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A House GOP proposal would force Amtrak to privatize operation of its cafe cars — but the federal government would still be required to pick up part of the tab for the private provider’s hot dog and Heineken offerings.

The measure introduced by Rep. Jean Schmidt (R-Ohio), part of the much larger and controversial surface transportation bill now under debate, takes aim at Amtrak’s onboard food and beverage service, which loses some $60 million a year according to the congresswoman.

The measure’s language, however, outlines the limits of what even its proponents think privatization can accomplish. The proposed legislation states the federal government would pay out “any portion of appropriations for Amtrak necessary to cover a net loss” from the food and beverage service. So even if the private providers save Amtrak some money, the federal government would still be required to cover any losses from the private businesses’ operations. Amtrak has argued that food and beverage services operate not as a money-making proposition, but somewhat as a loss-leader, an amenity to lure passengers to spring for train tickets.

Schmidt’s office did not immediately respond to a request for comment.

But Ed Wytkind, president of the transportation trades department at the AFL-CIO, argued the “net loss” subsidy is a symbol of Republican hypocrisy. Nearly 1,900 unionized members provide onboard food services on Amtrak. “You can’t make this stuff up,” Wytkind told HuffPost. “It is the best deal you could possibly write for some food service company.”

Conservatives have said private companies would operate more efficiently. But, Wytkind asked, “If they’re so confident about it, why do they have to hold them harmless?”

The measure would limit the government’s losses “to the extent that such net loss was anticipated in the bid selected.” Amtrak’s food and beverage services have long been a target of Republicans’ ire. Amtrak spends $2 for every $1 it makes off food and beverages, in part as a result of high labor costs, according to a 2005 Government Accountability Office report.

Harold Hongju Koh, the Department of State’s legal adviser, is a leading expert on public and private international law, national security law and human rights. He was dean of Yale Law School from 2004 to 2009 and now is professor of international law on leave from the school. Koh served as assistant secretary of state for Democracy, Human Rights and Labor from 1998 to 2001. He graduated from Harvard College, Oxford University and Harvard Law School, and has received 11 honorary degrees and more than 30 awards for his human rights work. This interview was conducted by Tom Fox, who writes the Washington Post’s Federal Coach blog.

What leadership lessons did you learn while working as assistant secretary of state?

It’s critically important for the head of an office to convey to everyone how important and appreciated their work is and to explain how their contributions relate to the mission. At my State Department jobs, I’ve tried to sketch out our tasks and repeat our guiding principles so everyone can follow them. At the Human Rights Bureau, I told everybody on the first day, “Do not under any circumstances shade the truth about human rights issues.” I told our office that we care about accountability, easing present human rights situations and building democracy for the future, to forestall future human rights abuses.

In my current job as legal adviser, I’ve laid out four functions for the lawyers in my office. We play the multiple roles of counselor, conscience for the U.S. government on international law, defender of U.S. interests and spokesperson for U.S. relationships in international law. I ask my attorneys to see themselves as always playing one of those roles. You give people a frame of reference and hope they can internalize it.

How do you set clear goals and motivate employees?

In the last decade, values we took as givens have been under assault. Our country believes in human rights and is built on the rule of law. We are the guardians of that position. It resonates with our lawyers to affirm that. They came into the government to serve these values. I tell my office that they’re the greatest international law firm in the world, representing the greatest nation in the world, and I believe it. It’s not often you are a part of the greatest anything in the world. It builds a sense of pride for people to see themselves in that light.

What makes government service attractive to young lawyers, given the private-sector opportunities?

The crushing burden of law school debt meant people had to go to a higher-paying private practice, even if they didn’t really want to. Then private firms over-hired and furloughed many associates. Private practice became less attractive at the same moment President Obama was elected. Young people got a new sense of excitement about public service. We’ve been amazingly oversubscribed with people looking for positions. They’re willingly taking huge pay cuts.

What advice do you offer new attorneys?

Give me your best. It’s the least you can do. It’s also the most you can do. What more can I ask for? It’s also important for people to judge their own work. Forget about being given gold stars by others. Judge something by your own standards.

Is negativity creeping into the workforce and bringing down morale?

