- I smell an attempted "cover-up"
afoot, now spilling over into some features of the current Enron hearings
by Congressional committees. I am reminded of a case I studied in some
detail about 60 years ago, the case of the famous privateer, Captain Kidd.
-
- Captain Kidd, like Enron, was, in his
time, a chartered captain of legalized rapine and theft; like Enron, a
"privateer." His charter for his voyages was issued on behalf
of England's monarchy, but deployed from the English colonies in North
America. According to the records compiled for his subsequent trial and
execution, there came a time when a mutinous mood spread among the lustily
larcenous members of Kidd's crew. The apparent cause of this was the prolonged
interval at sea without taking a legal target of the type for which that
privateering venture had been licensed. Kidd himself was reported to have
been threatened with death should he fail to take a rich prize.
-
- According to the judgment of the time,
under these mutinous pressures from the crew, a fresh, but unlawful prize
was taken--which is to say, as in the Enron case, outside of the bounds
of the thievery for which the privateering expedition had been explicitly
licensed. How much was taken in this act of piracy is unknown to the present
day; Kidd's alleged treasure was, apparently, never found. Those in America
who had backed Kidd's venture, were displeased by their failure to obtain
a profit. They dumped their protege, Kidd, who was captured and taken to
London, and executed.
-
- More than a half-century ago, the excellent
rare books section of the Boston Public Library provided me access to the
memorable documents on the matter, including the death sentence which ostensibly
should have concluded the case. Unfortunately, over the subsequent centuries,
the crucial implications of the case were often overlooked, in the zeal
of some to discover where Kidd's rumored treasure might have been buried.
Decades have passed since I studied those records, and the morals of our
nation have changed, for the worse. There is a lesson to be learned about
the way in which those morals have changed.
-
- The crime of which Kidd was charged,
was, like the dubious doings of Enron, not so much of a personal, as of
a more serious, systemic nature. Like the case of Kidd, the systemic character
of the crime of Enron, the system of privateering itself, was overlooked
by those who preferred to store up copious Congressional tears for the
suffering of the investors.
-
- In the comparable, Enron case, today,
what of the suffering of those who, unlike the backers and crew of Kidd's
voyage, were neither employees nor backers of Enron's privateering venture?
What of those who did not share the fruits of Enron, but who--as among
the government and people of the state of California--had perhaps lost
much of their pensions and of their health-care, because of the systemic
effects of the same kinds of policies of deregulation of both finance and
energy supplies which that scandal-ridden Enron case merely typifies today?
-
- - The Furies Are Circling - Whatever
remains to be discovered and decided about the details of the Enron case,
certain conclusions are already shown beyond reasonable doubt. Dickens'
"Artful Dodger" has been taken captive, but the "Old Fagin"
of deregulation, who fathered the crime-wave, plods on still. Does one,
therefore, hear, perhaps, the rustle of the Furies in the air?
-
- The crucial feature of the financial
scams associated with Enron's doom, is the role of financial derivatives.
The current phase of utter collapse of Enron, was brought on because certain
sections of the international market in financial derivatives, have reached
the threshold of a chain-reaction collapse in that entire section of the
market in international financial speculation.
-
- The conditions which have led to the
present brink of such a generalized chain-reaction collapse, are those
most concisely stated in the second version of my now internationally-renowned
"Triple Curve." During a period no later than mid-2000, the amount
of new monetary pumping needed to maintain approximately current levels
of crucial financial markets, was greater than the amount of financial
paper values sustained in this way. The international financial markets
had entered into a potentially hyper-inflationary spiral, of the type which
gripped 1923 Weimar Germany. Continued monetary pumping of that type, in
a deregulated market, would mean blowing out the system. The result was
a crunch developing in the most bloated, most wildly speculative section
of the world's financial bubbles today, the financial derivatives portion.
The credit derivatives specialty is presently among the most vulnerable.
