This is a guest post by Pedro Prieto from Madrid, Spain. He is the head of ASPO-Spain and organized the ASPO 7 conference in Barcelona last year. See also follow up post, regarding inflation adjustment to parameters.

When the economy started to fade last year, many attributed the cause to subprime lending.

Others put together very successful, hilarious stories, explaining that the ultimate reason for this financial crisis was the NINJA policies of banks (credits granted to people with No Jobs, No Income and No Assets). Many of these stories were uploaded to Youtube.

Neither subprime lending, nor NINJA policies, nor any financial media is able to explain why banks around the world, which had been for decades very cautious in granting a credit without solid collateral, suddenly started to grant loans to insolvent people; or why the strict financial regulatory and supervisory entities started to look the other way.

This is an attempt to offer a different perspective.

Ottawa Transit Derailed: An Interview with Clive Doucet

Residential, commecial and road builders have made and contine to make billions of dollars from this model. In fact, the principal industry in North America has been the construction of mall-sprawl suburbs. So the long and short of it is there are enormous vested interests in continuing the urban growth model exactly as it has been undertaken now for more than fifty years.

'New ideas' like electric light rail create entirely different kinds of growth patterns. They are more pedestrian oriented, consume less land and require a more diverse and complex building pattern. The developer just can't rip off the top soil from the farmer's field and then lay out his suburban grids which has the fewest construction costs and largest profits. Electric light rail changes all this.

Another reason why it is so difficult to make happen is that the initial costs are not incremental. Our council increases the city's road network by 100 kilometers a year and spends $600 million total on roads just for repair and expansion, but it's always increased incrementally. Each road expansion or reconstruction can cost anywhere from $5 million to $100 million. There are so many of them that they become part of the background financial noise of the city.

In contrast, a public transit project like light rail requires a more difficult, more complex environmental assessment than a road environmental assessment, requires more initial funding than a road project, and can't serve everyone all the time everywhere - unlike roads, which are perceived as a universal service when in fact they are no more than public transit is. There are many roads in Ottawa I've never driven on and never will.

The final large reason is that there is no federal or provincial funding programs for public transit systems. Canada is the only G-8 country that has no ongoing federal or provincial urban transit funding. Ottawa suffered through all of these limitations, fought for and got $400 million in special project funding from the federal government and the province ($200 million each); fought through the environmental assessments, project definition, and so on.

But unlike every other Canadian city, Ottawa had a senior federal minister deliberately interfering to make sure the project never happened for partisan political ambitions.