I’ve seen remarkably little impact, because people are so dedicated. I have to say I’m tired of the bashing of our public servants. The government employees I work with are incredibly impressive. For example, people who focus on rescuing American citizens being held abroad were working like crazy during the threat of a government shutdown. Their commitment was absolutely total. They would have been barred from doing their jobs during a shutdown. There was a lot of political posturing about “who needs the federal government” and that “the only worthwhile activities occur in the private sector.” I thought, “There is some massive disconnect here.” If one of [the legislators'] constituents was captured overseas, would they expect anything but the kind of dedication I’m seeing in my office?

What events or people shaped you as a leader?

I’ve had tremendous luck in my choice of bosses and role models. My father and mother and siblings are all extraordinary people. I clerked for two judges, Malcolm Wilkey and Harry Blackmun, who were heroes of mine. I’ve worked for Madeleine Albright and Hillary Clinton. This is a wonderful group of people to be associated with. My first boss, Malcolm Wilkey, an extremely self-confident man, would be dissenting alone among 11 judges, completely undaunted. I’ll never forget when I recommended he vote a certain way. He did and everyone voted against him. He said, “Well, I guess I’ll have to persuade the rest of them.” Five flipped to our side. That showed me that someone who really believes his position can attract other people’s views.

Justice Blackmun was the hardest worker I ever saw. Nothing was beneath his attention. Many Supreme Court cases involve people who can’t pay the filing fees. Most people throw those cases away, but Justice Blackmun read them all and was deeply moved. Here’s one of the most powerful guys in the country and he empathized with the little person, the outsider. This was a powerful lesson. He didn’t get onto the Supreme Court until he was 61 and he just kept growing. That someone who has had such a successful life ends up in the highest court in the land, still learning things and changing his views and seeing the world more clearly is an amazing lesson to carry into your mature years.

This post was originally featured on The Washington Post‘s website.

Pat McCarthy had the perfect pitch for the sharks circling in the “Shark Tank” (Fri., 8 p.m. EST on ABC). As part of his attempt to get some financial backing for his Money fragrance, he came in under a shower of cold hard cash — well not hard per se as it was bills and not change.

The sharks were certainly impressed with that presentation, and were even willing to witness the wonderful smell of money. They have emotional attachments to money and love the smell of it. But did they love the smell of his Money fragrance?

Barbara Corcoran seemed to think the smell too overpowering, but mostly they were concerned about the competitive perfume market. The cost of penetration into the big department stores they calculated at more than a million, and they weren’t confident this product could get there.

Daymond John liked the idea of licensing the name and put an aggressive offer of $100,000 for an 80% stake in the company. But it was the only offer McCarthy would see, as the other Sharks all backed out. In the end, McCarthy couldn’t part with control of the company and so he walked away with nothing. Money talks, but control talked louder for McCarthy.

See which products are spotlighted next on “Shark Tank,” Fridays at 8 p.m. EST on ABC.

TV Replay scours the vast television landscape to find the most interesting, amusing, and, on a good day, amazing moments, and delivers them right to your browser.

“The pace and composition of the deleveraging process needs to be consistent with the macroeconomic scenario of the adjustment program and should not jeopardize the provision of adequate levels of credit to the economy.”

Thus spoke one European finance official this weekend, as one more confab of ministers from the eurohood gathered to assure the world that all is proceeding apace toward “a more balanced monetary union governance model and effective firewalls.”

The tendency to speak in finance jargon–one is reminded of the incomprehensible utterances of Alan Greenspan–may suggest to some that they have the problem under control. However, the lack of frank discussion of the underlying issues suggests instead that they have a tiger by the tail and are making it up as they go along.

Each week now brings new assurances that a deal is imminent, and yet as the weeks go by it is becoming harder and harder to imagine that after all of the complex negotiations, the end will not be more straightforward: Greece defaults and exits the eurozone.

It may be inevitable, and it may be for the best. Maybe not for Germany, maybe not for the banks, but for Greece.