-
- The proposed, just-look-at-Enron-only
investigations policy, put forth by some members of the Congress, is about
as relevant, under the present circumstances, as trying to stop a forest
fire with a watering can. Since 1995-1996, in particular, the majority
of the elements of the U.S. political system, including, of course, that
billionaire-controlled "Big Brother" of the mass entertainment
multi-media, has been pumping out fairy-stories: such as promises of the
psychotic glories of the "Revolution in Military Affairs (RMA)";
the now busted "New Economy" bubble of 1995-2000; the myth of
the "Asia only" crisis of 1997; and the myth of "it was
only one Capistrano swallow" hype over the 1998 collapse of the Long
Term Capital Management bubble. The latest fable of that genre is now,
"Let's hope Enron was an isolated case!"
-
- Stop trying to Kidd the people! The cause
of the crisis was no Kidd; it was the system of privateering, or, what
is called today "deregulation." You, including you in the Congress
who have ritually pushed deregulation of about everything, have, in effect,
deregulated crime itself. You have crime, such as the Enron case, before
you today, because you, in effect, voted for it--not because you really
knew what you were doing, but simply, as usual, "to go along, to get
along."
-
- Now, hear the rustle of the Furies. Enron
is not an isolated case; it is just the first big fatality in an onrushing
epidemic. It is time for a change, a very big change. Congressman, it may
mean time for a big change in you, or, in the alternative, the elected
occupant of your present seat. ___
-
- The U.S. Senate Committee on Energy and
Natural Resources accepted written testimony prepared by EIR's banking
correspondent John Hoefle at its Feb. 6 hearings. The testimony is entitled,
"Enron, the Convergence of Energy and Financial Deregulation, and
the end of the Off-Balance- Sheet Era." It gave the distinguished
Senators a step-by- step demonstration of LaRouche introduces above. Among
the items of interest in it is that, were JPMorgan Chase to lose a mere
0.2% of its derivatives portfolio, its entire capital would be wiped out.
Your bank is no safer than Enron. For a free copy of this testimony, which
will be in the Feb. 15 issue of EIR, call 1-888-347-3258 and say that you
"saw it on Rense.com."
-
- ___
-
- Note - The following article appeared
one year ago....
-
- LaRouche - Only Re-Regulation Will Stop
Energy Rip-Off
-
- By Marcia Merry Baker Executive Intelligence
Review 2-16-1
-
- (EIRNS) - As of mid-February, with weeks
of winter still left to go, the impact of energy hyperinflation is worsening
in California, and throughout the United States, Canada, and Mexico. In
California--with 33 million residents and a $1.1-trillion state economy--Feb.
13 was the 29th straight day of a "Stage Three" power alert for
rolling blackouts. However, the issue is not "merely" a California
crisis, nor even an energy crisis as such. It is a POLICY CRISIS: THE RIP-OFF
ENERGY BILLS CANNOT BE PAID.
-
- What is underway is a process of HYPERINFLATION,
emanating from a financial system which is desperately trying to keep itself
afloat through issuing money for its debts, and extracting loot from an
income stream. Energy prices, from electricity to natural gas, are doubling,
tripling, and more as a result of pure speculation and greed. This very
hyperinflation will sooner or later blow out the financial system--but,
as Fed Chairman Alan Greenspan's testimony to Congress Feb. 13 demonstrated
once again, the financial authorities are insanely committed to accelerating
this process, down to the last bones of the very last person. What's at
stake with energy is the global economic breakdown crisis, and the shift
to re-regulation, is the crux of solving both.
-
- - Physical Collapse -
-
- As a result, an economic shutdown is
now underway (factories, farming, etc.), and vital services are threatened,
from sewage treatment, to schools and hospitals. Each day that those in
positions of responsibility try to "make deregulation work" better,
or turn to "Pennsylvania as a model" (a popular delusion), or
some other lunacy, makes things worse. Re-regulation and reconstruction
of infrastructure, as in the traditional American System approach of the
1935 Public Utilities Holding Company Act, and the 1935 Power Act, are
what's required to do the job.
-
- Lyndon LaRouche, who forewarned of today's
breakdown crisis, spells out what to do in a Feb. 4 policy document, released
this week as a 200,000-copy mass-circulation pamphlet, by his LaRouche
in 2004 Presidential campaign committee. (For one or many free copies of
this 32-page pamphlet, call 1-888-EIR-347-3258 and say you "saw it
on Rense.com."
