“This Was Preventable”: Railroad Workers Explain How Wall St Caused The East Palestine Derailment
It’s been more than two weeks since a Feb. 3 Norfolk Southern train wreck in East Palestine, Ohio spilled massive volumes of vinyl chloride and other toxic industrial chemicals. As residents of the town and people across the nation and the world demand answers, little action has been taken to investigate the disaster or hold those responsible for it accountable. Mainstream media has finally come around to covering the story, but this tragedy has been years in the making, and many explanations that focus on train brakes or other simple solutions miss the complexity of the story. Railroad workers have spent years in a contract battle to change the conditions that produced the disaster in Ohio: dangerously long and heavy trains, skeleton crews, punishing hours, and an all-around cost-cutting approach that puts profits over workers’ health and the safety of the public. Jeff Kurtz and Mark Burrows, who each spent over 40 years as railway workers, join TRNN Editor-in-Chief Maximillian Alvarez to explain how the East Palestine catastrophe could have been prevented.
Post-Production: Eli Ben-Yaacov
Maximillian Alvarez: Welcome, everyone, to The Real News Network. My name is Maximillian Alvarez, the editor-in-chief here at The Real News, and it’s so great to have you all with us. The Real News is an independent viewer supported nonprofit media network, which means we don’t do ads, we don’t take corporate cash, and we don’t put our content behind paywalls. So we need each one of you to become a supporter of our work so we can keep bringing y’all coverage of the voices and stories you care about most. So please head on over to therealnews.com/support and become a monthly sustainer of our work. It really makes a difference.
New revelations are coming out every day regarding the fallout of the catastrophic derailment of a Norfolk Southern train in Northeast Ohio, which has thrust the residents of East Palestine and the surrounding area into a non-stop waking nightmare. The freight locomotive derailed on Feb. 3, prompting an emergency response that involved the immediate evacuation of the town and the controlled release and burning of the toxic substance vinyl chloride, which was being carried in five of the train’s 150 cars. Norfolk Southern’s spokespeople, government officials, and many in the media have defended the controlled release of the vinyl chloride as necessary to prevent the cars containing the substance from exploding and spreading [inaudible], which may be true.
But the fallout has been something straight out of a horror movie. The controlled burn has spewed hydrogen chloride and phosgene into the air. A massive black death cloud hangs over the region as we speak. Residents are reporting symptoms of toxic exposure and posting home recorded videos online of dead animals and fish throughout the area, even as they are being told that the air is safe to breathe and the water is safe to drink.
It’s going to take a long time to fully appraise the damage of this train derailment on the population, on rail workers and first responders, and on the environment. But like many of you, I have a terrifying suspicion that we are watching, in real time, the unfolding of a disaster that will be a black putrid stain in our history books. If you’ve been following our continuous coverage of the crisis on the nation’s rail system over the past year, if you’ve been watching and listening to the hours upon hours of interviews with railroad workers that we published on our YouTube channel, on our podcast feed, and in our text reports, then you, like me, know how depressingly predictable, unnecessary, and avoidable the tragedy in East Palestine was.
Railroad workers have been warning repeatedly about the danger we are all in after corporate oligarchs and their Wall Street shareholders have taken over the industry and a vital component of our supply chain, cutting corners, costs, and staff year after year while executive salaries, stock buybacks, and shareholder dividends skyrocket. Workers have been saying to anyone who will listen that all of these systemic issues – The same issues that rail companies, President Joe Biden, and Congress refused to address during the high stakes contract negotiations that came to a head last year – Have put all of us at risk of more accidents, more derailments, and more disasters.
Now, Real News viewers have, of course, been asking for more coverage from us on the disaster in East Palestine and we are going to deliver. If you haven’t already, please do check out the article that my colleague and our associate editor, Mel Buer, published last week at The Nation magazine. You can also check out a recent episode of my podcast, Working People, where I spoke with longtime railroader Matt Weaver, which we published on The Real News website as well. And you can check out my latest Art of Class War segment on the Breaking Points YouTube channel where I interviewed longtime trained dispatcher Jay about the crisis in East Palestine as well.
And today we’re going to continue that coverage by giving y’all some more insider perspectives on the Norfolk Southern train derailment in East Palestine, the fallout from this catastrophic derailment, and the larger Wall Street-led changes to the industry that have put all of us at risk and have made catastrophes like this more and more likely.
To talk about all this and more, I’m honored to be joined once again by the great Jeff Kurtz. Jeff was a railway engineer and union member for 40 years. He served as a union officer most of his career, including eight years as president of BLET Local 391 and chairman of the BLET Iowa State Legislative Board where he oversaw safety and legislative matters for the union in the state for four railroads for 10 years. He retired in 2014 and served as state representative for one term in the Iowa House after winning the 2018 election in his House district. He now works in a volunteer capacity with Railroad Workers United and the local labor chapter of the Iowa Federation of Labor.
We are also joined today by Mark Burrows. Now, Mark hired out as a brakeman at the Chicago and Northwestern Railroads, now Union Pacific, in Chicago in 1974, and soon became a locomotive engineer. He worked at the Sioux Line Canadian Pacific Railway from 1991 until he retired in December of 2015. He was active in the United Transportation Union’s 47-day strike in 1994, and served as the delegate for Local 1433 at the UT’s final convention in 2011 and the inaugural convention of the Sheet Metal Air Rail and Transportation Workers Union Transportation Division, or SMART-TD, in 2014. He’s been a member of Railroad Workers United for over 10 years, and served as co-chair and organizer in the past. He contributes regular commentary to and is currently the editor of RW’s quarterly newsletter. Mark, Jeff, thank you both so much for joining us today on The Real News. I really appreciate it.
Jeff Kurtz: Thank you for having us, Max.
Mark Burrows: I second that.
Maximillian Alvarez: Well, and I apologize to everyone for my long intro. They’ll be shorter in the future, but there’s a lot here to wrestle with, and I wanted to make sure that folks have enough of the immediate context up front before we really dive into this with Mark and Jeff. And I’m so grateful to them for making time for this, because I know right now what we need more than ever is voices like theirs giving us the insiders’ view, the essential historical and industry related context that we need to understand the horrors that we are watching on our screens.
And so to start off, guys, I wanted to shut up on my end and start by asking if we could just get your perspective on what we are watching unfold in East Palestine, Ohio. Folks who are watching in horror around the country do not have your decades and decades of experience, insider knowledge, so on and so forth. So I just wanted to start by asking, in your eyes, what are you seeing that you think folks are not, and what context do you think people need to have to understand what exactly they are watching in East Palestine right now? So Jeff, why don’t we start with you and then Mark, hop in after him.
Jeff Kurtz: And the thing is, I have quite a few questions, because the government and the railroads aren’t putting out any information. All we know is that this death train derailed in East Palestine, Ohio, and the residents were evacuated. I would like to know, did it derail when they were attempting to stop? Well, this is what we heard. Right before they informed the crew that they had a defective journal. And I don’t know if they were in the process of stopping when they derailed or anything else. But a train that’s 9,300 feet long and that’s 18,000 tons heavy, the in-train forces in a train like that are just going to be tremendous. And so it really comes down to what occurred to cause this derailment and to cause those in-train forces to jackknife these cars and cause the damage that it did.