The United States began as poorly structured fiscal union. The debts of the nation and the debts of the states were comingled and the boundaries of responsibility poorly defined. Like Europe, the United States is a federation with a single currency and centralized monetary policy, but with fiscal authority retained at the state level. And early on, there were periods of fiscal crisis that were first resolved with the federal government assuming the debts of the states. But it was only after state defaults on their own debts that long-term stability was achieved, as new working rules–established under state constitutions–were established that clearly delineated the responsibilities of the states and of the central government.

Europe–or more precisely the eurozone–was created with similar failures to define boundaries of responsibility. It is not surprising that nations bound together with a common currency, but each retaining spending authority, would find themselves subject to fiscal pressure. This problem was exacerbated by the implied debt guarantees that allowed each state to borrow freely, while giving the banks and other investors little incentive to make credit decisions reflective of each country’s management of its fiscal affairs.

The European experience mirrors the experience of nations that have pegged their currency to the dollar. There are benefits of maintaining a common currency, but the peg cannot be sustained if a nation fails to manage their affairs–such as was the case of Argentina–or if they outperform the nation to which they have pegged their currency–such as Taiwan and Singapore. In either cases, market forces will exert pressure over time to move away from the peg and allow their currency to depreciate or appreciate until a new balance is achieved.

Greece is the Argentina of Europe, and enjoyed the benefits that access to a common currency offered, until it was no longer able to pay its bills. Argentina finally defaulted a decade ago, but not before its families of means squirreled their pesos away in dollars stashed in foreign banks–much as Greeks are doing today.

There was no impediment to Argentina’s ultimate default. The currency market did for Argentina all of those things that are being demanded of Greece today. Everything was adjusted downward in real terms. Salaries and pensions–public sector and private alike–funding public services. The population became poorer, their futures cast into doubt, but unlike Greece, no public official had to cast a ballot.

Each week, the Germans–along with their junior partners in France–are putting the hammer to the Greeks. Cut public sector spending. Cut worker salaries. Cut pensions. Sell the airports and trains. And this week demands to cut private sector salaries by 25%. Now, German ministers have taken the final, inevitable step and suggested that Greece must have a fiscal overlord to set budgets and spending levels.

While the world has focused on Greece’s failures–with the implication that it was German beneficence that allowed Greek participation in the euro in the first place–it is easy to lose sight of the fact that Germany has been the greatest beneficiary of the creation of the eurozone. The advent of the common currency eurozone with 330 million people created a massive, captive market for the German export machine. After China and ahead of the United States, Germany is the second largest exporting nation on earth, and the bulk of what it sells is to other European countries. There are no innocents in this morality tale. All those Greek bonds and Italian bonds and Spanish bonds and other bonds that are now at risk were issued to sustain an economic bubble of consumerism from which German exporters were among the largest beneficiaries. If Greece lied on its application for admission, the Germans had good reason to look the other way.

Those who have benefited from the euro want it to survive this crisis. Failure is not an option–insisted European Central Bank member this weekend. It is not an option for Germany, whose currency would skyrocket if the eurozone nations went their separate ways, punishing its export-dependent economy. It is not an option for France, for whom the euro is the key both to containing the German colossus with which it has fought several wars and to creating a counterweight to U.S. global power and prestige. It is not an option for China, that badly needs an alternative currency to the dollar for its massive foreign currency holdings.

And then there are the financial imperatives of achieving an orderly unwinding of the exposure of the European banks to Greek default risk. Each week, we are assured, a deal to restructure Greek debt–theoretically averting a default–is almost done. The parameters of such a deal are not in question. The banks holding Greek bonds would write off more than half of the value of their bonds against their fictitious capital reserves–fictitious because those reserves have been invested in sovereign euro-denominated bonds, among which are these very same Greek bonds. Hedge funds will be strong-armed into accepting the same deal, though their write-offs will be against their own–rather than other people’s–money.

But essential to the suggested resolution would be the forbearance by the ISDA–the International Swap Dealers Association–in pronouncing that no “credit event” has taken place, such that those same banks will not have to pay out on credit event losses as the sellers of credit default swaps against those same Greek bonds. Such an outcome would seem to be unlikely based on the merits, but in a world that has dangerously comingled the financial and the political, anything is possible.

For all of this–to sustain the illusions that are Europe and the stability of its banks–all that is asked of Greece is that it voluntary cede its powers of democracy and self-determination. Yes, Greeks can still elect their leaders, but those leaders will no longer control the destiny of the nation.

