Enron Traders Caught On Tape

This is a Bush hit piece for sure. This has been broadcast before more than a year ago. CBS appears to be drudging this up to paint Bush as some sort of energy manipulator. I would guess they are searching for an election issue that will turn California solidly away from Bush.

It is interesting to know the background context of this energy trading fiasco. For sure there was some abuse as there was a systems platform and information management system that was prone to abuse.

But it is important to understand that the Enron scandal was not a scandal relating to trading or pricing in California. The Enron scandal was primarily an accounting scandal, where for example some backwoods water treatment facility in Brazil would be bought for say $10 million and then Fastow would broker the deal in such a way to load about $200 million of Enron debt onto this off balance sheet facility known as a 'Special Purpose Entity' or SPE. There were about 3000 such SPEs and it was way out of control. It was during the Clinton years where lies and thieving were the norm. Thank God that Enron is gone as it will be split into 3 entities and the rest destroyed.

But the context for the California trading fiasco is better seen in the backdrop of California not paying its bills. Because California had not been proactive in preparing for its energy infrastructure due to environmental holdups and delayed permitting, it became dependent on power generated outside state lines and it still is.

When California began its energy wholesale purchasing it tried to dictate pricing and contracts and it failed miserably as there was no economic reason for energy generators to meet the demand at the price points California demanded. In short California would not award contracts to keep plant employees and facilities ready for peak loads and when they requested such power they balked at the pricing. Even after agreeing to spot price demands, their accounts payable department were told not to pay the bill.

This nonpayment of bills policy was applied to over 60 energy generating companies including some regulated utilities of other states. California went after all of them feigning all along that it was a victim of these 'pirates'. And some in California still maintain that absurd claim.

So we see some Enron employees who were basically 'pissed' (to use the venacular) at California demanding power and not paying its bills or signing contracts for peaking power. This state of being pissed escalated into a pissing contest and hence the game was on.

Now whose at fault?

I would surmise it is both sides but the cause goes back to an attitude problem among the dinosaurs of regulated power who had long enjoyed with their Green Berkelized constipated buddies a de facto dicatorship and monopoly of all things in energy generation.

What we witnessed therefore was the freemarket in a head-on collision with monopolistic power.

"Four years after California's disastrous experiment with energy deregulation..."

As usual, the Leftist morons spin government regulation into deregulation.

It fits the idiot agenda.

Dear article author, allow me to correct one minor point.

You stated "Four years after California's disastrous experiment with energy deregulation"

It should read:

Four years after California's ~~disastrous~~ failed attempt to keep state regulations in place while calling it deregulation, experiment

Excellent analysis. Of course, the Democrats will never see it that way, since as Ann Coulter said: for liberals the past began this morning.

People who do illegal things and then talk about it on recorded lines are exceptionally stupid.

Yep. That's what I've been saying about the neocon free traitors all along.

Thanks for the heads up on the media body count mythmaking. That'll help me the credibility of the next lib that starts blabbering those soundbite tripe.

I do not doubt this kind of talk went on. It is surprising to find some of it recorded. I never liked Enron from the first time I heard of it, too much Teapot Dome.