The train is poised to make a comeback in the US, says Bill Bonner in The Daily Reckoning.

Bill says the next president will need to spend huge sums of money as consumers cut back on spending. If consumers don’t spend, either private business or government will have to take up their mantle. And what better way for the government to spend then a massive infrastructure program.

The only sure thing about a massive infrastructure program, however, is it will further bankrupt the nation…

Our Lufthansa (FRA:LHA) flight from Vancouver to Frankfurt was cancelled. “That’s only the second time that’s happened in four years,” said the clerk. Eventually, we made it onto a flight to London. Then, a strike by ground staff in Paris delayed our departure another three hours. When all was said and done, we got back home a day later than expected.

“I hate flying,” said a colleague. “When I was young, I used to look up and see airplanes and wish I was on every one of them. Flying was an adventure. And they treated you so well. I remember flying on PanAm many years ago. They treated you as though you were an important person. But now, it’s a nightmare. Waiting in lines. Getting searched…screened…questioned. I’d rather take the train.”

In America, taking the train is tough. There aren’t many. But James Kunstler is sure there will soon be more. Mass transit, he believes, will be forced upon us by the price of energy.

We’re not sure trains really use less energy than automobiles. By the time you get people to the trains, have them wait, build the train itself…and the rails, employ ticket takers and engineers, and so forth, saving energy is no sure thing. Then too, trains do not always operate at full capacity. It may be a waste of energy to have a single commuter in an automobile. But imagine a train with a single passenger!

In a free market, we wouldn’t have to worry about such things. The price would tell us all we needed to know. The more energy intensive a form of travel was, the more it would cost. But with so many government subsidies, price controls and regulations in place, price alone no longer gives you a clear picture.

Nevertheless, our guess is that rail travel is going to make a comeback in the United States – for other reasons. We suspect that the U.S. government is going to want to spend a lot more money. Already, we’re estimating deficits as high as $1 trillion in the coming Obama administration. We’re in an advanced phase of empire. The mobs want bread and circuses. That’s why Obama is so popular – people believe he is more ready to give it to them than the cranky, old McCain.

But even $1 trillion deficits won’t be enough. Here’s what is happening: the consumer economy is rolling over… because the consumer is rolling over. As he realizes that he has no money, the consumer must cut back. This will cause a big drop in demand… leading to a big drop in sales, output, earnings and employment. A recession, in other words. And since the consumer has gotten himself so deep in debt over so many years… and since he now faces the stage of his life when he most needs savings… this consumers’ strike will go on for a long time.

If the consumer doesn’t spend, who will? There are only three broad possibilities. Either the consumer does it, business does it, or government does it. If the consumer turns his back on the heavy lifting, it’s up to business or government to spend. Business? What business is going to expand in the face of a major consumer pullback? That leaves it up to government. Of course, the government has no money. And spending more – when you are faced with a $1 trillion deficit already – is almost suicidal. But when the mobs yell for more bread… and more circuses… the government obliges – especially when the pols can hand out juicy contracts to friends and contributors.

What will government spend money on? Health care… certainly. War? Yes, but people are getting a little wary of war. Infrastructure? Of course! Who will want to oppose huge new infrastructure spending? It will put people to work, they’ll say. It will make the country “greener.” It will save energy and contribute to U.S. independence.

Whether a massive infrastructure-spending program will do any of those things is doubtful. But one thing it will do is sure – it will help bankrupt the nation.

Source: Dead Cat Bounce