????

I don’t get it.

Please don’t change sides Dave.

Dave Dayen would never do that.

Ah, those old “after trading prices” scheme. Yeah, just because the market operates here from 9:00 to 4:00, the players work it 24/7. I guess the electric market players took their lessons from the oil market players.

Scarecrow, thanks for this post. Illuminating for many that have had no idea how prices are commoditized at the whims of greed.

Sure, FERC is shocked, shocked …. Of course the pricing of electricity as a commodity is being manipulated. It would be irresponsible not to. That limited universe of traders operates almost entirely in secret, within a legal framework where regulatory capture is a fact of life. The traders can significantly alter their profitability by colluding, while taking almost no downside risk to themselves or their firms. Who thought we were putting angels in charge? The fact that our nation continues to operate on the theory that “free markets” in this vital area of our economy will operate to our collective advantage is a tribute to ideology, and our corrupt political systems.

Well, electricity markets have been functioning since about 1996 or so. Most of the time you never hear about them.

What this series of investigations, involving several banks trying different schemes in different regions, is telling us, is that the banks trading mentality was one of essentially screwing the market and hurting consumers. So the banks are not just gouging you on checking accounts, and fees for this and that, and mortgage fraud, and price fixing LIBOR, etc, etc, they were also out there trying to steal money from you through electricity prices. They’re basically a criminal enterprise, looting the economy in every way they can think of.

TWOOPH!

Criminal Enterprise for sure.

Through the device of these pyramided holding companies, small groups of men with a disproportionately small investment were able to dominate and to manage solely in their own interest tremendous capital investments of other people’s money.

–F.D.R.

“On March 12, 1935, President Roosevelt introduced to Congress the Public Utility Holding Company Act (PUHCA), an act with two titles, and of which Title|I had a bombshell feature: It stated that many utility holding companies had no useful economic function, but were largely for pyramiding (speculation). It stated that the utility companies should voluntarily get rid of those holding companies which had no useful function. But, should that not be carried through, within five years, on Jan. 1, 1940, the Securities and Exchange Commission (SEC) would be empowered to compel the dissolution of every holding company which did not establish an economic reason for its existence. Most holding companies would be dismantled. This was called the ‘death sentence clause.’

The death sentence caught everyone’s attention….The Wall Street financiers, led by Morgan Bank, fumed with rage. John W. Davis, the general counsel of Morgan Bank, stated before the American Bar Association that the PUHCA was the ‘gravest threat to the liberties of the American citizen that has emanated from the halls of Congress in my time.’ In September 1935, Davis was the lawyer for the Edison Electric Institute, the lobbying arm for the electric utility industry, when it joined with one of its members, the American States Public Service Co., in the first suit against the PUHCA.”

http://american_almanac.tripod.com/reregula.htm

We’ve been here before.

Thanks for the insight, Scarecrow. It never ceases to amaze me how many truly expert people are at this site. It is probably the single most educational site on the intertoobz. I am not surprised that people from here are not asked to be guests on tv pundit shows; if the person, guest or regular, who was on was lying or short of knowledge, the Firebagger would show how the other person was not giving a good answer. Every day that I come here, I learn a new, important fact or see an important analysis. Thanks, FDL.

Great piece of history. If applied today, I suspect half or more of Wall Street would be at risk, and for good reason. Thanks for the links.

sorry thought this was dave dayen

Scarecrow,
I thank you very much for helping me understand a little bit better what new opportunities have been created by the mega banks to exploit us in a new and better way.
Hopefully the FERC is not powerless to do something about it or will be de-clawed by the monied interests trying to stop any kind of regulatory powers.
Just as an aside, living here in N. Illinois, we have had our air conditioner running 24-7 for a couple of weeks now and it looks like it will be awhile before we can even shut it off.
Today’s prediction is for 103 degrees, tomorrow 102 and Friday 101 degrees.
This demand offers some real opportunities for the manipulation you describe.
Thank you for the heads up.

When commodity market manipulation is operated from the highest office in the land, just what are you going to do about it. This commodity market manipulation began for the first time under the Bush Administration, and has continued under the Obama Administration. Either he is unaware of what’s going on, or he has given it his tacit approval.

An invisible tax has was added to almost everything you bought after 07. Politicians lie, I might even be suspected of being “untruthful”; but commodity charts don’t lie. They are neither Republican nor Democrat, liberal or conservative; they are a record of what you paid for a commodity, and when you paid that price.

If you go to this website http://wp.me/p2vRlu-4 you will see three unrelated commodities whose prices went higher than they have ever gone in the history of this country. The excess you paid for those commodities enabled some people to be able to tear down multimillion dollar houses because they were blocking the view, while we have the largest percentage of homeless people ever in my lifetime.

I’ve worked with the homeless, and when it comes to sanity; it’s a question of which came first, the chicken or the egg. Many homeless people are mentally disturbed and should be in an institution, but many others have mental problems because they became homeless.

One lady who had a masters degree, became homeless because of illness, and developed mental problems. She had a good job before she became homeless. Fortunately we spotted this, and gave her a legitimate address; because if you apply for a job, address “under the bridge” does not go over very well.

Today, when you compound high unemployment, with “sky high” manipulated prices for everything we need to sustain life; you have a misery index that is off the scale.

The stomach-turning truth is that after all the headlines fade and the ‘investigations’ are complete, not one of these worthless fucks will do 60 seconds in jail. Yet get caught with a bag of weed and you might pull a fiver in the Big House. Land of the Free, Home of the Brave my achin’ ass.

Classic example of confusing Liberty with License.

