I felt it was high time for me to pay a call to our esteemed U.S. Senators to inquire about the recent financial melt down on Wall St. Since as a taxpayer I will be expected to step up and bail out a bunch of corrupted greed mongers I believe I deserve an explanation from those who got us into this unbelievable mess in the first place.
Dear Senator,
In the past two weeks I feel as if I have been hit by two devastating hurricanes. Many residents in the Houston and Galveston areas are still without power and most continue to struggle with Ike's aftermath. The nation's fourth largest city and its surrounding areas have taken a tremendous beating.
Just when we were beginning to think we could see the light at the end of Ike's tunnel we now find ourselves suddenly blindsided by another hurricane. This one did not sweep in from the Gulf. This unexpected monster came hurdling down from Wall St. and its aftermath could prove far more cataclysmic than Ike.
What is this business about a financial bailout using the taxpayer's money? It seems to me that a group of greedy and corrupted fat cats on Wall St., with the blessings of their supporters and cheerleaders in Congress, raped and pillaged the United States and now taxpayers are being asked to pay for the carnage. And we're supposed to turn over nearly $1 trillion and say "we trust you to clean up after yourselves."
Please.
See what Naomi Klein, author of The Shock Doctrine has to say about the Wall Street debacle.
There is at the heart of our tradition a love for freedom, independence, for the wide open possibilities of the competitive market and all it suggests about rewarding the innovative, the risk takers. All the way back to Ben Franklin and even before, we have firmly believed that open competition brings out the best in us. The sad truth is, this has always been only half true. The crash of several electric companies over the past several weeks is eloquent testimony to this harsh truth - when the regulated capture the governmental regulators, we all lose.
One poster to the Houston Chronicle summed it up pretty good:
garybennett wrote:
In classical economic theory, competition works to keep down prices if and only if an unlimited number of producers can step into the market easily; when the number of companies is small, the cost of entry into the market high (and in this case the supply of a natural resource is limited and unreliable) and the probability of collusion on prices is great, all bets are off. The right wing ideologues who promoted deregulation forgot to mention the caveats, as they always do. The same fuzzy thinking privatization religion has also given us the Katrina aftermath, Blackwater and the health care fiasco.
10/6/2007 12:49:29 PM
The Texas House agreed to allow regulators to reduce prices for some residential electric customers, but the legislation was derailed before lawmakers could vote on whether the state can review the proposed record buyout of TXU Corp.
[snip]
DALLAS - TXU Corp. says it could be forced to shut down some of its power plants if it can't settle charges by state regulators that it manipulated the Texas wholesale electric market.
TXU, the largest power generator in Texas, didn't say how many of its older, natural gas-fired plants it might shutter or turn over to other operators. But it warned the result would be disruption of the state's wholesale electric market.
Since the utility issued the warning, it has begun negotiating a settlement with regulators, a TXU spokeswoman said Thursday.
Last week, the Public Utility Commission proposed a $210 million penalty against TXU over charges that it jacked up electric prices in the summer of 2005 by selling power at inflated prices.
Low-income customers are not benefiting from electric deregulation, according to a consumer advocacy group, the Association of Community Organizations for Reform Now.
The group called on the Legislature to reinstate low-income consumer discounts, permanently ban summer shut-offs for low-income consumers, and ban the use of credit scores to determine whether a customer has to pay a deposit.
"When people say switch and shop around, it's hard for everyone, but it's a lot harder for people with back bills they can't pay and bad credit scores," said Ginny Goldman, an organizer for ACORN in Houston.
The group surveyed 646 consumers who visited its centers in Dallas and Houston.
It found that 63 percent of customers in Houston and 74 percent of customers in Dallas didn't know they could switch electric companies.
Many who switched found prices were still unaffordable and either had a disconnect notice or had been terminated, according to ACORN.
Some aren't able to switch because companies run credit checks and require deposits.
Let's look at this story in a bit more detail.
1.) I think I qualify as a very economically informed person. And the only reason I knew Texas had deregulated utilities was because a door-to-door salesman was in my neighborhood.
2.) The checking of credit scores is similar too what some banks have started doing. Before someone can open a checking account, the bank runs a credit check to see of a person has bounced a check. If the person has, they may not get the bank account. I don't know about you, but I've bounced checks although not in awhile. And I'm not the only one.
3.) While the deregulation is a nice idea, it has done nothing to lower the cost of the raw materials. These have been increasing far faster than inflation for the last 5 years. Until we deal with that issue, we're going to continue to have this problem.
LINK "Given where natural gas prices are, if wholesale power prices remain low, the consumer can expect to see lower prices," Reliant spokeswoman Pat Hammond said.
If electricity rates do drop, it would come just as many of the state's power markets - including most of the Houston area - complete the transition to deregulation.
The last vestige of regulation, the so-called "price-to-beat rate" that companies like Reliant and TXU had to offer to customers in their home regions, will disappear on Jan. 1.
Let's talk deregulation and prices below the fold...
In Texas, and all the other states who have adopted simlar models of utility deregulation, there will be hell to pay. It seems that Repugs understand theoretical markets, but not human nature, and not human greed at all.
