the CAMP ENRON Report

... gateway to the next Progressive Era?

Some say it's nothing but a train wreck ... roll in the big cranes, clear the track, see what the crew's been smoking. If I thought so, I'd not be writing this ... and if they thought so, they'd not be drumming so hard.

For a brief orientation, see this
Welcome to Camp Enron

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Camp Enron Archives
01/01/2002 - 02/01/2002 02/01/2002 - 03/01/2002 03/01/2002 - 04/01/2002 04/01/2002 - 05/01/2002 05/01/2002 - 06/01/2002 06/01/2002 - 07/01/2002 07/01/2002 - 08/01/2002 08/01/2002 - 09/01/2002 06/01/2003 - 07/01/2003

(2) All "major" articles of older material have now been imported, some with updates worth perusing. We'll keep it all on the main page for a while, will add a few loose pieces of history, will trim the main page and index the archives for convenience later.


free agent, loose cannon, pointy stick ... taking an imposing analytic toolkit out of the box, over the wall and into the street ... with callous disregard for accepted wisdom and standard English

reading the tea leaves from original angles, we've led with uncannily prescient takes on the federal surplus, the dotcom crash, the "Energy Crisis", the Afghan campaign, the federal deficit.

More where those came from ... stay tuned.

For brief orientation, see this
Welcome to CP

... gateway to the next Progressive Era?

For a brief orientation, see this
Welcome to Camp Enron

Many thanks to Tony Adragna and Will Vehrs, still shouting 'cross the Potomac at QuasiPundit. Early Camp Enron material can be found in QP's Dispatches department.
Sunday, January 13, 2002

--- Short Takes from Camp Enron ---

[ First "Camp Enron" special, originally on The Fray ]

"So much manure, gotta be a pony in there somewhere." Well, for starters there's a Clydesdale in the, uh, lobby of retiring Sen. Phil Gramm's (R-TX) office. That doesn't mean a whole herd will be corralled and broken, no matter how many hoofprints run from Houston to D.C. and back.

Democrats are salivating at the "payback" opportunities ... beware the immunization effect! Remember how GOP operatives treated the Clintons to so many bootless "AHA!" moments that the first real scandal drew a public "ho-hum, what else is new"? [CONTEXT: the AHA-man himself, former Senate Whitewater Cmte Counsel Michael Chertoff ("What about THAT, Mrs. Clinton, what about THAT?") now heads DOJ's criminal division.]

Democrats be-doubly-ware, all scandals work to the atmospheric benefit of Republicans, by reinforcing John Q's cynical view of politics and government.

Republicans beware, the stench of suspicion lingers after the meat of (alleged) misconduct is off the table. Everybody remembers Whitewater as a "shady land deal", even though there was no wrongdoing done in the deal.

It's not a real Washington scandal till the fat lady denies something that everybody already has on tape. Ooops, I guess we're there. WH still claims no reason to round up a list of Enron/WH contacts. That would be a "fishing expedition". [2002-01-20 UPDATE: GWB's "KennyBoy who?" routine busted wider open, in David Corn's 1994 piece re GWB/Lay/ENE/Argentina in 1988. ]

Let's take a quick cruise through the obvious political fallout, following the money. Later in the cycle, attention may shift to "follow the legislation" -- who introduced which loophole, who bought in, who pushed back -- but for now "E-money" is radioactive, and they spread a lot of it around.

Most E-money went to Texas. Phil Gramm's legacy is gone in a cloud of subpoenas ... will he still wind up running some institution dedicated to proving "the market's always right, and the gubmint's always wrong"? [UPDATE: Chmn declares Gramm NOT categorically disqualified for coveted Texas A&M post. ]

Enron's "home port" Congresspeople, Kent Bentsen and Sheila Jackson Lee (both Democrats) were major recipients. Sheila is a highly regarded up-and-comer, fallout remains to be seen. She and caught-in-a-crossfire FERC chief Pat Wood could even emerge with enhanced stature if they play their roles artfully.

Bentsen is/was a serious contender for the primary nod to run for Phil's old senate seat ... but probably not the most compelling candidate in November's general election. The touch of Enron may knock him out in the primary, helping his party's prospects.

TX governor's race also becomes more competitive, and with multiple angles that could hurt GWB in 2004. [UPDATE: see Camp Enron Report of 2002-01-23, "Messin' with Texas"]

Outside of Texas, Sen. Chuck Schumer (D-NY) got a big bag of E-money. Schumer has been a key advocate of Enron-style deregulation. Is that all?