There’s questions about the hot box detectors, detectors that are supposed to catch hot wheels, sparks, bad journals and things like that. So there’s people that are saying that those things were turned off and that information would go to a desk and somebody at that desk would relay the information to the crew. Well, when I worked, we had the detectors, they were either analog detectors that we would stop at and we’d be able to tell what axle was having problems, or as time went on later in my career, we got the voice detectors that would tell us where we needed to go and what the defects were.
So, there’s just so many questions to this, but to me this looks like it was eminently avoidable. 50 years ago we would have hot rails with sticky brakes, we’d have smoke, sparks, fires shooting out from under cars. We didn’t derail like this. And that’s because we had shorter trains and we had more people on the trains. So there’s a lot of questions to answer, but I think it comes down to in-train forces because the train was so big, and lack of people on the train.
Mark Burrows: I guess that’s my cue. Just to touch on what Jeff is talking about, the in-train forces, I want to point out, everything that we talk about, the physics of these long and heavy trains, the dangers of having a disproportionate amount of the loads on the hind end with these longer and longer heavy trains. The reason we know that this is dangerous, that it pushes the envelope, is because the carriers taught us. They taught us what we know about the physics in our training to learn how to train handle, to learn how to operate these trains. And so everything that Jeff and I talk about, we know because they taught us, therefore they know. They know what they’ve been doing.
Backtracking to the question of what are my observations? I mean, I think everybody’s observations is that this is just a horrific, slow motion tragedy unfolding before our eyes, and I don’t want to be a prophet of doom or anything like that, but let’s just be real. What’s going to happen five years from now, 10 years from now? Are we going to see a disproportionate cluster of cancer rates because of how they’ve just been literally poisoned by the railroads? And then, of course, their response as well, the science is inconclusive. You can’t prove that this disproportionate rate of this cluster of cancer rates all around this area because of the derailment. But a wise old man once said, if it walks like a duck, quacks like a duck. You touched on it in your intro, about how this was preventable.
One of the things that really grates me watching all these politicians coming out of the woodwork, oh, we need to have more regulation about this, everybody coming out acting like they’re shocked and surprised. I even read something a couple of days ago, somebody had an analysis that, oh, this was actually a blessing in disguise because nobody got killed, and now it draws attention to things that we need to tighten up on in relation to the railroad industry. And no, this is not a blessing in disguise. We did not need this to happen to waken politicians and the public’s eyes to the hazards of what the railroads are subjecting the workforce and the public to. Because activists, conscious rail workers have been talking about this for decades.
When the tragedy in Lac-Mégantic happened, we knew something like that was only a matter of time. We hoped, we wished that we could have more control of the narrative and prevent something like that from happening. But it was a gut punch, because in spite of our best efforts, we weren’t able to. And this is the same feeling again. As you said, we have been trying to explain the potential of something like this happening to anybody who will listen in any venue; through our website, through our newsletters, whenever we get a chance to talk publicly and now, more recently, we’ve been getting more media exposure in the context of the discussion over the strike. But we have known something like this could happen anytime, anywhere for decades, and it could happen again tomorrow, anytime, anywhere, until some serious changes [happen]. And I imagine we’ll get to that more later. So I’ll just leave it there for now.
Maximillian Alvarez: Yeah, I mean I think that’s one of the many disheartening things about this. Is that you’re seeing the way that the discourse takes shape when people have been so thoroughly failed by the media, by our politicians, and by these companies themselves. Because, frankly, a lot of the media just doesn’t cover this stuff, and didn’t until we were approaching a potential national rail shutdown last September. And so when people see a derailment like this in East Palestine and then they hear of more derailments happening, it feels like it’s coming out of nowhere. And so they’re like, oh my God, what’s happening? This must be some sort of conspiracy. And it’s like, no, motherfucker, we average over a thousand derailments a year in this country. It’s happening all around you, just no one is talking about it except railroad workers, and we need to be listening to them.
We don’t need bullshit conspiracy theories or partisan point scoring narratives to explain what we’re talking about here. Again, as Jeff and Mark said, as the workers that we’ve talked to repeatedly over the past year have said to us in podcast form, YouTube videos, and in text reports, this is the product of the larger systemic changes that have taken hold of the rail industry in recent years and decades. And we need to understand how those two things are connected. How the issues that we were screaming about throughout last year as we made our way through the different locks and keys and hurdles that had to be cleared as stipulated by the Railway Labor Act in order for us to get to the point where railroad workers could legally strike or rail companies could legally initiate lockouts.
So I wanted to ask you guys if we could hook it back to all of that. We obviously can’t go over all of the things we went over last year: What was at issue in the high stakes contract negotiations between the major rail carriers, that is the companies, and the 12 unions representing over 115,000 workers on the freight rail system. What we do know is that President Biden, when he appointed a presidential emergency board in the summer to try to broker an agreement between the two sides, offered its recommendations, and then President Biden and Congress essentially used those recommendations as the framework for a contract that they then forced down workers’ throats in late November to avert a rail strike in early December. None of those things, the contract, the PEB, none of them addressed the larger systemic issues that we would argue, that I know Jeff and Mark would argue, are at the root of what we’re watching happening in East Palestine.
The constant staff cuts, making the trains longer, heavier, more dangerous, more unwieldy, while they are reducing the crew sizes on those trains, while they are piling more work onto fewer workers, while they are not investing in track maintenance, in safety inspections for the rail cars, all the necessary provisions that used to be in place – They could always be improved, but we used to have a lot more people doing a lot more checks on these trains to ensure that derailments like the one we’re watching now did not happen.
So Jeff, Mark, I wanted to toss it back to you. Before we take a longer view of how we got here, since our Real News viewers and listeners were really tuned in to the contract dispute that was playing out last year, I was wondering if you guys could talk to us about how the derailment in East Palestine is connected to all of that.
Jeff Kurtz: Well, I think it’s connected because of the fact that if you watched during… First of all, the first time you interviewed me was during the hi-viz fight back last February. That led into all of this stuff on the contract, and eventually the contract fight. If you would watch during that whole period, nobody was listening to us. I mean, it was like the Biden administration was patting us on the head saying, yeah, we’re going to take care of you. We’re going to take care of you. I mean, they took care of the carriers, but they didn’t take care of us. And they’re not listening. And I know I’ve talked to you about quality of life before.
We have been beaten like dogs since… I think it was 1999 when we had a ruling against us as far as attendance policies, and that started this whole snowball ruling about attendance, and it just got unmanageable in the last year. Well, when you have people that aren’t happy, that are tired, that are stressed, they’re not going to be able to do the job they need to do, and when they’ve got more work piled on top of them anyway, this is just a soup, just ready for a disaster just like this.
