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OfflineEchoVortex
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Registered: 02/06/02
Posts: 859
Last seen: 8 years, 7 months
Ah, the glories of deregulation
    #2755455 - 06/02/04 02:13 AM (12 years, 10 months ago)

Listen in as Enron traders gloat about how they are royally screwing Californians up the ass. And right-wingers wonder why liberals don't trust corporations?

http://www.cbsnews.com/stories/2004/06/01/eveningnews/main620626.shtml

Enron Traders Caught On Tape

LOS ANGELES, June 1, 2004

When a forest fire shut down a major transmission line into California, cutting power supplies and raising prices, Enron energy traders celebrated, CBS News Correspondent Vince Gonzales reports.

"Burn, baby, burn. That's a beautiful thing," a trader sang about the massive fire.

Four years after California's disastrous experiment with energy deregulation, Enron energy traders can be heard ? on audiotapes obtained by CBS News ? gloating and praising each other as they helped bring on, and cash-in on, the Western power crisis.

"He just f---s California," says one Enron employee. "He steals money from California to the tune of about a million."

"Will you rephrase that?" asks a second employee.

"OK, he, um, he arbitrages the California market to the tune of a million bucks or two a day," replies the first.

The tapes, from Enron's West Coast trading desk, also confirm what CBS reported years ago: that in secret deals with power producers, traders deliberately drove up prices by ordering power plants shut down.

"If you took down the steamer, how long would it take to get it back up?" an Enron worker is heard saying.

"Oh, it's not something you want to just be turning on and off every hour. Let's put it that way," another says.

"Well, why don't you just go ahead and shut her down."

Officials with the Snohomish Public Utility District near Seattle received the tapes from the Justice Department.

"This is the evidence we've all been waiting for. This proves they manipulated the market," said Eric Christensen, a spokesman for the utility.

That utility, like many others, is trying to get its money back from Enron.

"They're f------g taking all the money back from you guys?" complains an Enron employee on the tapes. "All the money you guys stole from those poor grandmothers in California?"

"Yeah, grandma Millie, man"

"Yeah, now she wants her f------g money back for all the power you've charged right up, jammed right up her a------ for f------g $250 a megawatt hour."

And the tapes appear to link top Enron officials Ken Lay and Jeffrey Skilling to schemes that fueled the crisis.

"Government Affairs has to prove how valuable it is to Ken Lay and Jeff Skilling," says one trader.

"Ok."

"Do you know when you started over-scheduling load and making buckets of money on that?

Before the 2000 election, Enron employees pondered the possibilities of a Bush win.

"It'd be great. I'd love to see Ken Lay Secretary of Energy," says one Enron worker.

That didn't happen, but they were sure President Bush would fight any limits on sky-high energy prices.

"When this election comes Bush will f------g whack this s--t, man. He won't play this price-cap b------t."

Crude, but true.

"We will not take any action that makes California's problems worse and that's why I oppose price caps," said Mr. Bush on May 29, 2001.

Both the Justice Department and Enron tried to prevent the release of these tapes. Enron's lawyers argued they merely prove "that people at Enron sometimes talked like Barnacle Bill the Sailor."


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Invisibleafoaf
CEO DBK?
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Registered: 11/08/02
Posts: 32,665
Loc: Ripple's Heart
Re: Ah, the glories of deregulation [Re: EchoVortex]
    #2756420 - 06/02/04 12:28 PM (12 years, 10 months ago)

Best Democracy Money Can Buy - Greg Palast

very clear and concise explanation about how
enron and their cohorts fucked california in the
ass.


--------------------
All I know is The Growery is a place where losers who get banned here go.


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InvisibleXlea321
Stranger
Registered: 02/26/01
Posts: 9,134
Re: Ah, the glories of deregulation [Re: EchoVortex]
    #2756421 - 06/02/04 12:29 PM (12 years, 10 months ago)

Really makes you feel kinda warm inside knowing these pricks are in charge of our energy supply doesn't it...

