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.
Tuesday, March 12, 2002

--- CFTC Bloodhounds on Enron Trail ---

In a significant development, the Commodity Futures Trading Commission "inquiry" of last fall has progressed to "formal investigation" of Enron trading practices. (multiple sources) CFTC will tag-team with DOJ, SEC, FERC, and probably other fed/state/local agencies, parties and experts as the probe proceeds. CFTC is probably the agency with deepest experience in pertinent territory, and is the least-swamped investigator going in.

Assume they start with Enron's NYMEX activity in conventional regulated commodities, but extend the probe into non-regulated over-the-counter activity.

This will challenge CFTC resources -- as millions of documents and thousands of hard drives are implicated -- and jurisdiction, since the key segment (OTC energy trading) was exempted to create the "regulatory black hole" and nontransparent market in which Enron operated as market maker and as the predominant buyer and seller. CFTC still retains fuzzily-defined, poorly-tested authority to peer into the black hole looking at patterns of fraud and manipulation outside.

It's also a challenge as the first major investigation of trading patterns in a private web-deployed trading network.

And it raises a challenge of complexity, since the biggest scheme -- if it occurred -- would have been a multimodal tandem manipulation across three or four "energy pipeline" commodities -- natural gas, gas transmission capacity, electric power, and possible electric transmission capacity --each in multiple markets, and in nonmarket transactions.

Going beyond the available facts, just reading the wind, I think they'll confirm a complex pattern of abuse behind the so-called California Energy Crisis. (I say "so-called" because the crisis was manufactured, and because it extended far beyond the confines of California and the oddities of that state's deregulation model. The average Seattle electric customer is burdened by $2,000 in debt incurred during this "crisis" interval, and stands to lose thousands of dollars more in disadvantageous forward power contracts signed during this period.)

The circumstantial evidence is compelling, but it's possible Enron was not behind this game ... or even that there was no game.
(1) The Game might be the work of primary eneregy and fuel producers and dealers, and Enron might have been nothing but a channel through which their tactics were executed. In this scenario, Enron would have enjoyed windfall profits from high volumes and generous margins in a panicky, illiquid market, and there are indications they gouged both sides of the trades in ways that warrant wire fraud prosecutions ... but they weren't Mr. Big.

(2) There may have been no overt collusive manipulation. In this scenario the requisite harmonious withholdings by independent players were emergent behavior, like that of a flock of birds flying and resting in advantageous concert without explicit leadership. The customer still got screwed, but nobody planned it.
These alternatives seem unlikely considering Enron's dominant role -- 30% to 70% of the action, depending of commodity and region. CFTC will investigate, or will advance the ball to the point where another agency can pick it up, or will get somebody to crack and spill the beans. If this reveals explicit market-rigging, the effects could include extensive criminal penalties, and several tens of billions of dollars in civil liabilities, to be satisfied ... where?