But even if a default by Greece on its March 20th bond payment is diverted, nothing will actually have been solved. At best, a new package of loans will be arranged, and the default will be delayed until some later date.

This solution is backwards. Instead of affirming Greece’s responsibility for its own choices, it will have been stripped of its sovereignty. Instead of having to face up to the challenge of building its own future with real rules–as ultimately each nation must–it will move forward instead as a vassal state to its Franco-German overlords.

Perhaps it is time to gather those ministers and elected leaders into a room and tell them to go home. For all of their sakes, perhaps it is time that they open their eyes and let Greece be Greece. Better now than later, because all is not proceeding according to plan.

Because there is no plan. They are just making it up as they go along.

Years before the housing bust — before all those home loans turned sour and millions of Americans faced foreclosure — a wealthy businessman in Florida set out to blow the whistle on the mortgage game.

“Are these people going to be found frozen”, words that define what the cold of winter means to so many in Maine. Stark, frightening words from the owner of a small oil dealership listening to the pleas of too many of his customers, unable to pay for their heating oil deliveries and depicted in a stirring New York Times article “In Fuel Oil Country, Cold That Cuts to the Heart” 01.04.12.

The price of heating oil has gone up by 40 cents this year to $3.71 per gallon. This while Congress and the Obama administration have cut the energy assistance program, meant to help the poor to pay their heating bills. In Maine alone that covers 65,000 households who must now make do with $483, down from $804 a year ago. All this while the major oil companies a raking in humongous and record profits!

And all this while Washington snoozes away, letting the oil boys, both here and over there, walk all over us while our fellow citizens freeze up in Maine and the many other northern tier states throughout the land.

Yes, occasionally lip service is given to the issue of run-away oil prices and the suspicious peculiarities of their formation where pricing loses all connect to the oiligopoly’s mantra, “Its all about supply and demand.”

To that end the Administration announced the formation a financial fraud task force, “The Oil and Gas Price Fraud Working Group” (please see “Obama Administration Announces Formation of Oil/Gas Pricing Fraud Panel. Really?” 04.27.11). The panel was meant to focus on fraud in the energy markets, to monitor the oil and gas markets for potential criminal violation, i.e. price fixing, manipulation, etc. To date, nearly one year after this brave announcement, nada! Not a peep from Washington, the Administration, the Justice Department-the agency vested with the responsibility of organizing the task force-nothing.

Nothing from an Administration that has sat idly by while during the three years since its investiture the price of crude oil, the determiner of the price of all downstream products, from gasoline to heating oil has increased by over 200 percent, from the low $30/barrel in February 2009 to $100/bbl today. (You do the numbers-over $60/bbl difference between then and now, times 19 million barrels DAILY U.S. consumption). The cost to the nation in economic activity, employment, not to speak of simply dollars and cents is immeasurable, and of course the freezing home owners in Maine.

There is a profound lack in this Administration’s understanding of the functioning of oil markets. Nor is there anyone on board who can help navigate the ship of state on this issue. The Department of Energy, when not handing out hundreds of millions to the likes of the Solyndra project, is totally at sea in dealing with the unforgiving world of energy markets. The Department, headed by Nobel Prize winning Steven Chu, a brilliant physicist but totally out of his element as Energy Secretary (Please see “The Half Billion Solyndra Debacle- Why Is Steven Chu Energy Secretary?” 9.26.11) in dealing with the ruff and tumble of the oil world, enabling him to utter such misguided nonsense from his U.S. Department of Energy perch as:

“OPEC is going to do what they are going to do based on their own interests. I frankly don’t focus on what OPEC should do, I focus on what we should do”

This coming from the world’s largest consumer of oil, giving the OPEC cartel carte blanche to continue their manipulations to their hearts content, and at our expense. Tell it to the people in Maine, Mr. Chu.

Combine the Energy Department’s ineffectiveness to the vapid oversight (Please see “Time to Dismiss the CFTC Chairman and His Commissioners” 12.27.10) of oil futures and petroleum products trading on the commodity exchanges, you have a recipe for disaster. Don’t believe me, then go ask the good and freezing people up there in Maine.