:rockon:


--------------------
Don't worry, B. Caapi


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Invisibleafoaf
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Registered: 11/08/02
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Re: Ah, the glories of deregulation [Re: Xlea321]
    #2756452 - 06/02/04 12:45 PM (12 years, 10 months ago)

it makes me feel kind of warm inside knowing
these pricks are taking the UK to the cleaners
far more heavily than they did us californians.


--------------------
All I know is The Growery is a place where losers who get banned here go.


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InvisibleXlea321
Stranger
Registered: 02/26/01
Posts: 9,134
Re: Ah, the glories of deregulation [Re: afoaf]
    #2756457 - 06/02/04 12:48 PM (12 years, 10 months ago)

"Nationalism is an infantile disease" - Albert Einstein


--------------------
Don't worry, B. Caapi


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InvisibleEvolving
Resident Cynic

Registered: 10/01/02
Posts: 5,385
Loc: Apt #6, The Village
Re: Ah, the glories of deregulation [Re: EchoVortex]
    #2756491 - 06/02/04 01:04 PM (12 years, 10 months ago)

This is not a problem caused by deregulation but by unscrupulous people taking adavantage of a badly set up system. Actually, 'deregulation' is a misnomer for what was done to the electrical energy market in California, in fact the government never deregulated, they only changed regulations and made things worse. Try getting a power plant built in the state and you will realize that it is still HIGHLY REGULATED. Previously (before the lie called 'deregulation') electricity was considered a 'natural monopoly' and government granted exclusive rights to sell it in geographic areas. The state partially deregulated the retail market allowing companies to compete. This allowed prices to be driven down temporarily, but rate increases were still subject to regulation by the Public Utilities Commission.

The regulations limited long term contracts for the wholesale purchase of power. In a deregulated market (NOT the case in California), a retail seller of electricity, knowing the possibility of fluctuations in prices would be allowed to make long term contracts to lock in rates. These rates might be higher than the current spot price, but are a hedge against future price spikes. Reflecting typical government myopia the idea of paying a slightly higher price, even though it guaranteed a stable price, was deemed to be politically negative (with the rationalization that it was bad for the consumer/voter). Yes, Enron was piloted by assholes but they are assholes who took advantage of the situation CREATED by the government. It can reasonably be argued that costs could have been kept much lower and opportunites for gouging the public kept down if rates had been allowed to be locked in with long term contracts.

Don't be fooled by the way words are constantly redefined and misused by the political class. In California, electricity was never deregulated, no matter what the politicians and the economically illiterate media may say. In some areas restrictions were eased, while in other areas restrictions remained or increased. A cynic might say, that those who designed the so-called 'deregulation' were well aware of it's shortcomings but set it up as a means of discrediting free-market reforms. In the very least it illustrates the inherent shortcomings of political compromise and the short sightedness of the political class.

This does NOT excuse the actions of individuals at Enron, but we should realize that corporations are a legal fiction created by the state to shield individuals from personal responsibility. The government has created a situation ripe for exploitation by those with no scruples, sheilding them from responsibility and providing opportunities of a scale that would not exist in a truly free market.


--------------------
To call humans 'rational beings' does injustice to the term, 'rational.'  Humans are capable of rational thought, but it is not their essence.  Humans are animals, beasts with complex brains.  Humans, more often than not, utilize their cerebrum to rationalize what their primal instincts, their preconceived notions, and their emotional desires have presented as goals - humans are rationalizing beings.


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Invisibleafoaf
CEO DBK?
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Registered: 11/08/02
Posts: 32,665
Loc: Ripple's Heart
Re: Ah, the glories of deregulation [Re: Xlea321]
    #2756762 - 06/02/04 02:48 PM (12 years, 10 months ago)

"Two things are infinite: the universe and british stupidity;
and I'm not sure about the the universe." - Albert Einstein


--------------------
All I know is The Growery is a place where losers who get banned here go.


