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Jon Talton

Analysis and commentary on economic news, trends and issues, with an emphasis on Seattle and the Northwest.

Category: Transportation
February 3, 2010 at 9:50 AM

Washington on Washington: Guess who’s getting shafted in infrastructure funding

Top of the News: Washington state is one of the biggest losers in federal infrastructure spending, according to the Business Insider. We get $167.96 per person, compared with Alaska at $1,100 per person.

Other big losers include Virginia, Colorado, California, Ohio, Tennessee, Arizona, Michigan, Florida and North Carolina. It’s telling that most of these states are urbanized with urban needs, many that have been left undone for years. Meanwhile, rural places such as Wyoming are making out.

If the numbers hold, Washington especially stands to lose, considering the need to replace the 520 bridge and drill the deep-bore tunnel. The Cascadia region could also have been a prime corridor for real high-speed rail, rather than the (welcome but hardly enough) improvements to standard rail that have been announced. Infrastructure money could also help with transportation to help Puget Sound ports, such as better connections with eastern Washington and refitting the Stampede Pass tunnels to accommodate double-stack trains.

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Comments | More in Ports of Seattle and Tacoma, Transportation, Urban issues

November 9, 2009 at 10:00 AM

Kraft wants to gobble up Cadbury: Sweet for Wall Street, not Main Street

Top of the News: The significance of Kraft’s $16.4 billion hostile bid for Cadbury is that the Smart People (you know, the ones who cooked up credit default swaps) believe it heralds a return of animal spirits to the wounded capital markets. No wonder the Dow touched a 52-week high today.

These kinds of deals rarely deliver what they promise to shareholders, and they result in heavy job losses at the acquired company (how else are they “paid for”?). They reduce competition and choices for consumers. Yet after decades of lax antitrust enforcement they go on, largely because they are so lucrative for CEOs, investment bankers and lawyers who control the show.

Kraft’s move is also motivated by another usual suspect: its sales are suffering in the recession, materials costs are rising and Wall Street must be placated. That’s the point: The real economy is still sick. If Kraft gets a short-term boost by the deal, it won’t change this reality. Meanwhile, most businesses will be wondering why they can’t get the capital to build productive work while Kraft can assemble it for a speculative, anti-competitive play.

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Comments | More in Macro/Big picture, Stock market, Sustainability, Transportation

November 3, 2009 at 9:35 AM

All aboard: Buffet’s rail acquisition has big stakes for Northwest

Top of the News: Warren Buffet’s acquisition of the Burlington Northern Santa Fe railroad is freighted with the history and future of the Puget Sound. The company is made up of several storied railroads, including the Great Northern and Northern Pacific which helped build Seattle and Tacoma. Now its a major player at both ports and has a key role in whether they will remain competitive.

Buffet said the $34 billion deal is “an all-in wager on the economic future of the United States.” Most analysis has focused on the solid profitability of BNSF, along with the strong results railroads showed mid-decade and their likelihood of an early rebound in a recovery.

I hope, however, Buffett is also talking about the future, where discontinuity once again comes into play. For example, energy costs and environmental concerns should give railroads a much greater role in hauling freight, as well as providing right-of-way for enhanced passenger service.

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Comments | More in Ports of Seattle and Tacoma, Transportation

October 7, 2009 at 10:20 AM

Want to create real jobs? Get busy building high-speed rail in U.S.

Top of the News: Many smart people talked about “a lack of imagination” among American leaders in not foreseeing the 9/11 attacks. The same language was used to describe the sleepwalk into the financial crash. It could be applied now to efforts to restart job creation.

The other Washington is apparently mulling a tax credit for employers who will hire. This seems like a bad idea for at least two reasons. First, the jobs would not be related to real demand and would likely not have a future unless the economy rebounded strongly, an unlikely scenario. Second, every tax credit already increases the deficit.

American policymakers seem mired in the past. A federal effort to actually build high-speed train networks would create real jobs, many of them permanent for workers to operate and maintain the system. It would relieve congestion and enhance productivity, as well as better positioning the nation for a high-cost energy future (and helping with carbon emissions).

While America is only studying high-speed rail (and Amtrak still lacks predictable, adequate funding for regular trains), the world is racing ahead of us. Britain, continental Europe, China, India and Saudi Arabia are building and expanding their systems.

Here, another failure of imagination, with more costly consequences.

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Comments | More in Jobs/Unemployment, Midweek Economic Briefing, Sustainability, Transportation, Urban issues

July 17, 2009 at 10:30 AM

Training wheels: Seattle enters the exotic world of 21st century transportation

Top of the News: Seattle is about to dip its toe into the 21st century when it opens its first light-rail line. My advice: Be calm.

Most Americans don’t get out much, so light rail is exotic, strange, even threatening (especially to a mythmaking minority of anti-transit fetishists and to the oil industry). The media, which are curiously incurious about the hidden costs and damage caused by freeways, will scrutinize every bump and burp of light rail.

The good news is that modern light rail has succeeded in every city in which it has been built. Seattle will have to work really, really hard to mess it up. Even road warrior Phoenix opened a wildly popular 20-mile line last December — so the bar to succeed is pretty low.

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May 21, 2009 at 10:00 AM

Signs of bottoming out don’t mean a recovery is at hand

Top of the News: More evidence of a sucker’s rally comes from Nouriel Roubini’s RGE Monitor, which looks at the big rise in commodity prices since the beginning of 2009, a bet that the recession will be V-shaped and we’re on the upbound leg.

“However, these ‘green shoots’ might still be a signal of the stabilization of economic activity at low levels, rather than a return to trend growth. Even if GDP growth around the world has bottomed, growth may continue to be negative or sluggish until 2011,” the RGE analysts write.

Behind the commodity rise has been technical factors such as stockpiling, rather than fundamentals, such as a rebound in growth.

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April 17, 2009 at 10:20 AM

The economic necessity of a 21st century rail system

Top of the News: President Obama’s plans to spend $13 billion as an initial step toward building high-speed rail in America is a welcome change after years of anti-rail politics and myths. America is far behind most developed nations in using rail as an essential component of its transportation system. In Europe, high-speed rail between certain city pairs has essentially put the airlines out of those routes — allowing them to focus on travel that plays more to their strengths. China is building high-speed rail, and Spain’s system is so popular it can’t expand fast enough. That’s a 21st century transportation system. America has been stuck with a 1965 system, only with more congestion and fewer trains.

Improving this has economic ramifications, from increasing productivity to helping deal with higher energy costs and easing the effects — including high economic costs — of climate change. The funding is too small, and the process risks spreading it too thinly. A better process would be to pick one or two city pairs — San Francisco to LA, or Seattle to Portland — and build the thing. Show Americans who don’t get out much how it works — and works better than air travel in certain situations.

Also, we don’t need futuristic stuff (although high-speed rail is hardly even that, given its proven record worldwide). The economy would benefit from upgrading capacity on freight railroads. This would not only allow for enhanced Amtrak service that is convenient, frequent and reliable — the Cascades and California’s Amtrak service show how this can work — but it would improve freight service. A better freight rail infrastructure will also be an essential if the U.S. is to say competitive and deal with higher oil prices in the future. All of this is sustainable, creates American jobs and has the potential to create American companies doing some of the work.

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Comments | More in Sustainability, Transportation

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