It’d be interesting to find out how much time the crew had off, how much they’d been working, how much training they had. One of the questions I have is around here we have what’s called a trip optimizer or the leader program that’s on the UP, and that’s led to a lot of violent train separations. Was that running the train when this train went in the ditch? And it comes down to training. And these are things that weren’t addressed in the contract. If you look at that PEB, there are multiple issues that they remand back to the parties. Well, this is after they’ve been negotiating for three years. Well, all this stuff is unresolved, and the carriers get to do what they want. And what they want to do is run three-mile-long trains with hazardous material up the ying yang, and just roll the dice on these communities.
Maximillian Alvarez: And they want one person operating those three-mile-long trains.
Jeff Kurtz: Yeah! [laughs] We have left so many issues unresolved. Where do we start? I don’t know where we start on this. I think that it’s going to take RSAC committees, and they were Rail Safety Advisory Committees. I don’t know if you remember those, Mark.
Mark Burrows: Yeah.
Jeff Kurtz: But it was the FRA, it was the carriers, and it was the unions that would get together and they would hash this stuff out, and boy, you’d get into some real dog fights and those things. But it’s going to take multiple RSACS to hash this out if they bring back that system. I think it was Trump that did away with that system. But there are so many unresolved issues out there that it’s going to take probably years to untangle this.
Mark Burrows: When Jeff poses the question, where do we start, I think the starting point is elevating. And in Railroad Workers United, we’ve kicked around the question of nationalization for years, but it was only last year that we were ready to go on record as an organization, a regular discussion at our past conventions, we discussed it. And many individuals, yes, I’m all for it, but don’t feel comfortable with the organization publicly taking a position on this in terms of our standing and credibility. We may alienate… That had been a past discussion over the years. But in the context of what Precision Scheduled Railroading had done over the last few years, and by the time we brought it up, by the time it came up again at our last convention last year in 2022, we were ready. And so we have come out publicly, and it’s gained traction. The United Electrical workers recently put out a great statement advocating.
And the fundamental question is simply the profit motive has to be taken out of the railroad industry. Nothing less than that is going to resolve these issues. Because compromising safety is always the cost of doing business. That’s everywhere. Speed up. At Amazon it takes the form of workers maybe getting crippling injuries, chronic repetition injuries or back injuries. That’s the consequence of speed up and unsafe working conditions at Amazon. The consequence of speed up and unsafe working conditions on a railroad industry is tragedies like Lac-Mégantic and now East Palestine.
I want to backtrack to the contract. The big issue that the unions were raising, and rightfully so, were mainly about scheduling dignity, which in and of itself is a very important safety factor. But the whole question of operating operations, the long and heavy trains, things like that, none of that was in the discussion over the contract, or scheduling with paid sick days and everything, which are all very important. But a lot of these issues were not even in that contract discussion, are not even to be negotiated later. And this is why it’s so important for us to discuss these operating practices. And really the only solution is to take the profit motive out of the equation.
And real quickly, and we’ll probably get to more of this later. So it appears that this overheated journal is what led to this derailment. Whether the cars derailed first and then the train went into emergency, or whether it went into emergency while the engineer was attempting to stop that, that’s not clear. All the NTSB representative said was the engineer was notified about a bearing defect, and then emergency application happened. He didn’t say where it was initiated. That’s my understanding.
But years ago when we had cabooses, new hires, people that have been in the industry for 5 or 10… What’s a caboose? And once upon a time we had cabooses, we had two crew members, and one of our fundamental responsibilities was to inspect the train going around curves, looking for smoke by day, looking for sparks by night. And like Jeff was talking about, if we saw something and the head crew, the headman, he would go, if it was a left-hand curve, he’d look out of his window. If it was a right-hand curve, he’d get up and get behind the engine and look out from the engineer’s window.
So you had the train being inspected on curves on a regular basis. And when I started taking road trains in ’91 5, 7,000 feet was a good size train, but a long winding curve with an unobstructed view between the head end and the hind end, you could keep a good visual inspection. They introduced hot box detectors, which are supposed to sense these things. And the combination of hot box detectors and rear end devices, well then that rendered the job of the crew in the caboose obsolete. We don’t need them anymore. So cut the caboose off, and then we’ll just supplement with hot box detectors, and we’ll triple the size of the trains. That’s the short version of how we’ve gotten here. The technology of these hot box detectors is not foolproof. And I’ll say more about these detectors next chance. I’ll leave it there for now.
Maximillian Alvarez: And so, we’ll pick up on that in a second. And I just want to try to sum up where we are for viewers and listeners. Again, there’s a lot about the derailment in East Palestine and the fallout from it that we’re not going to know until these investigatory reports come out. And it feels like a lot of information is being deliberately kept out of public view right now. So I don’t want to ask Jeff or Mark or anyone to speculate on things that we don’t know. I just want to try to give you all access to them, their perspective, and to hook this back to all the reporting we’ve been giving y’all over the past year so that you can better make sense of what you’re watching and put this derailment in the broader context of the crisis on the railroads, which did not just come out of nowhere. It has been brewing for years, if not decades. That’s what we’re going to talk about in a second.
But to sum up, I know there are a lot of different news stories and related stories that are coming out about Norfolk Southern and East Palestine and what caused the immediate derailment. As we’ve said, it appears to have been a bearing issue. The train appears to have derailed just outside of East Palestine. We have some video that we can see where it’s clear, there’s sparks and fires coming from the wheels of this train. Clearly there’s a problem. I know that folks have been asking about, for instance, whether or not this derailment would’ve been mitigated in its scope and scale if, say, the train had these electric braking systems put on them. I know that other outlets have reported that Norfolk Southern, among other rail carriers, successfully lobbied the Trump administration, they successfully got the Obama administration to cave on implementing those regulations, i.e. forcing the rail companies to implement these electronic braking systems. It remains to be seen what that would have meant for the derailment in East Palestine if those electronic braking systems were the industry standard, if that regulation was pushed through prior to this.
But I want to be very clear, it’s much bigger than the brakes. This is a much bigger story than the brakes. And in many ways, the things that led to the derailment and that made the derailment so bad go far beyond the brakes. They go to the stuff that we are talking about here and that we were talking about all last year. Because we were saying during the contract fights between the unions and the rail carriers that it wasn’t just about the money, it was about quality of life. It was about workplace safety. It wasn’t just about sick days, paid sick days. It was about what those paid sick days represented in the larger mess that the rail carriers have created.
Why were rail workers fighting so hard to get just one paid sick day? Because the rail carriers, driven by this Wall Street mindset of taking our vital supply chain and turning it into a money generating machine for shareholders and executives. That is the mentality that Warren Buffet and all these other rail barons have been implementing on the railroads to the detriment of rail workers, their families, and as we’re seeing in East Palestine, all of us. Because that mindset, that corporate mindset of reduce your operating ratio, cut costs, cut corners, cut staff, cut these safety provisions, these extra hands that we had to check the cars, check the tracks, those have been reduced down to skeleton crews now. And so a lot of the folks who are still tasked with, say, doing preventative health checks on rail cars, they don’t have as much time to do that. They’re being asked to do that in like 90 seconds when they should have minutes to be able to inspect these cars top and bottom to make sure that nothing’s wrong.
