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California High Speed Rail is a Ponzi Scheme

Original post made by Morris Brown on Sep 3, 2011

High Speed Authority Board, Vice-Chair Lynn Schenk, admitted last week, their previous business plans were really nothing more than sales tools. She said:

"That first Business plan was more of a sales and marketing piece than it was in the nature of a proxy."

view video at Web Link 3 minutes

Indeed the voters of California were convinced to vote for the Prop 1A, $9.95 billion bond measure in 2008 based on a whole series of fraudulent claims.

Construction costs were to be $33 billion, but have now doubled to around $65 billion. Projected ridership of 117 million passengers per year has now fallen to around 40 million; may well go much lower. The price of a ticket expected to be $55 dollars, has now inflated to $105.00.

Just equate these sales pitches used by Authority board members, to the same level as Bernie Madoff used for his $50 billion Ponzi scheme. The only difference is really that right now Madoff lives in prison, but previous and present board members continue to pitch this scheme.

Governor Brown and the legislature could stop this right now, but they simply refuse to listen.


Morris Brown
Menlo Pak, CA

Comments (9)

Posted by Menlo Voter, a resident of Menlo Park: other
on Sep 3, 2011 at 5:54 pm

They refuse to listen because they are in the pocket of organized labor.


Posted by Hy Dis Lie, a resident of another community
on Sep 3, 2011 at 7:39 pm

"That first Business plan was more of a sales and marketing piece than it was in the nature of a proxy."

Like virtually every startup seeking funding that I've ever been a part of. Toted up and down Sand Hill every day.

Seriously, folks, get real.

Ponzi? Morris had an epic fail in the analogy department. Ponzi is offering investors insane profits without the ability to deliver, paying off the initial investors with later deposits, illegally pocketing most of the investments.

This is a project with rising costs as many do, maybe, but a Ponzi?

You belittle your argument with baseless hyperbole, distortion or lies.


Posted by Disgusted, a resident of Menlo Park: Central Menlo Park
on Sep 3, 2011 at 9:51 pm

Morris, you say Gov. Brown and the legislature could stop this but "refuse to listen." You're right, they could stop this, but the second part of the statement is wrong: it's not that they're not paying attention. Many if not most are complicit in the fraud, because these kinds of shenanigans -- pulling the wool over the gullible people's eyes with shrewd and unethical marketing, often at the public's expense -- are business as usual.

There are many reasons why a large number of politicians want this project to go forward, but none of them have anything to do with benefits to the public and a reasonable return on the taxpayer's investment. Menlo Voter oversimplified when he said our politicians are behind this because they are serving the interests of organized labor. Organized labor is only one of many special interests the politicians who support this outrageous scheme are beholden to. As I said before, it's business as usual. What a disgrace.


Posted by Norman, a resident of Menlo Park: Central Menlo Park
on Sep 3, 2011 at 10:50 pm

A writer for the Chronicle (I think) emailed me that the 'plan' was so old that it was useless. That a 'real' one would be in place next year. And that, in his words, it was impossible to know what the ridership and cost would actually be as it would be derived from what people would actually pay for it. So, I'm thinking how can we spend $65B to probably $100B with massive resultant subsidies necessary from the State (which they don't have)if we don't know what its really going to cost.

Further, one of the proponents used the Golden Gate Bridge as an analogy to hsr with respect to the controversy and then the usefulness of it. A better analogy is the SST, the Concorde, which cost a minimum of $25B in current dollars not including its losses. It was a bust and good for the USA for staying out of it. The same should happen to HSR.

Further, isn't startling that this project has been in the news for so long yet our major media outlets, to my knowledge, have never showed us the numbers. Very suspicous.


Posted by look deeper, a resident of Menlo Park: Sharon Heights
on Sep 4, 2011 at 2:38 pm

Organized labor is the primary special interest? What about the speculative land owners who bought up property near potential stations? What about developers and contractors who reap the most benefit from development? And politicians whose home base might eventually get more visitors (passengers) despite the fact that other towns will suffer greatly but will be bypassed.
How about putting it up for a vote of the people again, with more accurate numbers?


Posted by Hy Dis Lie, a resident of another community
on Sep 4, 2011 at 2:40 pm

Every loser wants a recount. Failing that, they want a rematch.

The "people have spoken" only applies when their side wins.


Posted by John Ponzi, a resident of Portola Valley: Ladera
on Sep 4, 2011 at 8:44 pm

Morris is right on the money - although the Ponzi scheme might not be the right metaphor. The initial business plan was a sales plan - and believe me - it was hawked all over the state to groups, societies, unions, businesses, politicians, etc. Amazingly, it showed how a high-speed rail trip from the Bay Area to LA would be just slightly cheaper than airfare. I laughed at that claim, knowing the price would double. I've seen too many of these huge public works snowballs occur to know that it was going to happen, and that the cost would escalate. Believe me, no one knows how owned this state is by the unions.


Posted by Hank Lawrence, a resident of Menlo Park: Sharon Heights
on Sep 5, 2011 at 9:35 am

HSR is a boondoggle. The construction and O&M costs are grossly underestimated and the ridership numbers are grossly overestimated . Look at the Northeast. It has the highest population density and income in the United States and the Acela is losing money hand over fist.

California is largely a rural state with huge population centers in San Diego, Los Angeles, San Jose, Sacramento, and San Francisco. It would be far better to invest in transportation in these SMSAs than to have HSR.

In fact the State would save money if it just gave away free airplane tickets to everyone who wanted to travel between these major cities instead of building the HSR.

A Caltrain subsidy is warranted because it keeps its ridership off the highways. Our highways are at fully saturated along the peninsula. If Caltrain goes under you will see traffic congestion that would make Los Angeles look like a ride in the countryside.

Rail investments should be made in the areas with the highest population densities and highway investments should be made elsewhere.


Posted by morris brown, a resident of Menlo Park: Park Forest
on Sep 5, 2011 at 12:15 pm

Hank Lawrence is right about the HSR project.

But when he write:

"If Caltrain goes under you will see traffic congestion that would make Los Angeles look like a ride in the countryside.", he has gone way way overboard.

I don't want CalTrain to shut down; CalTrain won't shut down. The current hysteria that Scanlon has fueled regarding annual funding shortfalls, which are nothing new, is just a ploy to gain support for a tax measure, which is not needed and shouldn't be supported.

Just last week CalTrain turned down a chance to save about $5 million a year and instead chose the more expensive operator.

Look at:

Web Link

for more on this.

CalTrain is proposing to spend $251 million on a Positive Train Control (CBOSS), which is surely 2 to 3 times what such a system should cost. Metrolink in LA is doing the job on their system with 5 times the track miles and much much more complicated for about $200 million.

CalTrain has been the root cause of the local problems with HSR along the Peninsula. They have supported the HSR boondoggle since day one, and insisted the CalTrain corridor be used by HSR.

Groups like "Friends of CalTrain", based in Palo Alto, just ignore all the other issues that CalTrain should first fix, and go around advocating a bond measure to further tax us and keep promoting the agenda that CalTrain wants. As long as CalTrain cintinues to suport the HSR Authority using the CalTrain corridor, CalTrain deserves no new subsidy support.

Loss of CalTrain service wouldn't even some close to the kind of catastrophe that Hank forecasts for the freeways, but Palo Alto would indeed suffer dramatic traffic chaos without CalTrain.


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