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OfflineTao
Village Genius

Registered: 09/19/03
Posts: 7,935
Loc: San Diego
Last seen: 1 year, 10 months
Re: Ah, the glories of deregulation [Re: afoaf]
    #2756773 - 06/02/04 02:56 PM (12 years, 10 months ago)

"70% of quotations are made up on the spot." -Albert Einstein


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InvisibleEvolving
Resident Cynic

Registered: 10/01/02
Posts: 5,385
Loc: Apt #6, The Village
Re: Ah, the glories of deregulation [Re: Tao]
    #2757029 - 06/02/04 04:05 PM (12 years, 10 months ago)

"I am Sam, Sam I am. I do not like green eggs and ham." - Dr. Seuss


--------------------
To call humans 'rational beings' does injustice to the term, 'rational.'  Humans are capable of rational thought, but it is not their essence.  Humans are animals, beasts with complex brains.  Humans, more often than not, utilize their cerebrum to rationalize what their primal instincts, their preconceived notions, and their emotional desires have presented as goals - humans are rationalizing beings.


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Invisiblesilversoul7
Chill the FuckOut!
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Registered: 10/10/02
Posts: 27,301
Loc: mndfreeze's puppet army
Re: Ah, the glories of deregulation [Re: Evolving]
    #2757064 - 06/02/04 04:12 PM (12 years, 10 months ago)

Quote:

Evolving said:
"I am Sam, Sam I am.  I do not like green eggs and ham." - Dr. Seuss



:shocked: That bastard!


--------------------


"It is dangerous to be right when the government is wrong."--Voltaire


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Invisibleluvdemshrooms
Two inch dick..but it spins!?


Registered: 11/29/01
Posts: 34,186
Loc: Lost In Space
Re: Ah, the glories of deregulation [Re: afoaf]
    #2757179 - 06/02/04 04:39 PM (12 years, 10 months ago)

Quote:

afoaf said:
"Two things are infinite: the universe and british stupidity;
and I'm not sure about the the universe." - Albert Einstein


:rotfl:

Too be fair.... no ALL the British are stupid.


--------------------
You cannot legislate the poor into prosperity by legislating the wealthy out of prosperity. What one person receives without working for another person must work for without receiving. The government cannot give to anybody anything that the government does not first take from somebody else. When half of the people get the idea that they do not have to work because the other half is going to take care of them and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for that my dear friend is the beginning of the end of any nation. You cannot multiply wealth by dividing it. ~ Adrian Rogers


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Invisibleafoaf
CEO DBK?
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Registered: 11/08/02
Posts: 32,665
Loc: Ripple's Heart
Re: Ah, the glories of deregulation [Re: Tao]
    #2757211 - 06/02/04 04:45 PM (12 years, 10 months ago)

:smirkysmirksmirk:


--------------------
All I know is The Growery is a place where losers who get banned here go.


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OfflineEchoVortex
(hard) member
Registered: 02/06/02
Posts: 859
Last seen: 8 years, 7 months
Re: Ah, the glories of deregulation [Re: Evolving]
    #2759403 - 06/03/04 03:10 AM (12 years, 10 months ago)

You won't get any argument from me that California deregulated in a manner that was incompetent, to say the least, but at the same time I'm still not convinced that a total absence of regulation would have prevented rampant price gouging and all the rest.

The regulations limited long term contracts for the wholesale purchase of power. In a deregulated market (NOT the case in California), a retail seller of electricity, knowing the possibility of fluctuations in prices would be allowed to make long term contracts to lock in rates.

They would be allowed to yes, but that doesn't mean that wholesalers would agree to making those long-term contracts. They certainly wouldn't HAVE to agree to do so, and probably wouldn't do so if they believe they could make greater profits otherwise.

Free markets are ideally regulated by competition, but competition, in order to be effective, has to be flexible and dynamic: new competitors have to be able to enter the market easily, competitors who can't cut it have to be able to be pushed out easily, and buyers have to be free to change from one seller to another at the drop of a hat. None of these conditions prevail in the electric power industry, simply by nature of the industry itself, which is extremely infrastructure-intensive.

This does NOT excuse the actions of individuals at Enron, but we should realize that corporations are a legal fiction created by the state to shield individuals from personal responsibility. The government has created a situation ripe for exploitation by those with no scruples, sheilding them from responsibility and providing opportunities of a scale that would not exist in a truly free market.

If by a "truly free market" you mean one in which the laws of incorporation have been rewritten so that corporations are as defanged and declawed as the government is, I'm inclined to agree. But I'm not sure it is wise to begin deregulating as if we were already in a truly free market when we clearly are not.