So all of these things really have come to a head in East Palestine. Over the past 50 years, the rail companies have gone from over 500,000 employees to less than 130,000. And the rail carriers, as we know, as we’ve covered at The Real News, the class one freight rail carriers have eliminated 30% of their workforce in the past six years alone. They have caused this man shortage. They have reduced all the people who are supposed to be there to do the necessary preventative safety checks, quality assurance checks to ensure that stuff like catastrophes like what we’re watching in East Palestine never happen.
Which also means that the people who are left and who are still employed on the railroads are burnt the fuck out. They’re exhausted. They have no set schedules. There are no more reserved people left to fill in if they need to take time off work. That is why the workers were screaming about getting paid sick days. It’s because it’s a symptom of a much larger issue. And I wanted to toss things back to you guys and give us a broader bird’s eye view of how much the industry has, in fact, changed, from, say, when you started to now. These changes didn’t come from nowhere. Can you talk us through that larger historical trajectory that you both saw in your daily working lives, these changes taking hold, and now here we are watching this horrific catastrophe in East Palestine?
Jeff Kurtz: Well, yeah, I’d love to talk about that. I hired out in 1974. Probably between 1975 and 1990, I estimate I ran about 3000 trains with cabooses. And that was with a conductor and a brakeman on that caboose, and a brakeman on the head end with me, and sometimes I’d have a fireman or an engineer trainee. And like Mark said, we would inspect these trains constantly, and it was just kind of habitual. You would go around the curve and you’ve got a big mirror, probably a couple of feet high and about eight inches wide. It’s like a rear view mirror, and you’d be going through all the machinations I go through to brake a train or to speed up. And you would just habitually look at that mirror to inspect your train.
I can remember one time we were coming into Galesburg and we had just gotten by a hot box detector, probably seven miles back. And we were down to 30 miles an hour, and I just happened to look in the mirror, and fire is shooting out of a car that’s about eight car lengths back. And the head brakeman went back there, the conductor walked up, because we only had about 3,500 feet of train. So we had two people that were riding that car. We had the other brakeman, the rear brakeman was back on the caboose, and he was watching the rear end of the train. As we cut away from that car, the conductor got on there, and I think we went up to the siding, which was about three miles away, between 5 and 10 miles an hour to set that car out.
It sounds like it was very similar to the incident that just happened in East Palestine. But we caught it because of the fact that this is a smaller train and we had more people on the train. And the conductor, after we set the car out, he came up and he says, my God, the noises this thing was making when we were pulling it up there. He said, it just scared the hell out of me.
So I contend that these towns that are along railroad tracks were much safer 50 years ago than they are now. I mean, think about that. With all the advances we’ve got and everything, it was safer 50 years ago because we had people that took care of this stuff. We had people that watched these smaller trains. The situation of East Palestine really, I think, starts in 1985, when we were under contract negotiations like we were this last year. Was in the Reagan administration, and the administration told the UTU, basically, you take this PEB or you are going to get something much worse than this. And what the PEB said basically was, we have the right to get rid of men on this train. And so by 1990, I think, we got rid of one brakeman. It was a couple of years later we got rid of the other one, and that was the advent of the two-man crew.
And about that time we started losing arbitration cases right and left. And we lost the arbitration case in 1999 as far as attendance. And if you read that ruling, what it said, the arbitrator said, it looks like the carriers are operating in bad faith. It seems like their demands are unreasonable. And the arbitrator went through a whole litany of things. And then the arbitrator ruled in favor of the company. And in the ruling, they say that this ruling is not to be used in other attendance cases. So now every time we have an attendance case, that ruling is cited. It makes no sense.
And so flash forward to where we were last year with this arbitration case, after the union’s lost the hi-viz case and the BNSF, we had a railroad lawyer brag about the fact that rail labor hadn’t won a case in 33 years. Now, their lawyers are not that bad. This is something that happens on purpose. This is not a case of you’ve got really bad lawyers and they’re just not arguing the case right. It’s basically, we’re going to do what we want to do, and nobody’s going to stop us. Because one bad ruling, one bad arbitration case, it piles onto the next one. And they cite the bad ruling, like in 1999, they cite that in every other ruling. And then when they have another bad ruling because they cited 1999, they will cite that bad ruling for the next awful thing that they do. And this stuff just snowballs. And I’d like to talk about the administrators with the FRA too. I think it was one FRA administrator, I think he was an ops [and track] specialist, was talking about the ECP brakes.
And then we had Cheryl Feinberg come out and she was talking about long trains. And she said, yeah, I thought 80 or 90 cars was bad. She was the FRA administrator from 2015 to 2017. Well, I would love to know from these FRA people, did they talk about this at lunch? Did they talk about this in an industry meeting? Did they talk about this at a senate or a congressional hearing? Where was it that they cited this stuff? And Cheryl Feinberg, she said 80 or 90 cars was too long, and like I said, she was the administrator from 2015 to 2017. Well, I was Iowa State chairman from 2004 to 2014, and I know from 2010 to 2013, we were handling complaints from our members – In fact, I probably still have the paperwork somewhere – About trains that were 12 to 13,000 feet long, which is a lot longer than 80 or 90 cars.
So I’m wondering what kind of information she was getting as the head of the FRA, if she thought 80 or 90 cars was too long, which would be somewhere between 7000 and 8,000 feet? Because I’m getting this information about 12,000 and 13,000 feet. So it seems like it’s a communication problem, a lot of times, that people aren’t communicating. Apparently she didn’t know how to communicate that we needed to do something about long trains. He didn’t know how to communicate about the electronic brakes, and we just go merrily along our way and kill towns, basically.
Mark Burrows: I mean, I think the communication issue can be summed up real basically, that voices like ours are not part of the conversation. Corporate executives, corporate friendly regulatory agencies, et cetera, et cetera, they are having the discussions, they’re having the narrative. Nobody asked me or Jeff. And so what we try to do with Railroad Workers United is to get our narrative out there.
I just want to backtrack. Jeff started to go through the brief chronological history. That ’85 agreement, we’ve mentioned that sometimes we had firemen, firemen were kind of optional. Obviously they weren’t needed to shovel coal anymore by the time I hired out. Firemen were like where, okay, they don’t need X amount of it. They can cut back on some engineers, so they get set back as firemen. So firemen could exercise their seniority as hustlers, this, that, and then could work as an assistant engineer. So many times, we had firemen working as an assistant engineer to share the workload. So ’85, that was the beginning of the demise of getting rid of the firemen. And then getting into the early ’90s, we still had three ground men, conductor, hindman and headman. So the hindman was first to go. Then a few years later, the headman, and from there it’s been engineer conductor since that time.
