Warrent Buffett, investor extraordinaire, just bought something. The Burlington Northern Santa Fe Railroad Company (BNI). It cost $26 billion. He already owned part of the railroad, but he wanted it all. Figured it was a great investment. So why should you care?

First, because it's Warren Buffett. While he's made one or two bad investments (see Eastern Airlines (who?) as an example), most of what Mr. Buffett buys increases in value. He's not the second richest man in America because he's lucky. When he buys into an industry, it may be one that most investors should consider.

The world's largest auto maker, Toyota Motor Corp. (NYSE: TM) announced Tuesday that is was about to issue the biggest recall in the company's history, as problems with some floor mats has led to numerous accidents and at least five deaths.

The recall involves eight different models of Toyota and Lexus vehicles manufactured and sold in the U.S. over the past six years, and include the popular Prius hybrid. Apparently, there is a problem with the driver side floor mats that result in the mats coming loose and jamming down the accelerator.

Rail carloadings for agriculture and coal are down, as is containerized trade traffic, and the near-term does not look bright, but you'd never know it from Burlington Northern Santa Fe's stock price trend.

Institutional investors have bid-up shares in anticipation of U.S./global recoveries. Therefore, I'm reiterating my Buy rating for Burlington Northern (NYSE: BNI), first recommended on April 30, 2009 at a price of $67.81. However, there is caveat: wait for a pull-back to about $75, and hope the market gives you the chance at a decent entry point.

If you are getting tired of reading all the news on the government's "cash for clunkers" program, don't worry... the Obama administration announced this afternoon that the popular incentive program will come to an end this Monday.

There has been a lot of controversy over the program as of late, but one thing is for sure, car buyers have definitely been taking advantage of the program since it launched last month.

As we noted yesterday, a lot of auto dealers have decided to pull out of the popular "cash for clunkers" program. This comes as a result of lack of payment by the government, and today General Motors said that it will start to advance dealers the cash that they are due from the government related to the program.

Today's announcement by General Motors marks a change in company policy, which had earlier stated that it was not in a position to come to the aid of its dealers.

For the past twenty years we've seen a globalization of production and distribution. The present financial crisis is causing companies to rethink one component, that of distribution of component parts.

Supply chain experts Ernest and Young estimate that 70% of a company's carbon footprint comes from transport and other costs in the supply chain.

So then, with such high costs, companies are setting up supply chains closer to home. US companies are restructuring their operations and using Mexico and a supply center for component parts. European operations are using Eastern Europe as the hub of their supply operations. These moves are intended to shorten supply chains to reduce costs. The long supply chains all the way back to China are being scrapped in favor of these shorter, regional chains.

It goes without saying that I favor the railroad sector. And why not? The nation's inadequate, congested interstate highway system and vehicle transportation system dependent on oil suggests a bottle-neck plagued, high-cost road transportation network in the years ahead.

That opens the door for a resurgence of the rails, and Kansas City Southern (NYSE: KSU) is part of that fortunate circle. Kansas City Southern has operations in the U.S. (56% of FY2008 revenue) and Mexico (44% of FY2008 revenue), including 6,000 miles of track.

CSX (NYSE: CSX), a railway company whose peers include Burlington Northern Santa Fe (NYSE: BNI), Union Pacific Corp. (NYSE: UNP) and Norfolk Southern Corp. (NYSE: NSC), reported earnings for the second quarter on Monday after the bell. Net sales declined 25%, and earnings from continuing operations declined 24% to 72 cents per share.

Declines are never nice, but for a company like CSX, it's only to be expected. The recession continues to have an impact on operations. Management said that volumes decreased; it also mentioned how CSX is doing its best to run as efficiently as possible to combat the dropping top line. Maybe it's working out, because according to Reuters, the company beat Wall Street estimates by 10 cents.

Yesterday afternoon, Barnes Group Inc. (NYSE: B) announced that it is withdrawing its 2009 earnings guidance thanks to uncertainty in the transportation sector. In May, Barnes forecast earnings of $1.20 to $1.35 per share -- better than the consensus estimate of $1.19 per share. Barnes did not update its estimate when making the announcement.

The company stated that problems in transportation sectors (like the automotive industry, which comprises one third of the company's revenue) have made predicting the rest of the year very difficult. Barnes' CEO Gregory Milzcik noted, "Challenging industry conditions, evidenced by customer plant closures, reduced customer production schedules, and overall uncertainty in the automotive market driven by bankruptcies and the cascading effect on suppliers, have obscured our visibility for the coming months."

For the green shoots believers, a dose of reality: The Journal of Commerce reports that the Cass Freight Systems Index (Cass is a company that tracks freight spending) fell by a whopping 25% in April 2009 (hat tip to ZH).

This comes on the heels of a strong run-up in transports. The IYT Index that tracks this segment dipped below $40 in early March. At close of day on Tuesday it logged $59.54. Freight shipments and freight spending are the lifeblood of the U.S. economy and a key leading indicator for economic activity as both retailers use them to replenish inventories and durable goods.