As states gear up to finalize a national mortgage servicing settlement, some are looking to avoid the painful lessons of a 2008 mortgage deal that failed to deliver the help promised to desperate homeowners.

Nearly four years ago, 11 states settled with Countrywide, the giant subprime mortgage lender acquired by Bank of America in 2008 that was accused of knowingly making unaffordable loans that hurt homeowners. The bank agreed to provide up to $8.4 billion in assistance to 400,000 borrowers struggling to keep their homes, but as of October 2011, only $237 million has been paid out.

Given the Countrywide settlement’s underperformance, some states are hesitant to join the $25 billion servicing settlement currently being negotiated between state attorneys general, the Obama administration, and five of the nation’s largest banks. The states have until Monday to decide if they will sign on to the deal, according to the Iowa attorney general’s office.

“Based on our experience with the Countrywide settlement, if we ever do a deal of that magnitude again we will be looking for a built-in enforcement system that includes strong penalties for nonperformance … You know, once bitten, twice shy,” said a source who works for the attorney general of one of the states that signed onto the Countrywide deal and is deciding if it will join the current settlement. The source is not authorized to speak on the record.

The current settlement grew out of the “robo-signing” scandal of 2010, in which banks are alleged to have systematically forged documents and wrongfully foreclosed on homeowners. Under the proposed deal, five of the nation’s largest banks — Bank of America, Wells Fargo, JP Morgan Chase, Citi and Ally Financial — would provide $25 billion in assistance to needy homeowners by changing the terms of their mortgage, refinancing their mortgage, or reducing the amount of principal owed on their mortgage.

Five states — California, Nevada, New York, Massachusetts, and Delaware — left the negotiations last year over concerns that the deal would be too soft on banks and deliver too little to homeowners. To date, none of those states have rejoined the talks.

The Obama administration, which is pushing states to sign on the new settlement, agrees that the Countrywide deal has underwhelmed. “The Countrywide settlement has not delivered the relief it was designed to deliver,” said Department of Housing and Urban Development Secretary Shaun Donovan on a call with reporters on Saturday. But the new deal will hopefully avoid repeating that mistake, Donovan said.

Under the Countrywide deal, Bank of America did not have to actually provide $8.4 billion in help to homeowners. Rather, the terms were such that the bank simply had to offer assistance, irrespective of whether the offer would actually help the borrower or whether it was ultimately accepted.

“Bank of America could just mail a letter to a homeowner, and get credit for helping that borrower, even if the person didn’t take them up on the offer,” said the source in the office of one of the attorneys general who signed on to the deal. “And there were folks who would take Bank of America up on the offer, and maybe make one payment under the new loan terms and then default on the second or third payment. The bank quickly foreclosed on them, but the bank still got credit because it offered the help to the borrower.”

Under the new deal, the banks will not receive credit for helping borrowers until there is clear evidence that the homeowner has benefited from the assistance. “There will be no credit for principal reduction unless it has happened, has actually occurred, and that homeowner was able to stay in their home and pay on their new mortgage for at least 90 days,” Donovan said.

Another problem with the Countrywide deal is that it does not enable the states to hold the bank accountable to its promise to help homeowners, said Kevin Stein, associate director of the California Reinvestment Coalition, a collection of nonprofits that advocate for consumers. “Perhaps the terms weren’t tight enough, so that poor performance is still in compliance. Because if the terms were tight and Countrywide wasn’t complying, the states could go back in to reinforce it.”

Some states are so frustrated with the Countrywide settlement’s lack of effectiveness that they want out of the deal altogether. In the last year, both Nevada and Arizona have asked the courts to excuse them from the settlement so that they can go after Bank of America independently.

Bank of America maintains that it is fulfilling its commitment under the deal. “The bank is on track to reach the nearly 400,000 estimated offers … and offers to date have amounted to $14.1 billion in potential savings,” said Bank of America spokesman Rick Simon.

Nevertheless, both states and the Obama administration are determined to employ a different structure this time around. They plan to implement stronger enforcement measures, imposing financial penalties on banks that do not meet their obligations, according to Patrick Madigan, Iowa Assistant Attorney General and one of the current settlement’s negotiators.