-
- Who would oppose such a reasonable approach?
The whole alignment of bandit energy cartel companies making mega-profits
off deregulation, that's who--Enron, Dynegy, Duke Power, British Petroleum/Amoco,
Reliant, El Paso, and others. British money is big in this crowd (e.g.,
Powergen, the U.K. energy firm, bought Louisville Gas & Electric of
Kentucky, last December).
-
- These companies, part of a political
alignment best called, "Southern Strategy, Inc.," have multiple
interconnections with the Bush administration and throughout Congress.
Consultants to Texas-based Enron have included Lawrence Lindsey, Bush's
economic adviser, and Zoellick, his Trade Secretary. As the Feb. 12 cover
story of BusinessWeek is titled, "Power Play; Enron, the nation's
largest energy merchant, won't let California stand in its way." Alaska
Republican Senator Murkowski is backing a bill to give huge tax breaks
to this crowd, in the name of energy "security."
-
- - California Crisis Won't Go Away -
-
- Two legal decisions have delayed the
worst of the repercussions of California. First, on Feb. 7, a Federal judge
refused to permit the leading energy wholesalers to cut off power to California
utilities, on the basis that the shutdown of power would do "obvious
irreparable harm to the public." Some had estimated that as many as
4 million people might have been without electricity, if the judge had
let lapse the Federal order for wholesalers to sell to the bankrupt utilities,
as the Bush administration had decided it should. There will be a further
hearing Feb. 16.
-
- Second, on Feb. 13, Judge Ronald Lew
denied Southern California Edison an immediate rate increase, a ruling
which will hold until a March 5 status conference ordered by the judge.
-
- In the meantime, Gov. Gray Davis and
the Sacramento legislators are pouring out hundreds of millions of dollars,
and trying to interpose the state--at the cost of multi-billions of taxpayer
dollars--in order to placate the shark "merchant" generators,
gas firms, and wholesale electricity speculators. Even if all parties agree,
given the hyperinflationary process, and lack of physical infrastructure,
the best-laid plans will fail.
-
- Davis has said he has longish-term contracts
for the state to buy power from four merchant companies, with hopes for
more contracts. The idea is for the state to borrow some $10 billion by
early summer, to pay for state purchases of power, which will be re-sold
through the (bankrupt) distributor utilities, Pacific Gas & Electric
and Southern California Edison.
-
- The latter, now over $2 billion in arrears
on some $12 billion in debt, continue operating on contingency of the political
process. Davis wants the utilities' parent companies (which have made big
profits off energy futures, and off tax overpayments from the utility divisions,
etc.) to kick in. He also plans to infuse state money into the utilities,
in exchange for which the state would get a financial stake in the transmission
systems, perhaps hydropower facilities.
-
- In effect, the state's shoring up of
the utilities is an intervention to "save the banks" that are
exposed in the utility debts. Those with holdings in Pacific Gas &
Electric and Southern California Edison range from Bank of America and
Wells Fargo--also part of the financially incendiary world of derivatives--down
to small pensioners and localities. The two big California utilities are
part of some $400 billion in utility debt nationwide, which is rapidly
going bad.
-
- Meantime, the high gas costs, and gas
and electric unreliability, are threatening all economic activity in California--like
food production. According to the California Tomato Growers, 90% of all
U.S. processed tomato products come from the state. Internationally, nearly
half of the world's total tonnage of processed tomatoes comes from California.
-
-
- - National Gas Crisis -
-
- Besides the deregulated electric market
in California, where electricity went from $30 per megawatt hour, spiking
up to over $3,000 in recent months, nationwide, the Federally deregulated
gas markets are going wild. Gas went from under $2.75 per 1,000 cubic feet
in 1999, to over $10 in fall 2,000, and is still over $6.00--much more
than double. This adds up to direct increases in gas bills, and indirect
price inflation for gas-generated electricity.
-
- The first week of February, demonstrations
were staged outside gas companies in Georgia, Pennsylvania, and elsewhere.
In Philadelphia, protesters shut down the payments office of the municipally
owned Philadelphia Gas Works. In Atlanta, angry customers protested in
front of the gas company.
-
- http://www.rense.com/general8/energ.htm
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