I get a kick out of the recent political discourse. First the Democrats were trying to blame this, that Trump rolled back the Obama era ECP regulations before they could even be implemented. Then the Republican shot back, oh, those ECP regulations, even this death train that’s poisoned the town of East Palestine wouldn’t have qualified for… So there’s this back and forth with this bipartisan finger pointing, blame gaming. And all I can say is, at a certain level, you’re both right. The Republicans blaming Democrats and Democrats blaming Republicans. They’re both right, and therefore they’re both culpable. They have enabled this situation that got us here over the years. As for ECP brakes, that’s a no-brainer. I mean, ask any engineer what difference would ECP brakes make. It’s the difference from a Flintstone type car to a Maserati or whatever.
And air brakes, I know it’s been discussed previously. Air brakes set each box car, each freight car, the brakes set up one at a time. It takes several seconds for that reduction in brake pipe throughout the train, one long brake pipe. And it takes time for each car to set up. And when you have these longer trains, if you don’t have sufficient horsepower to keep pulling and keeping it stretched, then the weight of the hind end can start running in on some of the head end where the brakes have already set, but they haven’t yet set up on the hind end. And that’s the danger of running two- and three-mile-long trains. It’s amazing. Most of them get over the road. And that’s a testament to the professionalism and the skills of the workforce. It’s amazing that most of these two- and three-mile-long trains get over the road. But when it goes bad, it goes really bad.
And these ECP brakes, if they were implemented, apparently they are being used on Amtrak trains in the Northeast quarter, that’s my understanding, so that politicians and businessmen can travel a hundred miles in the Northeast quarter, so that they can travel safely, so that that’s good for them. But ECP brakes will set the brakes up on every car virtually instantaneously. And so all this talk about, oh, cost-risk benefit analysis, the railroad exec says, oh that it would be too expensive to implement this. Yes, that’s the cost-risk benefit analysis.
So rather than invest whatever capital to make the train safer, they decided the cost of poisoning the people of East Palestine, Ohio. That was the cost of doing business, rather than investing money in these ECP brakes. And in my opinion, eventually ECP brakes need to be on all freight trains. But for the sake of pragmatism and urgency, as they get phased in, at the very least they need to be implemented on any train if it has one hazardous car. All it takes is one car of ammonia to open up to wipe out a town. So if it has one hazardous, it should have ECP brakes until they’re phased in through the entire industry. But all this talk about cost-risk benefit analysis, we need to do more studies. That’s just nonsensical gibberish. I’ll leave it there.
Jeff Kurtz: Hey Max, I want to make two quick points. The first one is how do you prove something happened when it didn’t happen? If that crew would’ve caught that hot journal and they would’ve set it out, nobody would’ve known anything, and these trains would keep running like they are. We wouldn’t be having these discussions. And that’s what happened years ago. We had sticky brakes, we had fire flying out of cars quite a bit, but we took care of it. But people like you never heard that, because the railroad ran well. So when we say that this stuff is dangerous, they need to listen to us, and they’re not listening to us. They need to listen to us when we talk about all the accidents that we’ve averted, but nobody does.
The second point I want to make is about the ECP brakes. ECP is for one reason only: because it reduces the end train forces while you’re braking. What happens to those forces when you’re not braking? They’re still there. So if you’ve got a 9,300 foot train and it’s going up and down a hill, it’s going around curves and everything, you still have these forces. And when something happens, say you have a part of the air hose which sets up the air brakes, or something happens to the ECP – Which, I’ve run two ECP trains before, and the second time we ran it sounded like an apocalyptic event when it malfunctioned on me. But when you have an issue, or just through the normal course of the territory that you’re going, when the slack runs in and you go into emergency, those in-train forces are still there, and you’re still going to have to deal with that.
So the thing that we need to do on a parallel track, we need to insist on electronic braking, but we also need to insist on reducing the size of the trains. Several state legislatures right now have these bills in their possession. I know I was one of them. But my suggestion would be that the secretary of transportation puts out an emergency order saying that no train turns a wheel in this country over 8,500 feet. If it’s got hazardous material in it, no train over 5,000 feet turns the wheel. And this is my opinion. I would put a way car, a caboose – I’m sorry, I revert to railroad talk – But I would put a caboose on every hazardous material train with a conductor and a brakeman on the rear end. That way, this would’ve never happened. If this train had been 5,000 feet long with a caboose on it, this would not have happened.
Maximillian Alvarez: Well, I think that’s a great point for us to end on, because I know that, in many regards, we’ve only scratched the surface here, but I hope that we can have you guys back on, and we’re going to keep having more folks who’ve worked on the railroads who have that insider perspective to keep giving y’all this important context. I’m sure, again, with the existing media coverage that we’re getting right now, where everyone, I think, is looking for one smoking gun or one political party who can definitively be said to be the root cause of this, I hope what we’re getting across is that, sadly, the explanation is not that easy, and, in fact, incorporates all of these larger, systemic issues that we’ve been covering over the past year.
But I think what we have contributed, at the very least here to this discussion, is that, sure, like the ECP brakes, the electronic braking systems – And I think you guys did a great job breaking that down – But just for everyone, instead of having an air braking system that goes from the front to the back car by car by car, so if you have the first half of the train where the brakes have been applied, but you got all that weight from the back of the train still going, that’s going to cause an issue. Whereas an ECP braking system applies the brakes to all cars at once. So just wanted to make sure that folks understood the difference there. So that’s important. And I think as we’re all saying here, yeah, we need those, that it seems like a good thing to have those on the trains.
But I think what we’ve contributed here that really isn’t being talked about enough in the coverage of the derailment disaster in East Palestine, Ohio, is that the trains should not be that goddamn long. This was a 150-car train that was carrying multiple cars of hazardous material. Like we said at the top, five of those cars contained vinyl chloride. That was not the only toxic hazardous substance on that train. In fact, we’re getting reports now that traces of other toxic substances are being found in the soil, in the surrounding waterways. This is really bad. And the point being is that if you have trains that are that long, and thankfully there were three people on that train, if I recall correctly, there was an engineer, conductor, and a trainee. But remember, the rail companies want to just have one person on those trains. Imagine how much worse this derailment would’ve been if there was just one person on that train to respond to this derailment. It would’ve been even more of a nightmare than what we’re watching unfold right now. But that is the historical arc that we’re trying to trace for you guys.
Again, we know that from 1980 to now, in broad strokes, we used to have over 500,000 workers on the freight rail system. Now, we’ve got less than 150,000. We used to have around 40 rail carriers. Now that the consolidations, mergers, acquisitions have brought that down to, what, seven major carriers, soon to be six? And so you have that corporate consolidation, and in that same time, over that same arc, the trains that used to have four or five guys on them, they used to be a lot shorter, used to have more eyes and more hands inspecting the car and making sure that things were running well. And if there was a crisis, it could be responded to immediately. Those trains have tripled in size while the crews have diminished down to two people. So this is the direction things are going.
And at the same time, again, instead of investing what needs to be invested in a robust workforce that can make sure that this vital component of our supply chain is running properly, that catastrophes like this don’t happen, we’ve been slashing the workforce. Instead of investing in track maintenance, let alone things like we should be investing in track electrification, expanding safe rail travel in this country, we’ve been doing the exact opposite. We’ve been letting our infrastructure crumble so that all of that extra money can just go into the pockets of shareholders and executives. Something has to give, and I think we are watching that something give right now. And so we need to care about this, and we need to understand that it’s not just one-off technical glitches that are causing these derailments. This is not the only derailment that’s happening, it’s just the most horrific one that we have seen of late.
