Quote from Mike805:
He didn't change the subject. ENRON screwed CA pretty bad. All that ENRON fraud and manipulation went out of CA's pocket and into that of TX. Think of all the salaries, the support industries based in TX that directly benefited from ENRON's fraud.... It's a large number that corresponds directly to the time and $$$ amount of CA's initial budget shortfall.
TX basically robbed CA out of billions of $$'s and now the 2 are being compared as if they had the same advantages and disadvantages over the last decade? You're making an irrelevant side argument meant to foster a political ideology which you are totally subscribing to because of your political bias.
It's not liberal versus conservative; in this case its a state that got f--ked and TX was the beneficiary.
That is so false I don't even know where to begin. I don't know if you are a trader, but I'll explain to you what happened. Grey Davis decided as governor to fix the price of energy in CA. In other words, he put in a ceiling for energy in CA. That made CA a net seller of energy at a certain price. The problem however is that when CA ran out of their own energy, they had to go into the open market to buy it. That price was not fixed, it was floating based on supply and demand.
So let's say they were sellers at 50. That means they sold energy at 50 to the people of CA. Most of the time they could produce it for less then that in their state. However, when they couldn't they often had to pay 100, 300 or 800 in the open market. So they are net sellers at 50 and they are getting squeezed when they had to buy it from outside the state.
Now, did Enron understand this? Of course they did. Everyone in the industry knew that CA was this ass backward state that tried to fix energy prices. And everyone gamed the system. When the blackouts occured, the marketpllace squeezed CA. I would do the same thing, so would you. In fact, this happens every single day in the market. Take a look at the chart of SHLD. Small float, heavily shorted. When the stock squeezes, the market goes after the shorts because there are no shares for them to buy to cover their position. And don't tell me you would be a nice guy and offer to sell energy at below market prices. You, like Enron and everyone else would sell at the highest price you possibly could.
It was the dumbest move maybe in the history of CA to fix energy prrices. You can only fix a price if you can fix the entire market. You can't fix the price in one state and then have all the other states floating. It just doesn't work. That Was Grey Davis's fault. Now was Enron also to blame. Sure. They absolutely gamed the system. They knew what the regulatory issues were and they knew CA was vulnerable to price squeezes during blackouts.
CA learned their lesson and I don't think they will ever do that again. And let that be a lesson to all you little socialists out there that think you can fix prices. There will always be a market, black or otherwise. Price controls only lead to shortages. And shortages lead to panics. And panics lead to much much higher prices.
This has nothing to do with CA vs TX though as Enron went bankrupt and cost the state of TX billions. Not to mention when Enron went under they took Dynegy, Calpine and several other firms with them and basically destroyed the entire industry and cost TX massive losses in tax revenues.