Rail layoffs Mirror Economy

I think the current situation has no precedent, although the severity might be similar or worse than the comparative benchmark of The Great Depression. On one hand, I think it is possible that prospect of a full depression will turn out to be just smoke and mirrors, and in a few months, the economy will be strengthening. But, on the other hand, this could truly spiral down into depths we have never seen, including significant civil disruption. I think it pays to be mentally prepared for virtually anything.

The classic victims of recessions are the people with the least amount of money. In this recession, if it happens, the primary victim will be the government. Perhaps that is why they are in a panic trying to prevent it. The government at all levels is bigger than ever, and the rate of government spending has never been higher. And in the panic to prevent this recession, government spending is accelerating exponentially. They spend all the tax revenue they receive plus as much more that they can possibly borrow or leverage against future revenue.

Eve

Yes, God help us all if the auto industry does go belly up. A few things to keep in mind here: we could very well be looking at the loss of millions of jobs like this nation has never seen in generations, the auto industry is the last of the major manufacturing sector left in our nation. If it falls, its gone for good. Who will then manufacture the Hummers and tanks for the military? Outsource that to a overseas country? Hmm.

And one might consider all the associated industries that rely on the big 3 for a large part of their business, plastic being one of them.

So far in the last 3 months, we have furloughed over 50 men from the PTRA, with the loss of plastic and chemical business being the major deciding factor.

If you go out and take a good look at your automobile, you will realize the majority of it, sans engine, frame and suspension, is made from some form or type of plastic.

Body panels, headliner, door panels, dash board, knobs, carpet, and gauges; just about the entire interior of you car is plastic.

Look around your home, and you will be surprised at how much plastic products you actually have.

So if the big 3 go, then the suppliers start to follow, and the people, like me, who handle the raw products go also…it can snowball really deep if you follow the supply line back to the first producer.

And it can flow over into other industries as well, consider that Goodyear still makes fan belts, hoses and stuff like that here in the US, and even though a lot of the basic auto parts are manufactured outside of the US, in Mexico and Canada, US truck drivers still deliver the stuff to the final assembly point, so they suffer as well…

Regarding Railroad layoffs – Layoffs are (or at least used to be) Stand Operating Procedure for the transportation crafts. I recall in 1968 on the GN at St. Cloud, MN when trainmen with 20 years of service were laid off. On many crew districts seasonal layoffs were routine and many men worked only half or less of the year.

For road crews (engineers, conductors and brakemen) when rail business falls off, fewer trains are run. Since most trains are run by pool (aka - chain gang) unassigned crews, their mileage, and thus earnings, are reduced. This kicks in the union mileage agreements which dictate how many how many miles the crews should be making. This will result in reducing the number of pool crews, which, in turn, starts a of chain of bumping which results in furloughs of those with lower seniority.

Determining mileage and number of crews is a continuing source of friction within the local union membership. Several decades ago the older crews wanted to keep the miles (and thus earnings) high to maintain their income stream. This seemed to be especially true of men who had experienced the Great Depression first hand. The younger men, naturally wanted lower individual miles to keep themselves employed. I have heard of union meetings which resulted in near fistfights because of mileage issues.

Yard/switch crews are also reduced when business slows. Usually yard jobs have assigned starting times and so when business slows down specific switch engine assignments are pulled off. This results in another chain of bumping with the younger men being furloughed.

A lot of maintenance of way people are routinely furloughed in the winter months, especially in the northern states because the roadbed and ballast is frozen.

The point of all this is that historically, railroad lay offs are, or at least we

[quote user=“Lee Koch”]

Guys, I don’t mean to sound bleak, but when this whole thing got really hot, with the stock market in free-fall, I got out my American History Book to look up the crisis of 1929. Well, what I read just gave me goosebumps; it all sounded so eerily familiar, almost like reading the daily newspaper. Here are a few excerpts:

“Despite the well-publicized prosperity of the 1920s…the nation’s wealth remained concentrated in the hands of very few people: even with installment buying, most consumers had reached the limit of their purchasing power…the savings rate was abysmally low. The families of workers who lost their jobs…could plunge instantly from the middle class to poverty-with no money left to pay for automobiles, radio sets, or anything else…”

“Of course, there was a great deal of reckless stock speculation as well during the 1920s, as millions of ordinary Americans joined the nation’s wealthiest citizens in playing the market…Optimism regarding the future of the economy reained nearly universal as late as the fall of 1929…The [stock] market’s high point was reached on September 3; then the slide began, at first slowly but picking up speed in late October…The deep plunge began on Thrusday, October 24, 1929…Leaders ibn Washington and on Wall Street responded with public statements designed to reassure…Then came Black Tuesday. . .[E]fforts…to prop up stock prices…had little effect. Over the next several months, personal bankruptcies mounted, dramatically reducing consumer spending; without customers, businesses began to fail. Business failure, of course, meant higher unemployment and even less consumer spending, which meant even more business failures. The cycle kept going for years, as the situation grew ever more desperate. The stock market, in fact, didn’t hit bottom until July 8, 1932…down 89 percent from its September 3, 1929 high…”

"[T]he country was in the depths of its worst financial c

I don’t want to get too far off the topic, and I hate to ruin anybody’s party…but the FDIC was designed to protect individuals’ savings in the event of a (single) bank’s failure. Any financial expert will tell you that, if banks start failing on a wide scale, there is no way on earth that the FDIC could possibly cover everybody’s savings. A widescale failure of banks would lead to millions of Americans losing their life’s savings.