One man caught more E-money than any other senatorial candidate in any single campaign, in or out of Texas ... John Ashcroft. Why Ashcroft? He was no Senate heavyweight. And why in a competitive race? (As a rule, big corp money is restricted to sure bets, or is balanced across evenly-matched contenders.) What did Enron want? What did they get? And when Ashcroft lost to a dead man, who tabbed him for A.G.? [CONTEXT: ENE rarely backed a loser. In hundreds of state-level races, 98% of their contributions went to winners.]

Robert Rubin will get raked for interceding on behalf of Citigroup, a major Enron creditor. That brings another name into play ... Saudi Prince Alwaleed (from whom Rudy G spurned a $10M WTC donation). Prince A bought heavily into ("bailed out"?) CITI when it was out of favor.

Looks like Rubin's angle was expediting a Dynergy merger, which might have saved most Enron jobs and pensions (though at reduced valuation) ... and a good many Citigroup shekels. Bridge financing, or risk mitigation, or honest brokerage plus creative technical consulting, or just a good word from the right people in the right circles might have salvaged the deal. Of course it's hard to save anything when the books are cooked. [UPDATE: Nope. A lost cause, correctly assessed by Treasury's Peter Fisher (who was instrumental in the LTCM bailout.]

A minor plus for California's Gray Davis, who demonized Enron before it became fashionable. A potential sympathetic plus for several western states now in uphill legal proceedings to recover damages from "California crisis" energy market manipulations (where Enron was a leading "player", in the worst sense of the word). A potential economic minus, since Enron's presumed deep pockets are now empty. [UPDATE: plus - pretext to break long term contracts now under water.]

Carnahan's Gold. The single most golden move by a member of Congress may be Senator Jean Carnahan's decision to return a $1,000 PAC contribution from Enron, way back in June 2001 before the troubles became evident. "After looking at some of the ways at how Enron did business and whatnot, we didn't think it was appropriate to keep the check." Could decide the race ... "Clean Jean" is up for re-election this year, in a nationally targeted race that could decide control of the Senate.

Non-political questions abound. Unlike WTC, Enron collapsed without creating much of a crater in the surrounding economy. Did Enron really exist in the first place? Airlines got same-day service at the bailout window ... why or why not Enron? And how did $600M in restated earnings knock down $60,000M in market capitalization?

Will Arthur Andersen survive? They look to be the most asset-rich litigable target for Enron victims. The debacle does not reflect credit on either the consulting side or the auditing side of the business ... even without that unpleasantness about destruction of records under subpoena. And the main resource -- "Andy's Kids" -- can stroll across the street and become somebody else's troops if their services are more readily marketable under a different nameplate.

Don't stop at Andersen. How much of the media -- trade and popular -- "invested" mindshare in the idea that unbounded value could be generated in glass-and-steel trading hives ... that equity might compound indefinitely without visible means of support? Ditto the financial community, academia, and a generation of "momentum investors", and the marketeerist political community, and what other packs of lemmings. The music stops, and "POP!" go the weasels.

Enron, the tip of many icebergs. Off most observers' radar, the global bandwidth market tumbled ... $1T in fiber build-out will be obsolete before it's ever used, and Enron paid to play. Enron got caught with a hand in California's cookie jar. As Enron's hand-picked man (Pat Wood) became FERC chair, the energy crisis turned to energy glut. In a soft global economy, many commodities worldwide lay in surplus ... and traders just don't thrash markets in a surplus-driven panic the way they did in shortage-driven panics.

Artificial markets for pseudo-commodities can be efficient, minimally intrusive allocation devices for all kinds of assets -- and liabilities (CO2 emissions, fishing quotas, NIMBY mitigations, natural-monopoly franchises). Will we throw the baby out with Enron's bath water?

Ironically, Enron was right on global warming, strongly favoring the Kyoto Accords (where Enron would have cleaned up on GHG quota trading). That's probably why Spence Abraham, and not Ken Lay, is Energy Secretary now. [UPDATE: Enron backpedaled, is now downright anti-Kyoto compared to BP's policy on same.]

Luckily, Lay and his gang of Alice in Wonderland accountants didn't have time to "save" Social Security for us. In a way, they did. Privatization, RIP.

In a sign of the (brave new) times, conservative columnist George Will emphasizes market dependence on regulation and institutional infrastructure, declares "Capitalism's a government program"!!! If only US neocons had made that clear to the Former Soviet Union back when the walls came down. Oh, well.

And remember that phrase ... "a Culture of Minimal Disclosure".