists are far more likely to have direct connections to Capitol Hill than almost any other group
Filings further show that the money was largely aimed at blocking government regulation.
The Association of American Railroads—the industry’s top lobbying group—spent heavily to push back against safety, labor, and antitrust proposals during the Obama years, according to an OpenSecrets database of lobbying disclosures. Under Trump, the partisan winds became friendlier, and spending tailed off.
While Obama didn’t exactly stick it to the railroads—his early visions of overarching antitrust and labor reforms never came to fruition—he did use his executive power to impose some key safety regulations in the face of all that cash. But Trump quickly scrapped those rules with the stroke of a Sharpie, and the railroad companies apparently didn’t feel they had to kick up their spending to convince him and his allies to act in their favor.
That’s not to say they stopped spending. Lobbyists know they have to maintain their relevance, and over Trump’s term, the rail lobby—led by AAR—spent millions of dollars renting the ears of lawmakers.
Many of those expenses went to combat the Safe Freight Act. That bill would have enshrined the two-member crew minimum into law, and was introduced in 2017 by a Republican—the late Rep. Don Young of Alaska, who’s the longest serving Republican in Congress of all time.
Norfolk Southern alone spent about $4.5 million on lobbying between 2017 and 2018, according to the company’s federal lobbying disclosures.
A Norfolk Southern representative referred The Daily Beast to “our extensive Government Relations’ Political Activity and Political Contributions overview” and their statement on the NTSB findings.
Asked for comment, an AAR spokesperson sent a 228-word statement saying that “any assertion that railroads broadly opposed increased safety regulations is patently false,” pointing to a “a long, consistent record.” The spokesperson gave one concrete example, “pushing the Department of Transportation” in 2015 to raise standards for tank cars carrying flammable liquids, including a petition on the matter to the Pipeline and Hazardous Materials Safety Administration. (Those negotiations were more nuanced, according to the DOT’s final rulemaking and the PHMSA’s response to the petition.)
The statement also directed The Daily Beast to the AAR’s statement this week on newly released Federal Railroad Administration safety data, and touted “$20 billion in annual private investments” towards broadly “maintaining the network” and “deploying technology to enhance safety.”
When Trump landed in the White House, he quickly tanked several of the targeted Obama policies. One rule—which briefly came back into the news after the Norfolk Southern derailment—mandated new brake technology for trains carrying volatile and hazardous materials. Trump also killed a rail safety audit program, along with another proposed Obama rule requiring trains to operate with two-man crews, which had already begun to languish. Those repeals and others under Trump appear either minimally or entirely unrelated to the Norfolk Southern derailment, according to a Washington Post fact check.
Generally speaking, the rail industry’s political giving has always favored the GOP. According to OpenSecrets, the industry has spent about $108.6 million to influence elections since 1990, with PACs giving more than individual employees.
Republicans have received the majority of those donations in every election, with two exceptions—the 1990 and 2010 midterms. And some of the recent top GOP recipients, such as Sens. Sam Graves, Jerry Moran, and John Thune, hold leadership positions with influence over that industry.
Contributions from Norfolk Southern employees and its corporate PAC have also historically curved towards Republicans, the data shows, though the company favored Democratic candidates in both 2020 and 2022.
In one curious case, the money went the other way.
Between 2017 and 2021, then-Sen. Roy Blunt (R-MO) rented office space from Norfolk Southern for both his campaign committee and leadership PAC, FEC records show. Over that period, Blunt’s committees paid Norfolk Southern approximately $76,000 in rent. (In 2015, Blunt introduced a bill with bipartisan co-sponsors that would extend the deadline for adopting PTC.)
Still, it’s clear that Obama’s actions—no matter how debatable their relevance to the Norfolk Southern disaster, or the Democrats’ failure to deliver on antitrustissues—appear to have overcome an onslaught of cash. But he and liberal allies also weren’t able to rally enough support to fully overcome Republican and industry resistance.
That year, the railroad industry spent almost $43 million lobbying inside the beltway as Congress negotiated the bipartisan Rail Safety Improvement Act of 2008, which introduced positive train control. President George W. Bush signed it into law that October.
But the pendulum quickly swung the other way.
After the RSIA was passed, the industry dug in hard against some of those new rules, including the PTC requirement, which at that point had already been on the government’s wishlist for 18 years.
Over the next several years, the rail lobby successfully convinced lawmakers on both sides of the aisle to delay the mandate, citing cost and time constraints.
Obama himself signed a bill delaying PTC in 2015—the same year he put forward the new braking requirement that Trump tossed—and the rule was only fully adopted at the end of 2020.
The biggest revelation in the data is still not about money’s effect on the speed of progress, or even partisanship per se. Again, it’s that the most significant advancements are almost never proactive. Industry interests are powerful, and it takes a catastrophe like East Palestine to sharpen the focus on safety.
For instance, the RSIA of 2008, with its long-awaited PTC mandate, came only after a commuter train collision in Southern California killed 25 people. At the time, the Association of American Railroads put out a press release backing the bill. But according to the Internet Archive, the page disappeared from the organization’s website sometime between 2012 and 2013.
Around that same time, the industry convinced the Obama administration to extend the timeline for the PTC rule. Three years later, however, a fatal Philadelphia Amtrak wreck brought rail safety front and center again. In response, Obama enacted federal regulations without the help of Congress, while agreeing to delay PTC. The next year, however, another deadly passenger train crash put the heat back on the railroad lobby.
The Norfolk Southern freighter that derailed last month had positive train control. According to the NTSB’s preliminary report, the train’s PTC system was not to blame, as it was “enabled and operating at the time of the derailment.”
That’s put a new albeit reactive focus on another safety mechanism: old detection technology that may not be up for the task.
At a press conference addressing the report, NTSB chair Jennifer Homendy told reporters that track monitoring is “something we have to look at.”
“Roller bearings fail,” Homendy said. “But it’s absolutely critical for problems to be identified and addressed early so these aren’t run until failure.”