They would just print some more money off… which would be worthless. You couldnt buy anything with it.

I’ve been talking peak oil for years now, look what $147.00 a barrel and $4.00 for a gallon of gas got us. The banks new where we we’re headed and everyone tryed to make as much money as they could as quick as they could. Without cheep energy were headed back to the dark ages.

emphasis added

Actually, the upper limit for “general” accounts (non-retirement) is now $250,000 - since Oct. 3, 2008, and at least until Dec. 31, 2009. See:

http://www.fdic.gov/deposit/deposits/changes.html

Apparently retirement accounts - IRAs - have been covered to $250,000 since 2006 sometime (same source).

Just thought you’d want to know.

  • Paul North.

Since when did that matter.

The real deal with the “Big Three” is complex and undoubtedly someone is going to get hurt, and that does suck. These companies are the victims of poor management, extorted contracts (which they agreed to), and the inability to adapt in a world that is changing. This has been coming for a long time. The only way these three can survive is to file bankruptcy, reorganize, dump some of the dead weight contracts and cut the workforce. Like I said it is going to be a bad deal for a lot of good people. These companies need to find ways to pay the legacy costs and that will probably be at the cost of current workers. Those benefits are promised and support people that have given a liftime. The sad truth is that these companies need to become more competitive with other car makers. That means not subsidizing the unions, I am not dogging the union. Just saying that if I had to choose between making my union rich or keeping my job, that one is easy.

I know we have some union folk here, and once again this is not a shot at any unions. I am thinking of the people who would be left when the company and the union leave town.

I would be surprised if many people had their “Life Savings” in bank accounts. Myself, I have very little money “in the bank”. What’s “in the bank” is what I need to operate my life. Money to pay bills, etc.

I would think most Americans are diversified with investments in their homes, retirement accounts (stocks and bonds), and whole life insurance policies. While the home values and retirement accounts have recently declined significantly in value, unless you need the money within the next few years things will be OK.

This isn’t the end of the world, the end of the USA, or the end of capitalism. There’s always the chance that the government will screw up and make things worse, as it did in the 1930’s. But this is basically a correction of run away housing prices caused by government interferance in the housing market. It’s painful, but it will pass.

Before we go too far blaming the auto industry for not being far-sighted enough to already have designed alternate-fuel and/or ultra-fuel-efficient vehicles, remember that the auto industry, like any other prpoerly managed business, will make and sell whatever the customers will buy.

I do not recall reading about anyone that was forced at gunpoint to buy a 7-passenger bus SUV, or a dual-wheel 5.7L V-8 engined pickup truck. Customers wanted to FEEL secure in their big behemoth, and many others needed to reinforce their feelings of inadequacy by purchasing what they percieved as a status symbol.

And so, because so many citizens wanted big vehicles, Detroit supplied what people demanded. And Detroit made nice profits (about $6K PER UNIT), on the SUV’s, while they LOST money on mid-size and smaller vehicles**. Now buyers want economy, and cannot figure out why the showrooms of the “Big 3” aren’t filled with economy cars.

** http://www.msnbc.msn.com/id/9686761/

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Up until gas passed about $3/gallon, you rarely saw a car ad that at any time mentioned it’s gas mileage. Now, except for the ultra-snob vehicles, mileage is almost always a selling point.

When gas was $4+/gallon, I was having difficulty staying at my usual highway speed (70mph) between Milwaukee and Chicago due to the large number of vehicles going slow to save money on gas. Now in the last 2 weeks since gas has fallen below $2/gallon, my driving at the same speed is nearly getting me run off the road by everyone flying past me so quickly. During my trip last week at the above-mentioned speed, I passed a grand total of 3 cars and 5 trucks in a drive of about 70 mil

you hit the nail on the head!!!

csx engineer

Insuring people against losses from bank failures is one thing. But I see no reason to believe that any or all private liquid funds cannot be seized by an out of control, cash strapped federal government in times of national emergency. At any moment in history, a decision as to how much to tax has been in place. But it was never a permanent decision. It is fluid and can be changed any time. We do have a process whereby the people have input, so the decision about how much to tax is basically a reflection of public will. But the status of national emergency overrides the public control, and replenishing the government with cash could become a matter of public safety.