In this issue:

Top Banker: U.S. on Brink of Financial Armageddon

Army Corps Closing Locks and Dams in Minnesota

Move To Shut Down Amtrak's National Rail Routes

Union Pacific Rail Cars Derail Near San Antonio

Major Media Lying About New Immigration Report

From Volume 3, Issue Number 48 of EIR Online, Published Nov. 30, 2004

U.S. Economic/Financial News

Top Banker: U.S. on Brink of Financial Armageddon

Stephen Roach, chief economist at Morgan Stanley investment bank, met a select group of fund managers in downtown Manhattan in mid-November, and, according to a participant at the meeting who leaked this information to the Boston Herald, where it appeared Nov. 23, Roach said that America has no better than a 10% chance of avoiding economic "Armageddon." Roach said that he sees a 30% chance for a slump/crash soon, and a 60% chance that "we'll muddle through for a while and delay this eventual Armageddon."

Among the problems that Roach reportedly cited: The U.S. requires the inflow of $2.6 billion per day in foreign financial flows to finance its current account deficit, and that sum represents 80% of the world's entire net savings. This is said within the context of the dollar's fall. A meeting participant said that a "spectacular wave of bankruptcies" is possible.

Army Corps Closing Locks and Dams in Minnesota

Reflecting the growing urgency to launch Lyndon LaRouche's FDR-style approach to rebuild and upgrade our nation's rotted infrastructure, the U.S. Army Corps of Engineers announced it will close Lock and Dam 2 in Hastings, Minn., plus Lock and Dam 5 in Minnesota City on Nov. 30, in order to replace bulkhead slots.

Meanwhile, at the 600-foot Kentucky Lock, the busiest of 13 locks on the Ohio River system, workers must separate most barge tows in sections small enough to fit through the undersized lock—a dangerous process causing delays of from four to five hours, at a huge cost of about $1,800 per tow. Plans by the Army Corps to build a new 1,200-foot lock that would allow barges to pass through in a mere 30 minutes, hinge on getting Federal money. "Kentucky Lock is a bottleneck right now," warned Don Getty, Kentucky Lock project manager for the Army Corps in Nashville, Tenn. The 60-year-old lock, which handles about 39 million tons of products annually, is "the weak link in the chain," he added.

Ongoing pre-construction is threatened by the Bush-Cheney budget that contains only $25 million—$10 million short of the amount needed to complete the preparatory work. That level of funding also jeopardizes awarding contracts early next year for road and rail bridge superstructures, Getty cautioned. The bridges must be built before the old structures across Kentucky Dam are shut down to begin work on the new lock.

Move To Shut Down Amtrak's National Rail Routes

Kenneth Mead, Inspector General of the Department of Transportation, has released a report which calls for Amtrak to "restructure operations" and eliminate its long-distance routes: Amtrak should "focus on developing short-distance corridors" (routes with end-to-end distances of less than 500 miles). This would leave Amtrak as a balkanized patch-work of disconnected rail corridors.

The report starts off, accurately enough, by asserting that there are "increasing levels of deferred infrastructure and fleet investment.... Continued deferral brings Amtrak closer to a major point of failure on the system, but no one knows where or when such a failure will occur."

Then the report unfolds its major argument: that Amtrak has been running "unsustainably large operating losses," which it blames on long-distance routes, such as New York to Chicago, etc. It asserts that Amtrak exists from passenger-ticket revenues, and from a Federal subsidy, but notes that the 1997 Amtrak Reform and Accountability Act (ARAA) stipulates the elimination of Federal subsidies from 2002 forward (although so far, this has not been implemented). Therefore, according to Inspector General Mead's loony logic, since Amtrak runs losses each year, were the Federal subsidy to be eliminated, the only way Amtrak could scrape together enough money to make capital improvements on part of its system, is to shut down entire sections of "money-losing" long-distance routes.

Newt Gingrich and Trent Lott rammed through the ARAA in 1997, and they set up an Amtrak Reform Council of overseers. The vice chairman of the Reform Council is Paul Weyrich, who heads the Free Congress Foundation. During the last few years, the Wall Street Journal has spearheaded the call for putting Amtrak out to pasture.

For fiscal 2005, Congress has allocated Amtrak a mere $1.2 billion, although in September, a majority of Senators, including some Republicans, signed a letter calling for Amtrak to receive $1.79 billion. The emptiness of the Inspector General's report is shown by the fact, that after initially pointing to the deferral of infrastructure, there is not one word on what infrastructure investment should be made to upgrade the railroad. Meanwhile, this year, Amtrak's routes to Akron, Youngstown, and Fostoria, Ohio, have been shut down.

Union Pacific Rail Cars Derail Near San Antonio

Six Union Pacific rail cars went off the track near San Antonio, Texas Nov. 21; fortunately no one was injured. However, during 2004, Union Pacific has created a nightmare in and around San Antonio: Starting on May 6, UP trains have caused six major accidents in this area. On June 27, two trains collided, derailing 40 cars, and sending plumes of chlorine gas and ammonium chloride into the air; four people were killed. As recently as Nov. 10, a Union Pacific train crashed into a building, trapping and killing a worker inside.

San Antonio News-Express reporter Ken Rodriguez wrote on Nov. 11, "Someone dies in a Union Pacific train accident about every day and a half."

UP is America's largest railroad, carrying one-third of America's rail freight traffic, and 12% of all U.S. freight traffic by any mode of transport. Starting in 1995, Dick Cheney played a key role in turning UP into the asset-stripping behemoth that it is today. As CEO of Halliburton, Cheney was placed on Union Pacific's board of directors, becoming fast friends with and the hunting buddy of UP's CEO Richard "Dick" Davidson. In 1996, Cheney and Davidson engineered Union Pacific's takeover of Southern Pacific, making the merged railroad the largest in America. In or around this time, Lynne Cheney joined the board of UP's subsidiary, Union Pacific Energy.

To pay for the cost of the Union Pacific-Southern Pacific merger and, more generally, to increase shareholder value, the Cheney-Davidson duo cut the workforce, rolling stock, and maintenance to the bone, which ripped up the rail grid. After Cheney became Bush's Vice President, this policy continued. UP regularly fails to improve track, and has repeatedly been found to overwork its workforce in violation of rules. The Federal Railroad Administration (FRA), which oversees rail safety, has documented Union the company's intimidation of workers not to report railroad deficiences and accidents. A rail expert told EIR that Cheney extends a protective arm over UP inside the Bush Administration. During the 2004 election, CEO Davidson became a "Ranger," packaging $200,000 in contributions to the Bush-Cheney campaign.

Major Media Lying About New Immigration Report

All that appears on the Washington Post front page is not what it seems. Major U.S. media on Nov. 23 carried reports on the same Center for Immigration Studies (CIS) document which is covered, with other reports, in EIR's Economics article on slave labor and the Bush White House (EIR Nov. 26; EIR Online InDepth #47). The Post's coverage went on at length about the increase in the flow of immigrants to the U.S. since 2000 (some 4.3 million immigrants, approximately, in those four years), what states have gotten the most immigration, the growth in English-language courses, and other human interest details. But one would not guess, reading the article, that the CIS report is about jobs—new immigrants getting them, employed workers losing them. Its main revelation is that of those 4.3 million new immigrants, 2.9 million are now employed, although the net new job creation of the U.S. economy during those four years was zero. See the EIR for the story.

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