But Norfolk Southern has derailments like every other week, for Christ’s sake, and that’s just one rail carrier. So again, I hope that this has given you guys at least some essential historical context for what we’re watching in East Palestine, even if we only have so much that we can say about East Palestine right now, as we’re still waiting for more information to come out. And so we’re going to keep having these conversations. We’re going to have Jeff and Mark and other folks from Railroad Workers United back on to keep giving you guys that context you need. We’ll keep giving you updates as new updates come out about the derailment in East Palestine. But for now, I know that we went long, so I got to let Mark and Jeff go. Guys, I just wanted to quickly ask if there was anything else that we didn’t get in there that you wanted to make sure we get in before we wrap?
Jeff Kurtz: Real quick. If we do ECP brakes, it’s going to take years to do. We can reduce the size of these trains in five minutes. We would take care of a lot. I don’t think East Palestine would’ve happened if it was 5,000 feet long. So I will end on that note.
Mark Burrows: I totally agree that trains could be shortened right now, so I totally agree with that. And other things could be dealt with right now. The reality is most likely they’re not going to be. And that’s why this campaign for nationalization, I think, is very important, because that will take the profit motive out. And then workers, communities, shippers can sit down and collectively discuss and find that balance of safety and efficiency. Have a democratic inclusive discussion. Yeah, we don’t want to run 2,000 mile long trains, but we don’t want to run three-mile-long trains either. So whether it’s 8,500, whether it’s 5,000, the point is we need to have an inclusive, democratic discussion that finds the balance of safety and efficiency without compromising safety, so that products can be moved safely, communities cannot be put in jeopardy, workers can work safely and with dignity. And I’ll just leave it there. Thank you.
Maximillian Alvarez: So that is the great Mark Burrows and Jeff Kurtz, both veteran now retired railroaders with decades and decades of experience working on the railroads. Follow their work at Railroad Workers United, subscribe to their newsletter, stay up to date on the latest news coming out of the rail industry from the rank and file. Jeff, Mark, thank you both so much for joining me today on The Real News. I really appreciate it.
Jeff Kurtz: Thank you, Max, and thanks for covering this.
Mark Burrows: I second that. Thanks for having us, and thanks for your exemplary coverage.
Maximillian Alvarez: Thanks so much, guys. Really appreciate that. And we’re not done. We’re going to stay on this until we get the change that we need. And to all of you watching, thank you for following this. Thank you for caring.
And please, before you go, head on over to the realnews.com/support. Become a monthly sustainer of our work so we can keep bringing you important coverage and conversations just like this. Thank you so much for watching.
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Australian National Review – Ellen Brown: The Looming Quadrillion Dollar Derivatives Tsunami
Ellen Brown: The Looming Quadrillion Dollar Derivatives Tsunami
By Investment Watch Blog
Technically, the cutoff for SIFIs is $250 billion in assets. However, the reason they are called “systemically important” is not their asset size but the fact that their failure could bring down the whole financial system. That designation comes chiefly from their exposure to derivatives, the global casino that is so highly interconnected that it is a “house of cards.” Pull out one card and the whole house collapses. SVB held $27.7 billion in derivatives, no small sum, but it is only .05% of the $55,387 billion ($55.387 trillion) held by JPMorgan, the largest U.S. derivatives bank.
The global derivatives market is a $2+ QUADRILLION (2,000+ TRILLION) ticking time-bomb. When banks fail, derivatives won’t just unwind in an orderly fashion. Few people understand this.
These are some of the top U.S. banks ranked by derivatives exposure (double-digit TRILLIONs). pic.twitter.com/cS23fazqZH
— Gabor Gurbacs (@gaborgurbacs) March 19, 2023
The Bank of International Settlements estimates that there is a combined $52+ Trillion off balance sheet Dollar-denominated debt among non-banks outside of the U.S. and non-U.S. banks. In case of non-orderly derivatives wind-downs this could become extremely problematic. pic.twitter.com/x5IhFCnUsX
— Gabor Gurbacs (@gaborgurbacs) March 19, 2023
Credit Suisse’s $39 Trillion Derivative Debt Poses Significant Threat to US Financial System.
- The U.S. Treasury Secretary, Janet Yellen, is under a lot of pressure due to the deteriorating condition of Credit Suisse, a Swiss banking giant. Under the Dodd-Frank financial reform legislation of 2010, Yellen was given increased powers to oversee financial stability in the U.S. banking system. The legislation made Yellen the Chair of the newly created Financial Stability Oversight Council (F-SOC), whose meetings include the heads of all of the federal agencies that supervise banks and trading on Wall Street. It is Yellen’s authorization that would be required before the Federal Reserve could create any more emergency bailout programs for mega banks.
- Recently, the US Treasury was reviewing US banks exposed to Credit Suisse, looking into how many billions of dollars of underwater derivatives US banks were on the hook for as a counterparty to Credit Suisse, and U.S. banks exposure to Credit Suisse’s other major counterparties that U.S. banks do business with.
- Credit Suisse was making headlines for two years, and serious problems at Credit Suisse have raised alarm bells in the US financial system. Credit Suisse is a global, systemically significant, too-big-to-fail bank that operates in the US and is deeply interconnected throughout the global financial system. Its failure could have widespread and largely unknown repercussions, which is why the US financial system and economy need to be adequately protected.
- The recent revelations about Credit Suisse’s deteriorating state have raised concerns about contagion risks in the banking industry, particularly in light of the staggering amount of secret derivative debt being held by foreign banks. According to a report by the Bank for International Settlement, this unreported exposure is 10 times greater than their capital, with an estimated $39 trillion of dollar debt held off balance sheets.
- This poses potential threats to dollar swap lines and with a significant portion of derivative trades still not being centrally cleared, a layer of opacity is added to an already unaccountable system. The quarterly derivatives report from the Office of the Comptroller of the Currency found that four US mega banks held 88.6% of all notional amounts of derivatives in the US banking system, with a total notional amount of $195 trillion.
Australian National Review – UCSF Orders Their Doctors To Ignore COVID Vaccine Injuries
UCSF Orders Their Doctors to Ignore COVID Vaccine Injuries
By Steve Kirsch
They don’t file VAERS reports either. That’s a violation of federal law. I had a bunch of questions for their media relations department, but they ghosted me. Here’s what I wanted to know.
Dr. Josh Adler is executive vice president and chief clinical officer at UCSF Health as well as vice dean for clinical affairs at the UCSF School of Medicine. I wondered if he would like to see these questions answered as well. So I asked him.
Their response: silence.
You know what that means, don’t you?