“Under the servicing settlement, the banks are obligated to provide the assistance to homeowners,” Madigan said. “Whatever they don’t do converts to cash that they must pay, plus an additional penalty of 25 to 40 percent, so the banks are highly incentivized to perform.”

Additionally, the servicing settlement has a monitor to enforce the agreement, which Madigan says is key to making sure banks comply with the deal. “This agreement has a very robust enforcement mechanism, including an independent monitor. State attorneys general having a monitor over national banks is a significant achievement all by itself. There is no comparison between the enforcement and monitoring of this case and Countrywide.”

The Obama administration appointed North Carolina Banking Commissioner Joseph Smith as monitor, whose track record impresses consumer advocates. “They’ve appointed somebody I have a lot of respect for,” said Ira Rheingold, president of the National Association of Consumer Advocates.

But Rheingold cautioned that the effectiveness of the deal cannot be assessed until several years after its implementation.

“What happens after the deal is reached is what really matters, he said. “We won’t know whether it’s good or bad until a few years down the line, and it won’t be good if it ends up dependent upon the banks good faith to act appropriately.”

NEW YORK — Instead of complaining about clean air rules, maybe utilities should cheer them.

Sometimes, the rules lead to big gains.

First Energy, a utility based in Ohio, got such a boost Thursday, a week after the company announced it would close six coal-fired plants, blaming new federal rules aimed at slowing emissions of mercury and other toxins.

Without these plants, electricity prices in parts of Ohio dominated by First Energy are expected to nearly double at a power auction scheduled for May.

The reason: There will now be a smaller fleet of power plants available to meet potential power needs. This smaller supply means the price to coax companies like First Energy to make their plants available will rise.

Julien Dumoulin-Smith, an analyst at UBS, predicted rates would rise from $126 for every megawatt available per day to $200. For the 8,000 megawatts of power plant capacity owned by First Energy in the region, that would be an extra $216 million for the year covered by the auction.

Jonathan Arnold, an analyst at Deutsche Bank, said there’s a chance prices could approach $500, which would be an enormous windfall for First Energy.

First Energy shares rose 3.3 percent Thursday on a day in which the Dow Jones Industrial Average fell slightly.

Electric utilities have complained about a raft of new and tightening environmental standards. They argue that the rules are too stringent and that utilities are not being allowed enough time to prepare for them

The rules address several environmental issues: Emissions of toxins harmful to human health, pollutants that lead to smog and acid rain, the amount of water used to cool plants and disposal of power plant waste products.

Utilities argue that the cost of complying with the rules is too high, that electric power supplies could be constrained in certain regions and that electricity bills will rise.

What they don’t generally say, however, is that the rules can lead to higher earnings in some cases.

Electric utilities are regulated differently in every state, so the way utilities can benefit differs too. Here’s how:

_ In states where power prices are set by market forces, fewer plants means lower electricity supply, and higher prices. Companies that have plants that comply with the new rules stand to benefit from higher prices. First Energy has nuclear and modernized coal plants that meet the new standards.

_ In states that are regulated, utilities have to ask public utilities commissions for permission to install new equipment or build new plants. But the utilities are allowed to earn a higher return on these big-ticket investments than they are for selling power to customers. To the extent that the new environmental regulations allow regulated utilities to build new equipment, they will likely lead to higher earnings.

But some companies will suffer. For example, utilities in unregulated states that have to pay for upgrades themselves and cannot benefit from higher prices won’t be able to offset the cost of the equipment. Similarly, if state regulators refuse to allow utilities in their state to pass the cost of the upgrades or new plants to customers, those companies could suffer too.

The industry also argues that higher prices could also lead to lower power demand and profit.

First Energy chose to close plants that likely would have been unable to operate under the new rules on toxins. These plants are generally older and inefficient, so installing emissions control equipment would have cost the company too much money. These plants were already seldom used, so by closing them the company does not stand to lose much revenue from the small amount of power they generated.

But in the markets First Energy operates, plants earn money two ways: by selling power, and by making power plants available for use during peak periods, even if they are never actually needed.

With the closure of four plants in Ohio, there will be less power available to meet demand. That is expected to drive prices for capacity higher.

