You might wonder at the title, though. What could a President possibly have to do with the actions of the energy industry? I’m glad you asked.
Because when this crisis was first starting up, people were already quite suspicious that what was going on was exactly what we now know to be the case: a coordinated effort by several companies to create and exacerbate energy shortages in California in order to raise profits sky high. Given that this now seems to be the case, the obvious remedy: temporary wholesale price caps, would have quickly solved the problem. Make the schemes pointless (since the point was to drive up wholesale prices), and they would quickly go away, plants would mysteriously come back online, and that would be that.
Unfortunately, the President at the height of the crisis was one George Bush. A man who, apparently, had only made it through the first few pages of economics 101. While experts begged for price caps, the most engagement the administration had was to send to Cheney meet with a few California officials during which he didn’t listen, stared at his watch while they were talking, briefly lectured them on the value of free markets (which was completely irrelevant since the whole contention was that they were not currently free) and left. Bush made a few brief statements about price caps making things worse without any hint that he understood the fears that the power shortage might have been artificial and temporary price caps could easily be gotten rid of if they didn’t have the desired currative effect.
In short, without even considering more seedy motives, the administration attitude was “let them eat cake”: a blow-off in the worst way. Of course, considering the seedy motives isn’t too hard, since the people that benefitted the most from the situation, whether they were directly involved in illegal activity or not, were the people given special access to the administration’s energy policies, inner circle of friends and contributors, and so on. Even if there was no conscious doing of favors, its kind of hard to see how an administration so heavily in bed and in family ties to the companies making moola could consider the crisis objectively.
And the Enron people apparently knew this quite well:
You’re right, Reeder: Much more eloquent.
At any rate, I was on the opposite coast when this was happening, but I recall seeing it all in the news. Was it really obvious to those who understand the business end of energy creation and sales what was happening at the time, or is it more of a hindsight forehead slap - sort of an “That was so obvious!” kinda deal?
If what all Apos said was accurate (and I have no reason to believe it is not), then are we looking at yet another Bush scandal? And in what way? By sheer incompetance in properly handling the situation or is it more likely they (Bush/Cheney) were actively involved in inactivity?
You can read several collumns in the NYT speculating on just this, including the frothing at the mouth Paul Krugman who wrote several collumns alleging exactly this. It was a well known fact that a suspiciously large number of plants went or stayed offline right at crucial moments, ostensibly for repairs and the like. California officials thought it was a strong possibility, which is why they were pushing for price caps. Some Californians have described the market rigging as being “the worst kept secret since who killed Tupac.”
Nitpick: I don’t think that markets can be considered “free” when there is active collusion forcing the prices in a given direction. In other words, if the game wasn’t rigged then the law of supply and demand should have corrected the situation.
There were all kinds of accusations from various anonymous sources “within the business” which were reported just about daily. The frustration reached a point where there had to be an investigation. There were too many inaccuracies; what was being reported vs. what we heard coming from the power industry.
kaylasdad99, that pap is NOT what they were talking about – it’s been whitewashed, bleached, and sterilized with gamma rays. I think the following link leads to a version which is sufficiently censored:
Being a former sailor myself (and with a passing familiarity with intoxication), I actually knew that. I just thought it was a bit funny that they attributed the potty mouth syndrome to a sailor whose phraseology is (as demonstrated) above reproach.
I don’t understand why price caps were the solution. It sucked when Nixon did it, and it would still suck. Why not just put the fraudulent dealers in jail and force the companies to trade peacefully and honestly? I wish we could bring back America’s greatest president and make him dictator for life, but oh well.
My point was that had the markets actually been free then it might have been a valid argument. You just said, as far as I could tell, that his point was irrelevant. There is a subtle distinction. Maybe too subtle. I wasn’t trying to be disingenuous and I apologise if it came off that way.
Because the federal government only jails people who are convicted of White-collar crime if they’re dangerous, like, umm…Martha Stewart. And in this political climate with a big energy president, the chances of a whole industry shakedown are just not likely. Enron, yes, the entire industry? No. :rolleyes:
It was obvious then, and it’s obvious now that Cheney fucked California in the ass. But we got the same old tortured reasoning as to why (a) the Bush administration wasn’t to blame, and (b) everyone’s favorite whipping-boy, Bill Clinton, was equally to blame.:rolleyes:
This isn’t even remotely the same thing as what Nixon did. Nixon did it to try and play god with the economy. This would be a temporary move to check exploitation of the market.
