Debt Solution Tips

CityRail network buckles under the weight of thousands of new commuters each week, RailCorp is trying to clear room at crowded Town Hall station to accommodate them.

After a successful trial of marshals moving passengers to empty areas on afternoon peak trains, a minor upgrade is under way to make more room on some platforms. The renovations will fall well short of the extra capacity required at the ageing station, however.

Work is being done on platforms five and six to remove storage and cleaners' supply rooms to create 40 to 45 square metres of extra space.

Town Hall's platforms are 158 metres long, however, and the work will not create a huge amount of breathing space for commuters. But with the station straining at its capacity, RailCorp's management is trying to remove all non-essential items to free up room.

It is all the organisation can do until the State Government signs a hugely expensive, and disruptive, station upgrade plan that continues to gather dust.

A 2007 RailCorp plan exists for a $600 million overhaul to bring Town Hall up to fire safety standards and provide capacity for growth. It has failed to meet these standards since 2001.

Consultants have warned that "Town Hall cannot currently be fully evacuated in the morning and evening peaks within times stipulated by the Standards for Fixed Guideway Transit and Passenger Rail Systems". It still has no fire-escape stairs.

About 150,000 passengers use the station every day and the Government estimates this to rise to more than 168,000 within eight years. The actual figure is likely to be even higher.

With mounting household debt and strong CBD jobs growth in past years, railway patronage is rising by more than 8 per cent a year on some lines.

Overall, the growth rate was more than 4.7 per cent for the 12 months to February this year, which is more than 200,000 extra passengers using the network a week.

In June the Independent Pricing and Regulatory Tribunal said an urgent increase in capacity was needed in the CBD railway network to prevent Town Hall and Wynyard stations becoming swamped by passengers.

In 2005 the then Premier, Bob Carr, announced a plan to install a $5 billion rail line through the city, with new stations that would alleviate the crush at Town Hall and bring relief to every part of the rail network for decades.

This was plan scrapped in March with the announcement of the North West Metro. "The likely growth in peak-period demand means that meeting the Government's objective of reducing the cost of CityRail services while also improving the quality and reliability of these services will be a major challenge," the tribunal's report says.

A review of station operations by Boston Consulting Group has led to some changes in the way Town Hall operates. One of the most successful reforms has been the introduction of marshals on busy city platforms to move people to either end of the train, where there are fewer people.

Yacht brokers and Maybach salesmen cracked open the champagne this weekend after investors roared back into the stock markets Thursday and Friday.

But the U.S. government's vast - and still amorphous - bailout of the financial sector will not,signal a return to business as usual. For the financial-services industry, the era of vast profits, huge salaries, stunning bonuses, lavish benefits and platinum handshakes just came to a sudden end. That's the price the industry must now pay for its indiscipline.

The bailout is deeply unfortunate but even more deeply essential. The underpinnings of the global financial system were beginning to creak and rattle as the crisis-of-confidence turmoil grew. Washington owed it to the whole world to prevent the cancer of failed confidence from metastasizing any farther. The U.S. financial sector truly is too big to be allowed to fail.

If you take a financial risk, you deserve to cash in if things work out, but ought to pay the price if they don't. When there's no downside to a venture, why not go big? So what if it's a long shot? Uncle Sam will pay if you lose!

The financial services industry in the U.S. has enjoyed a breathtaking boom for many years, but now the party is over. The industry that emerges from this shakeup, and from what will likely amount to a sort of temporary partial nationalization, will need to be quite different.

But cries for "more regulation" are by themselves not helpful. The industry has a long history of taking care of itself first, despite successive waves of regulatory fervour and reform. As long ago as 1940, a man named Fred Schwed wrote a book about this, called Where Are the Customers' Yachts? The title makes the point.

Still, greed is part of human nature; the real policy challenge is not to outlaw greed, but to harness it so that it becomes responsible diligence. Policy decisions - capital requirements for banks, lending standards and other controls on the sector - will have to be made tougher and be enforced fully. And individual investors, we can hope, will by now have learned that if you can't understand it then you shouldn't invest in it. (What is a synthetic collateralized debt obligation, anyway?)

But no amount of new regulation will revive moral hazard. The top executives of financial firms, such as Dick Fuld of Lehman Brothers, are walking away from this shambles unpenalized. The government and the industry need to look hard at ways of instilling disciplined prudence at the top of the corporate pyramid.

we need an infusion of fresh capital into the industry and we need some fresh new regulations, but they may be insufficient. What I argued to the bankers is that the industry itself needs to change to solve these problems,” he told The Times. That involves embracing the four principles of Wikinomics:

1 Be transparent and open: “Investors should have full access to information and data on collateralised debt obligations and underlying assets . . . Basically, now that AAA ratings are pretty much worthless, investors have no idea really of what they are being asked to buy, and they won’t start buying until they fully understand what it is they are purchasing and they know that the price is fair,” he said.

“We’ve understood the value of transparency in pricing for market goods. As securities become more complex, we can use new digital tools to bring that same market approach to underlying information as well.”

2 Share intellectual property: “A lot of our risk-management models are viewed as proprietary sources of competitive advantage. They \ hoard all this information. They don’t share best practices. Banks and financial institutions should get together and share a lot of this information,” Mr Tapscott said.

“For something like 4 per cent of mortgages in the United States the lender knew that the borrower wouldn’t even make the first payment but they were passing it off on to somebody else, so they didn’t care. So there was no collaborative framework, there was no co-operation.”

3 Act globally. Mr Tapscott said that regulation should be agreed globally, not locally. “If Lehman is going under in the United States, you can bet eventually it is going to ripple through the UK and France . . . This is a global problem and we need to have global solutions.”

4 Collaborate with peers. “The big financial institutions need to get together and find an industry-wide solution to this problem,” he told the bankers. “The CEO of Barclays should call upon his peers to come together to form a global think-tank of all financial services institutions and figure out how to apply these four principles to fundamentally reinvent the modus operandi of the financial services companies.