“First Energy’s nuclear plants and baseload coal plants with environmental controls are the primary beneficiaries of the EPA rules,” says Hugh Wynne, an analyst at Sanford Bernstein.

Power prices have been driven lower in recent years by low natural gas prices, which in many markets set the price of electricity. Because of this, prices for capacity have become more important to company earnings.

Customers in northern Ohio will pay higher prices than they otherwise would have in the coming years. The final prices they pay, however, will depend on several other factors, including the price of coal, the price of natural gas, and power demand.

Workers in London, Ont., say they’ll continue to picket even though the Electro-Motive Diesel plant is now officially closed, as the head of the Canadian Auto Workers calls for a public inquiry into the closure.

Progress Rail Services Corp., a subsidiary of U.S. construction equipment conglomerate Caterpillar, announced the closure of the locomotive plant Friday.

The company locked out 450 workers from the facility on Jan. 1. Costs were the main factor in the dispute, with the company pushing certain employees to take a 50-per-cent pay cut, despite making nearly $5 billion last year.

Caterpillar said costs were too high.

CAW union boss Ken Lewenza admits cost has meant the loss of many manufacturing jobs in Canada.

“At the end of the day, if it’s all about competitiveness, then workers in Canada won’t win,” he said. “If it’s about productivity, if it’s about quality, then we will survive.”

Union workers plan to stay on the picket line until they get a closure agreement from the company.

Tony Biviano, one of the employees now out of work, said he’s confused.

“It’s not an economic thing; I don’t think that at all,” he said. “There’s lots of money here.”

It’s widely expected that Caterpillar is moving the jobs to its plant in Indiana; the company is holding a job fair there on Saturday.

On Wednesday, Indiana passed a right-to-work bill, after pressure from Caterpillar, that allows workers to opt out of union membership.

“I don’t think this timing is a coincidence,” London-based economist Mike Moffatt told CBC News. “Because Caterpillar got the legislation it wanted and the governor was then able to promote the jobs that legislation brought to Indiana.”

Latest blow to manufacturing sector

The plant’s closure is the latest blow to Canada’s struggling manufacturing sector, which is suffering under new competition from low-cost countries, a sluggish economic recovery and a strong loonie.

Ten years ago, Canada’s dollar was worth as little as 61.79 cents US. Now the two currencies are worth about the same, taking away one reason for companies to do their manufacturing in this country.

Michael Burt, director for industrial economic trends at the Conference Board of Canada, said the manufacturing sector has been improving since the lows of the 2008-9 recession, but noted it faced difficulties long before the downturn.

“Before the recession, we saw no growth in broad manufacturing activity for much of the last decade,” he said pointing to the rising loonie and China’s growing role as the world’s factory.

Prime Minister Stephen Harper had used Electro-Motive as a backdrop in 2008 to promote big tax breaks for industrial capital investments.

NDP MP Robert Chisholm called on the federal government, which has said repeatedly that the Electro-Motive dispute is one between a private company and its workers, to do something.

“The fact is that taxpayers have funded Caterpillar, the growth of Caterpillar in this country,” Chisholm said.

“In fact, we’re funding the move of Caterpillar to the United States and, so I say, and I think Canadians would agree, that this government has a responsibility to hold that company accountable.”

Andrew MacDougall, a spokesman for Harper, said the prime minister was disappointed and sympathized with the workers who are now without jobs. But he blamed the provincial government for not being able to mediate a solution to the dispute.

In his State of the Union speech, President Obama said and proposed many reasonable-sounding things. One of them was this:

We’ll also establish a Financial Crimes Unit of highly trained investigators to crack down on large-scale fraud… financial firms violate major anti-fraud laws because there’s no real penalty for being a repeat offender… So pass legislation that makes the penalties for fraud count.

And tonight, I’m asking my Attorney General to create a special unit of federal prosecutors and leading state attorney general to expand our investigations into the abusive lending and packaging of risky mortgages that led to the housing crisis.

Now, how could you be against that? In his speech, and indeed as has been true for his entire career, Mr. Obama deserves an A for rhetoric. But what grade does he deserve for action? Alas, he flunks.