The questions I sent them
- The UCSF Chief Medical Officer has issued a verbal directive that medical staff (doctors, nurses, techs, etc.) are specifically instructed NOT to associate the COVID vaccine to any injuries. So even if they believe the vaccine caused the injury they are NOT allowed to talk to the patient about it. Can you explain how this is in a patient’s best interest? World health authorities such as Karl Lauterbach, Federal Minister of Germany for Health, have publicly admitted that the rate of severe vaccine injury is 1 in 10,000 and the V-safe data in the US shows the rate of severe injury (requiring medical care) is actually 100X higher: 8 SEVERE INJURIES per 100 fully vaccinated people. So why is the UCSF medical staff forbidden to make an association??
- I’ve been told that the staff are told not to ask if the person was recently vaccinated with the COVID vaccine because that would suggest to the patient that the COVID vaccine might have caused their medical condition. Is this true? So the patient must offer it to the doctor because the doctor isn’t allowed to ask? How does that improve clinical outcomes?
- I’ve been told that 70% of the Radiology Department (in Marin specifically) requested and were granted religious exemptions after seeing what happened to people who received the COVID vaccine. If it wasn’t 70%, what is the number?
- I’ve been told that the placentas of a majority of vaccinated women who give birth are not normal (calcified, blood clots, etc.). This started happening after the shots rolled out. Can you tell me what percentage was observed and why nobody at the hospital is speaking out to the press about this situation?
- Most troubling to me is that I was not able to find anyone who currently works at UCSF (including doctors, nurses, and lab techs) who would talk to me on the record for fear of being fired. Why would these doctors and nurses have such a fear? Will you guarantee in writing that any staff member who speaks out about any of the points above will be protected and not be fired just for speaking out? Have you fired anyone for speaking the truth? Who?
- With all the chatter about fear and intimidation tactics, have you issued WRITTEN assurances to the staff that 1) it is OK to ask about COVID vaccine status, 2) that it is OK to write vaccine exemptions when warranted such as allergic reactions, 3) that if they believe the vaccine caused an injury that they are free to talk about it with the patient and 4) that staff members who talk publicly about what they are seeing in the clinic with respect to vaccine-associated injuries/deaths and don’t violate any confidentiality/HIPAA rules will be protected from being fired? I want to know whether TRUE speech is protected and whether UCSF has notified staff of this in WRITING. If not, why not? Do fear and intimidation tactics yield better health outcomes?
- My friend Tim Damroth told me he suffered a cardiac arrest 2 minutes after getting his first COVID shot. He was in such pain since the shot that his UCSF doctors prescribed a nerve block shot. But in order to get the nerve block shot, UCSF required him to be fully vaccinated (i.e., 2 shots)! He asked for a vaccine exemption, but the UCSF doctors told him that UCSF doesn’t allow them to write any vaccine exemptions, even for people who almost died after getting the shot. So Tim got another shot in order to get the medical care he needed but this made his pain much worse. Can you confirm whether COVID vaccination is still required to get certain medical care at UCSF? If it isn’t still required, when did the requirement end? Can you explain the rationale for requiring vaccination to give a shot? Do you deny treatment to people with life threatening conditions if they are not fully vaccinated? How vaccinated must they be to be treated? 2 shots? 3 shots? I just talked to Tim and he will be delighted to sign a HIPAA consent to allow UCSF to talk about his case and all his medical records publicly so everyone can learn what happened to him. Are you proud of the way he was treated? Do you have any regrets?
- If you believe that COVID vaccine and masks are effective, why would you subject a patient to have to be vaccinated before receiving medical care? This is nonsensical in light of the Cleveland Clinic study which clearly showed that vaccines increase risk of getting COVID which would seem to put the staff at higher risk. You are clearly ignoring that study. On what basis? Nobody has been able to debunk the study. The precautionary principle of medicine requires that you hold off your vaccine requirement until you can resolve the ambiguity.
- How many UCSF staff have died within 6 months of receiving a COVID vaccine shot? Were autopsies done? Did they do the histopathology studies to rule out the COVID vaccine as a cause of death? Can we see the slides?
- How many UCSF staff have been seriously injured from the COVID vaccine?
- Why didn’t any doctor at UCSF file a VAERS report on the vaccine injuries of
, Jan Maisel, and Angela Wulbrecht. This is required by law. was a former Chief Medical Officer at UCSF. Maisel is Associate Clinical Professor of Pediatrics at UCSF. Wulbrecht was a top UCSF nurse. All of their injuries were required by law to be reported, yet no VAERS reports were filed. Why not? What are you doing to correct the problem?
- UCSF ultrasound technicians with decades of experience have seen an unprecedented number of menstrual irregularities in women who have been vaccinated. Why aren’t any of them warning the public about this? Is the public better off if nobody knows about this?
- I talked to one of the funeral homes used by UCSF. They are seeing a 20X higher rate of perinatal deaths after the COVID vaccines rolled out. This is a disaster. Why isn’t anyone saying anything about this? Why did the funeral director decline to be named for fear of being fired? Why isn’t UCSF just publishing the numbers to warn the community? How does keeping this information secret result in superior clinical outcomes?
- Nearly all of the UCSF neurologists know that the COVID vaccines have caused serious injuries to huge numbers of UCSF patients. Can you explain why none of them are speaking out publicly about what they are observing in the clinic?
- Why not make public health information from the hospital public? The information can be easily anonymized to protect privacy. Wouldn’t making medical records such as age/admission date/COVID vaccine dates/reason for admission be a huge public service? If the vaccine really works, everyone would know it. If the vaccine doesn’t work, everyone would know it. Why don’t we have data transparency?
- Is anyone at UCSF calling for data transparency from the CDC? If the death-vax records were public, we could instantly know whether the shots are beneficial or harmful. Is there a reason these records are not public and nobody at UCSF is calling for these records to be made public? Do we get better health outcomes when the CDC keeps the data from public view? The data can be easily anonymized to satisfy any HIPAA requirements. I personally released a subset of the death-vax records from Medicare. So I know it can be done. Oh, and it showed the vaccine were causing an enormous amount of excess deaths.
- How long do you think you can get away with hiding all these vaccine injuries from public view?
- Is this really in the public interest to keep all this stuff secret and engage in fear and intimidation tactics? Is there a paper in a peer-reviewed medical journal showing superior patient outcomes when the public is kept in the dark about vaccine injuries?
Australian National Review – Government-Backed Digital Money To Represent $213B In Payments By 2030
Government-backed Digital Money to Represent $213B in Payments by 2030
By Lucas Mearian
Digital currencies backed by government banks still face a mountain of challenges before they’ll be ready for prime time, but 114 countries are involved in various projects, either in the planning stage or all-out pilots.
The global value of central bank digital currencies (CBDCs) will grow dramatically from $100 million today to $213 billion by 2030, once the virtual money gains greater adoption for domestic payments, according to new data from Juniper Research.
By 2030, 92% of the total value transacted through CBDCs around the world will be paid domestically, as cross-border payment systems face an uphill battle for adoption, Juniper predicted.
The digital currency, which is backed by traditional fiat cash such as the US dollar or British pound, can bolster financial inclusion because customers don’t have to have a bank account to hold them; they can instead use encrypted “digital wallets” that exist in the cloud, on a desktop or laptop, or even on USB storage device.