CSX (NYSE: CSX), a railway company whose colleagues include Burlington Northern Santa Fe (NYSE: BNI), Norfolk Southern Corp. (NYSE: NSC) and Union Pacific Corp. (NYSE: UNP), issued its Q1 report on Tuesday after the bell. As one might imagine, there was a drop in both sales and net income. The top line declined by 17%. The bottom line, on an adjusted basis (taking into account an item from last year's similar quarter), dropped 23% to $0.62 per share.

The economy is still taking its toll, obviously. Volumes were down during the quarter. However, the market sometimes cares about only one thing: beating expectations. CSX actually beat the analyst expectations of $0.51 per share. This significant difference led traders to push shares of CSX higher by 6.5% during Tuesday's after-hours session.

When you work in public policy or economics, you come across policies and programs in various countries in Europe and elsewhere that are innovative and/or that have otherwise have stood the test of time.

Still, the above doesn't mean they'll be implemented in the U.S. That's because the American culture and system presents its own, unique challenges and restrictions. Where else can one person -- 1 U.S. Senator -- stop the democratic process, thwarting the will of the majority, the will of the people?

This post is part of a series featuring bargain stocks that are worth a look now. See more Cheap Stocks.

Maybe a railroad stock doesn't exactly seem like the cutting edge in investments. In fact, it might even strike you as old-timey. Fair enough -- but if you check out the year-to-date performance of Burlington Northern Santa Fe (NYSE: BNI), it's hard not to be impressed. At the end of November, the stock was down just 8% for 2008, compared to a loss of 40% for the broader S&P 500 Index (SPX).

The Texas-based freight firm transports everything from lumber and coal products to canned goods and oats. While you may have a perception of trains as pollution-spewing dinosaurs, BNI happily defies those stereotypes. Not only is the company adding new rail lines, it has also recently won accolades for its environmentally friendly practices. (Environmentally friendly for a railroad, of course -- I won't kid you by saying these locomotives run on rainbows and happy thoughts.)

On the fundamental front, BNI reported third-quarter earnings in late October that crushed analysts' expectations, and offered a rosy forecast for the fourth quarter. CEO Matt Rose said he's optimistic about his company's future, despite macroeconomic uncertainty. A pullback in corporate spending could actually benefit BNI, says Rose, because it's cheaper to transport goods by rail than by truck. "As the economy slows down, customers are going to be paying a lot more attention to cost," noted the chief executive.

Just a few weeks ago we were wondering whether falling gas prices meant that Americans would be driving more. The data says: no. (Although the data is, admittedly, nearly two months delayed.) Both gasoline consumption and vehicles miles travelled have fallen every month over the past several months; the miles travelled figure is down 11 months in a row and 4.4% in September.

In the Wall Street Journal, Joseph B. White points out how the cycle is so far following that of the late 1970s and early 80s; gas gets expensive, Americans embrace high-mileage vehicles, less driving, and start thinking about alternative energy sources; demand falls and prices go back down; and then Americans return to their old ways. And complicating this situation is that gas tax revenue goes down when gas consumption goes down; so infrastructure funds dry up. Paradoxically, transportation officials are stuck in the not-so-virtuous cycle: if they encourage behavior that's good for the planet, they'll reduce their income and roads will suffer.

White asks, will we be headed straight back to "trance" state? Will automakers, having embraced development of electric-powered vehicles and other green options, give up in the face of the reality that it's just as cheap to drive a guzzler? Will Americans remember how much they loved their Sunday afternoon drives in the Excursion? Either way, the fallout is complicated.

I really believe that Americans will stay in the shock state. Many of my friends have made significant investment in the low-car lifestyle, buying family bikes and developing new routines around energy conservation. This time, it's not really about the money; I started my car-free lifestyle before prices started rising and the consensus seems to be that we're doing it for the health of the planet and our own health; those values are not to be unpacked for short-term gain. I believe in (some of) the American people. Now our government will have the hard choice of whether to raise gas taxes or find another way to fund the infrastructure shortfall.

It would appear to be axiomatic to say that there are few benefits from an oil price over $100 per barrel. Nevertheless, during oil's latest climb to the stratosphere, some have argued that a high oil price is 'net-positive for the global economy,' or 'a long-term good thing.'

Economist Glen Langan has a word for insta-analysis like the above. "Misguided," he calls them.

Not that Langan is an ardent advocate of oil use; hardly. Would that the developed and developing world could shift today to an alternate, renewable, and more environmentally-friendly energy form, he says. But the world can't, and as is some times the case in social science circles, "the normative influences the empirical," he says, and leads to curious conclusions like an 'oil shock being net-positive for the global economy.'

For the record: an oil shock is never net-positive for the global economy, Langan argues.

There are some benefits, to be sure, such as increased conservation, increased research on alternate/renewable energy forms, a transfer of some wealth to some developing nations and, of course, astounding increases in wealth in those connected to oil and oil services, but the overall effect is net-negative. Oil traded Thursday up $5.46 to $121.42 per barrel.