It has now been three and a half years since the financial crisis of September 2008. Only a few months after that crisis — three years ago now — President Obama took office. At the time, he had an overwhelming popular mandate and huge majorities in both houses of Congress. The nation was in crisis, with unemployment growing nearly half a percent per month. The Bush Administration’s policies (and the financial sector that those policies had allowed to run wild) were utterly discredited. If ever real change is possible in Washington DC, this was that time.

In that situation, and over the intervening three years, what did President Obama do? Well, we got a stimulus package, and then a year later a watered-down, absurdly complicated new law that addressed everything except the most important issues. And that’s about it. Consider the record:

President Obama’s personnel appointments were heavily weighted towards those who had sat by and done nothing as the housing bubble grew (Tim Geithner, Ben Bernanke), former officials who had made major contributions to causing it (Larry Summers), senior lobbyists for the worst of the banks (Mark Patterson, Tom Donilon), a former board member of AIG (Richard Holbrooke), and literally dozens of former executives of banks and hedge funds that had played major roles in causing the crisis. The new chair of the SEC, Mary Shapiro, was the former head of the investment banking industry’s self-regulation body, which brought not a single enforcement action related to the bubble. Her new director of enforcement, Robert Khuzami, was formerly general counsel for Deutsche Bank, which profited by helping John Paulson create securities so that he could profit by betting that they would fail.

We got the Financial Crisis Inquiry Commission, deliberately crippled through its tiny budget (less than $10 million for its entire operation, beginning to end), limited subpoena power, and publication date conveniently just after the 2010 midterm elections. Even so, the FCIC actually did a pretty decent job, and demonstrated that the housing bubble had involved pervasive fraud on the part of the banks.

Moreover, there followed a huge wave of private lawsuits. The banks fought them hard, and have tried extremely hard to prevent depositions and testimony from becoming public. But many plaintiffs persisted, and there has now accumulated a massive record of extraordinarily repulsive, and clearly illegal, behavior. In a book that I have just finished, and which will be published in May, grimly entitled Predator Nation, I go through what is known in considerable detail, and make the case for large-scale prosecutions and asset forfeitures.

This information is already public. So what has happened as a result?

Well, the SEC has filed some civil fraud cases — not many, and not big. Thus far, every single one has been settled with a minor fine, with neither individuals nor banks required to admit guilt. Criminal prosecutions of banks? Zero. Criminal prosecutions of senior financial executives related to the bubble? Zero. RICO cases, such as were used against Michael Milken and are routinely used against drug dealers and other organized criminals to seize their assets and forfeit their ill-gotten gains? Zero. Sarbanes-Oxley prosecutions, based on CEOs’ certification of obviously fraudulent financial statements? Zero. In Mr. Obama’s three years in office, not a single U.S. bank or senior financial executive has been convicted of any crime (or even prosecuted), or had their assets confiscated.

But now, it’s re-election time, and Occupy Wall Street has shown simmering anger among the population. So we create a task force. (There was another one before, too, but never mind.) A week later, several bankers are arrested. They’re low level patsies, who worked for a Swiss bank, and who didn’t create or sell the toxic stuff; they just traded it afterwards. And the task force? Its initial personnel: a whopping 15 people in the Justice Department, and ten — count them, ten — FBI agents. Eventually, Justice says, the task force will have an awesome 55 people. Goldman Sachs has 32,000 employees, there are several thousand financial industry lobbyists, the FBI has a total of 14,000 agents — but hey, I’m sure that those ten agents are the very best.

So yes, it’s absurd, and rather disgusting. But it must also be said that President Obama is not alone in prostrating himself before the financial sector. Congress is no better, and neither are Obama’s likely opponents in the presidential race. Newt Gingrich screamed about government interference while he was being paid $1.6 million by Freddie Mac’s chief lobbyist for “conservative outreach.” In Mitt Romney, we have someone who thinks it’s perfectly OK to have a tax rate of 14 percent on over $20 million per year in unearned income, and who wants to increase taxes on the poor while reducing them further for the wealthy. Unfortunately, the power of financial sector money has by now produced a pervasive, bipartisan systemic disease in American politics, of which the president’s recent speech is merely one example among many.