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InvisibleEvolving
Resident Cynic

Registered: 10/01/02
Posts: 5,385
Loc: Apt #6, The Village
Re: Ah, the glories of deregulation [Re: EchoVortex]
    #2760426 - 06/03/04 12:53 PM (12 years, 10 months ago)

Quote:

EchoVortex said:
You won't get any argument from me that California deregulated in a manner that was incompetent, to say the least, but at the same time I'm still not convinced that a total absence of regulation would have prevented rampant price gouging and all the rest.



If there was real deregulation, more power plants would be allowed to be built, more sources of electricity would become available and more competition would make it harder to charge exorbitant prices.

Quote:

They would be allowed to yes, but that doesn't mean that wholesalers would agree to making those long-term contracts. They certainly wouldn't HAVE to agree to do so, and probably wouldn't do so if they believe they could make greater profits otherwise.



True, but it is certainly a wise business practice to try to plan as far into the future as possible and ensure your revenue streams and costs can be managed. It makes sense that wholesalers would want to keep customers and not want them turning to someone else when and if prices drop.

Quote:

None of these conditions prevail in the electric power industry, simply by nature of the industry itself, which is extremely infrastructure-intensive.



As a historical note, had electricity not been considered a 'natural monopoly,' the infrastructure may have developed along the lines of allowing more flexibilty and dynamism. Because of the the way it was developed, large centralized power creation and distribution networks were given an even greater advantage. We are more prone to major disruptions such as multi-state blackouts because of this. If things would have developed naturally, there may have been greater incentives for the development of spot generation such as solar and wind. Of course, we can never be sure of what may have happened had circumstances been different.

Quote:

If by a "truly free market" you mean one in which the laws of incorporation have been rewritten so that corporations are as defanged and declawed as the government is...



Defanged and declawed as government?!? Hardly an accurate way of describing the powers of government, the state permeates every aspect of our lives and has power ripe for corruption and influence from large vested interests and ambitious, unscrupulous people. Maybe we need a constitutional amendment establishing the seperation of business and state.

Quote:

But I'm not sure it is wise to begin deregulating as if we were already in a truly free market when we clearly are not.



I agree. It is important to establish proper order in the steps of deregulation or privatization, but politics doesn't usually work that way... it's whose palms get greased, whose backs get scratched and how things will work out in the next election cycle, not what is right, wise or best in the long run.


--------------------
To call humans 'rational beings' does injustice to the term, 'rational.'  Humans are capable of rational thought, but it is not their essence.  Humans are animals, beasts with complex brains.  Humans, more often than not, utilize their cerebrum to rationalize what their primal instincts, their preconceived notions, and their emotional desires have presented as goals - humans are rationalizing beings.


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OfflineEchoVortex
(hard) member
Registered: 02/06/02
Posts: 859
Last seen: 8 years, 7 months
Re: Ah, the glories of deregulation [Re: Evolving]
    #2760576 - 06/03/04 01:40 PM (12 years, 10 months ago)

Defanged and declawed as government?!?

Sorry, didn't phrase that properly. I should have said: "As defanged and declawed as government would have to be for markets to be truly free."

I didn't mean to say that government is "defanged and declawed" as things stand, which would be a statement that I don't think anybody in his right mind could possibly agree with.

My point was simply that it may not be a good idea to phase out government's regulatory role over corporations BEFORE doing away with the legal fiction that is incorporation.

I agree. It is important to establish proper order in the steps of deregulation or privatization, but politics doesn't usually work that way... it's whose palms get greased, whose backs get scratched and how things will work out in the next election cycle, not what is right, wise or best in the long run.

No doubt. I would just add, though, that this is the way things work at all levels of human society, in every society. Everything is a matter of personal connections, backroom deals, "skimming a little off the top," reciprocity, carrot-and-stick, etc. Unfortunately honesty, rationality, and transparency are ideals that human beings aspire to but only rarely achieve. As much as I sympathize with the extent to which you despise the political class, I think they are different from the common run only in degree, not in kind.


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