With a cross-border CBDC payment system, immigrants, for example, could send money back to their countries of origin without having to pay what can be exorbitant fees for electronic money transfers. Businesses would also be able to make cross-border payments for goods and services with much cheaper, and faster, settlements.
Central-bank-backed digital currencies would also reduce the costs of printing and replacing mone, help improve fraud detection, and allow money paid to scammers to be more easily traced and recovered, according to Lou Steinberg, former Ameritrade CTO and managing partner at cybersecurity research firm CTM Insights.
“It would simplify and speed up cross-border payments and reduce the cost and complexity of processing checks, wires, etc.,” Steinberg said in an email reply to Computerworld. “Unlike cryptocurrencies such as bitcoin, a currency that is backed by the full faith and credit of the United States or other trusted government would provide certainty that the value of the currency is being carefully managed. A government can adjust everything from the money supply to interest rates as they manage and maintain the value of a fiat currency.”
Digital currencies also eliminate the anonymous nature of consumer cash transactions. In places such as China, where spending activity is closely monitored, that would let the government know what movies an individual is buying tickets for of whether they are spending money at a bar. Those are hard to track with cash.
The US has been a slow follower compared to other nations, such as China and its digital Yuan, in developing a CBDC. Australia, China, Thailand, Brazil, India, South Korea and Russia already have pilots or will begin test programs this year. By 2030, the Bank of England and UK Treasury are planning to launch a digital pound or ‘Britcoin’ CBDC.
It matters which nation’s digital currency achieves widespread adoption first because that government will be able to set the global rules for most others, according to Steinberg. “Whomever sets up large international payment systems first will have a de-facto standard, one which latecomers will have to adopt,” he said. “The US continues to study a digital dollar while others are making progress. We need to prioritize a system for international payments and settlement based on a digital dollar, almost the equivalent of a next-generation SWIFT network.”
The features and standards can be used to design in privacy or state surveillance and traceability. They can include limited use currency, such as a type of dollar that could only be used for stimulus but not saved, or a digital dollar food stamp.
“On the other hand, countries like Cuba have two types of currency, and limit the use of one type to foreigners only (so they know which of their citizens are collecting money from foreigners),” Steinberg said. “If we want western standards around privacy, we need to set the standards. If we want the dollar to maintain its role as a ‘reserve currency,’ we need to set the standards around cross-border networks. Showing up late to the game means you play by some else’s rules.”
All together, 114 countries representing 95% of global GDP are investigating the creation of CBDCs, according to the Atlantic Council, a Washington-based think tank. Only 10% have launched general CBDC networks. Sixteen percent of projects are in pilot stage, 30% are in development, and 27% are still in the research stage, according to the Atlantic Council.
“We are behind. The good news is that we are starting to realize this,” Steinberg said of the US.
This map by the Atlantic Council shows the maturity of CBDC projects around the globe.
In March 2022, for example, US President Joe Biden issued an executive order calling for more research on developing a national digital currency through the Federal Reserve Bank, or “The Fed.” The order highlighted the need for more regulatory oversight of cryptocurrencies, which have been used for nefarious activities such as money laundering. The Fed has been investigating the creation of a CBDC for years.
US lawmakers have also introduced bills that would allow the US Treasury to create a digital dollar. The electronic dollar would allow people to make payments using tokens on mobile phones or through cards instead of cash.
In November, the New York Federal Reserve Bank began developing a wholesale CDBC prototype. Named Project Cedar, the CBDC program hammered out a blockchain-based framework expected to become a pilot in a multi-national payments or settlement system. The project, now in phase 2, is a joint experiment with the Monetary Authority of Singapore to explore issues around the interoperability of the distributed ledger.
Juniper Research’s Maynard believes China will lead both domestic and cross-border CBDC use in 2030, “as it has had early pilots which have seen some success in the market.”
Since CBDCs are issued by central banks, they will be mainly targeted at domestic payments at first, with cross-border payments arriving as systems become established and links made between CBDCs used by individual countries. Crucial to CBDC success, however, will be cross-border and retail merchant acceptance.
CBDCs will also require a complex regulatory framework including privacy, consumer protection, and anti-money laundering standards, which need to be made more robust before adopting the technology, according to the Atlantic Council. Any new system of payment could also jeopardize the national security objectives of the country using them.
“They can, for example, limit the United States’ ability to track cross-border flows and enforce sanctions,” the group said. “In the long term, the absence of US leadership and standards setting can have geopolitical consequences, especially if China and other countries maintain their first-mover advantage in the development of CBDCs.”
Steinberg agreed, saying a fully distributed system has risks, “both that wallets will be electronically pick-pocketed, and that transaction validity (consensus) can be cheated. A well-designed system could be quite secure today and future proofed. A poorly designed one would lead to widespread theft and fraud,” he said.
The research by Juniper said to date there is still lack of commercial product development around CBDCs, with few well-defined platforms for central banks to leverage — a big limiting factor for the current market.
“While cross-border payments currently have high costs and slow transaction speeds, this area is not the focus of CBDC development,” said Nick Maynard, Juniper’s head of research. “As CBDC adoption will be very country specific, it will be incumbent on cross-border payment networks to link schemes together, allowing the wider payments industry to benefit from CBDCs.”
For success, any CBDC platform would need a full end-to-end financial network, including wholesale capabilities, digital wallet, and merchant acceptance, Juniper said.
Full end-to-end CBDC solutions, including wholesale capabilities and – most importantly – widespread merchant adoption central banks to generate buy in. That will mean leveraging platforms from experienced payments vendors, as well as having a public consultation model which involves key stakeholders at every stage.
“In order to achieve merchant adoption, it’s a chicken or egg scenario to an extent,” Maynard said. “Merchants will want to use the platform users are transacting in, but users will want to use the platform their favourite merchants and brands are on. As such, it will likely require a mix of incentives at both the user and merchant level to generate initial traffic.”
One of the challenges for central banks is figuring out how to enable a CBDC that adds value above existing payment systems, according to Gartner Research. The success of CBDCs also depends on “programmability” enabled by smart contracts, Gartner argued in a January report.
“In order to further justify investments into CBDCs, developers are experimenting with injecting programmability into CBDC-enabled payment value chains,” Gartner said. “Therefore, bank CIOs need to prepare for this transformation,”
As part of ongoing pilots of the digital Yuan, or e-CNY, for example, the Bank of China Chengdu is using smart contracts to manage the deposits for extracurricular school activities, such as field trips to museums. Using the e-CNY CBDC reduces reliance on third parties to deal with a refund if a class is canceled, or a student couldn’t attend, Gartner said.
Countries such as Russia and China see how payments that depend on US infrastructure and currencies can be affected by sanctions and are working to develop alternatives, Steinberg said.
“The one to watch is China,” Steinberg said, referring to the mBridge Project. “Domestically, they need to keep electronic payments from all moving to tech companies, and undoubtedly see benefits in increased consumer surveillance. Internationally, they piloted cross border payments and settlement with central banks in places like Thailand and UAE. That’s the current concern.”
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