The Tea Party tactics are the same as these folks writ large in that the base is now more than a few banksters.

I wonder if they’ll give Jamie Dimon a backrub this time while they blow him. Poor guy is under a lot of stress pillaging the working class and paying government to bow at his feet.

It’s a hard job, but someone has to do it . . .

The stomach-turning truth is that after all the headlines fade and the ‘investigations’ are complete, not one of these worthless fucks will do 60 seconds in jail.

My sentiments exactly. Most likely result is Jamie D gets another set of cufflinks. Or mebbe Zero gets a set with the JPMC logo.

FERC investigating JP Morgan? Maybe so. But Jamie still has the magic cufflinks.

Jail and doing time have nothing to do with justice. They are about keeping the lower orders in line.

Can you be positive that this didn’t start with the Financial Deregulator-in-Chief Bill Clinton? After all, his administration gave us the Commodities Futures Modernization Act, as well as the Financial Services Modernization Act, that laid the foundation for the current economic disaster. His bestest buddy Sandy Weill’s organization CitiGroup benefited from both laws.

“I thought Jeremy’s case must have broken some kind of sentencing record for a non-violent offender, until I learned of a man called Thomas Dye who received a sentence of 167 years under the three strikes law for a serious of petty thefts, bouncing checks and stealing a truck. I can’t spare the words here to get into the rationale behind Dye’s 167-year sentence, but because he tried to appeal, all the details of the verdict can be seen in his online court records.”

http://www.guardian.co.uk/commentisfree/cifamerica/2012/jan/25/california-three-strikes-law

or

“A West Virginia state investigation found that Massey Energy had been cited with 62,923 violations of the law in the ten years preceding the disaster that killed 29 people last year.”

For the entire history of this country, gasoline never went much over $1.00 a gallon on the commodities market; that translates to less than $2.00 at the pump. After 2006, it went to $3.50 on the commodities market which translates to over $4.00 at the pump.

Corn went to $5.00 a bushel in a drought in 96. Corn went to $7.50 in 08 under Bush, and $8.00 a bushel in 2011 under Obama. This was when farmers had so much corn that they had a problem storing it. One farmer had so much corn in his bin that it burst; destroyed his house and almost took his life. Now that we are going into a period of drought, just how high will the price of corn go.

We have the highest food and gas prices in the history of this country, and some of the highest unemployment rates at the same time. The real unemployment rate is probably twice higher than the official rate.

Natural gas went to the highest price ever under the Bush Administration, and so did rough rice, cotton, orange juice, heating oil and a few other commodities.

These commodity charts go back 25 years, and even if you went back 100 years, you wouldn’t find higher prices. Commodity charts tell you how much you paid for a commodity, and when you paid it.

Go to this website http://wp.me/p2vRlu-4

Cost-plus is at work. There’s a built in profit instead of performance based pricing system. Within this 5% real-time pricing is the narrow sliver of opportunity to game the profits. That’s likely to be overlooked – kind of like the scam of shaving a penny off of every on-line bank transaction. It almost never gets detected because it’s a tiny sliver of profit on individuals, but cumulatively is significant.

I’d be very interested in the opinion of Michael Florio, formerly of TURN, and lucky for consumers, now a Board Member of the Cal PUC.

FERC investigating JP Morgan? Maybe so. But Jamie still has the magic cufflinks

My guess that even ‘magic cufflinks’ have their limits. Shouldn’t bankers be doing banking to retain their official Bank status? Isn’t that the deal that company makes with the government to receive the benefits and protections of gov’t?

With respect to homeless/mental illness, the mental illness came first. I had a paranoid/schizophrenic uncle who was committed in California in the 50s/60s, who was turned out into the street by Reagan when he closed the state mental hospitals. Sick first, homeless thereafter. I realize it happens differently for different people, but in this case I’m sure. Before that SF was not full of panhandlers — that was a pure Reagan creation.

Yeah, Mike is a good guy. On the last night of hearings in 1996, early morning actually, the Chair of the joint legislative committee asked for a show of hands of the parties in the hearing room on whether they were ready to sign off on the legislative deal the utilities and large players had worked out to enable the restructuring and create the Cal ISO. There were only two hands against the deal, mine and Mike’s. I was representing the Energy Commission, he Represented TURN.

Mike and TURN just didn’t want the markets, but they hated the utilities too and didn’t trust the PUC. It was a tough call. My client was willing to try the new structure, but I warned the Committee that the new rules had been badly designed and would allow marketers like Enron to game the system. Nobody cared back then.

I just checked, and Reagan was the president when I was working for a shelter. I really felt sad when we were full and had to leave people out in the cold. I will never forget this young man of about 25 who was sitting on the steps in freezing weather with no socks on, dressed far too light for the weather; just staring off into space, and there was nothing I could do to help him. He should have been in an institution.

When I was working with the homeless most of them had mental problems, but years after I left people started becoming homeless who had no mental problems when they became homeless, but developed them as a result of being homelessness. Now, the problem is so depressing that I no longer keep up with it.

Agreed that all isn’t/wasn’t well at the CPUC, and I’m curious about your thoughts on regulatory capture both state and federal – as FERC didn’t do much until it had to, and then, not so much.
My brief stint at the PUC was a year long legal fellowship in 2000-2001. My task was reviewing the divestitures to determine if grounds for overturn the generation sales. Sadly, Full Faith and Credit made it unpossible. But when power generators sold for 2, or 3 times book value, then it was abundantly clear that the name of the game was profits.
Add the PG&E ring fencing and it just makes clear that the defense of profits is all that matters.

That Steve Peace still shows his face in public, is the height of arogance.