MJ

I tend to disagree. Georgians, by in large, hate Djugaishvili/Stalin. There may be a small group of Georgians worshiping him, though, primarily in the city of the birthplace of Stalin. Additionally, I can assure you, there would be a similar social group of Armenians worshiping Stalin, too. As to being puppet, I think the Georgians can claim with the same (and perhaps more) degree of validity that Armenia is Russia's puppet, therefore, the same question from the point of view of American taxpayers may be posed to Armenia.

Kazakh president opposes Turkey's attempts to revive Pan-Turkism Snark 24 May 2001 YEREVAN The Kazakh president is against Turkey's aspirations to revive Pan-Turkism within the framework of the organization of Turkic states. [Nursultan] Nazarbayev said this today when delivering a lecture at Yerevan State University. According to the Kazakh president, the organization of Turkic states is an association of peoples united by a lot in terms of history. "I have never welcomed attempts to turn this organization into a body to resolve political issues," Nazarbayev told a Snark corespondent, commenting on Astana's reserved position, deciding not to subscribe to the anti-Armenian statements made by the Turkish and Azerbaijani sides during the recent summit of Turkic states in Istanbul. Nursultan Nazarbayev touched upon the Artsax topic. He said that he was ready to do everything in his power to help establish peace in the South Caucasus region. "The Nagornyy Artsax conflict is an interethnic issue in which dilettantes should not meddle, although this quite often happens," the president said. He stressed that both the Azerbaijani and Armenian peoples were suffering from the conflict. Astana wants the Nagornyy Artsax problem to be settled peacefully, Nazarbayev said, expressing Kazakhstan's official stance.

I don't think so.

Tehran Times May 23 2001 A New Energy Triangle Emerges: Iran-Armenia-Ukraine Armenia has suffered severe energy shortages since 1991 and has long been looking to Iran to relieve its energy needs. Last year the European Commission decided to back a project for construction of a pipeline from Iran into Armenia. Discussions have now begun with Ukraine concerning the possibility of Iranian natural gas transiting Armenia and Georgia, then traveling either overland through Russia or under the Black Sea into Ukraine and onward to European markets. Turkmenistan's President Niyazov must now face Russia and Iran as potential competitors for the European market. Unless Niyazov decides to build the trans-Caspian gas pipeline, both Russia and Iran will have a stranglehold on Turkmenistan's gas and oil exports. BACKGROUND: Iran and Armenia signed an intergovernmental agreement in 1992 (amended in 1995) to construct a 140-kilometer pipeline with a volume of one billion cubic meters (bcm) per year. This pipeline would straddle the two countries' short common border, crossing the Megri corridor that separates Azerbaijan proper from its exclave Nakhichevan. In mid-1999, Iran's foreign minister Kamal Kharrazi suggested constructing a gas pipeline to Ukraine via Armenia. The Ukrainian ambassador replied by proposing to connect the Iran-Armenia pipeline with a Turkmenistan-Ukraine pipeline. Ukraine's newest former Deputy Prime Minister Yuliya Tymoshenko, who was recently forced to resign, had long propounded the idea for the trans-Caspian gas pipeline (TCGP) to carry Ashkhabad's gas westward into Ukraine. Such a pipeline, after going under the Caspian Sea and through Azerbaijan, would continue westward under the Black Sea to join the pipeline system in Ukraine at Fedosiya. Ukraine has indicated its willingness to take gas from Turkmenistan piped through Iran via Armenia. Financing even for the short pipeline from Iran to Armenia has been difficult to find under any plan. Gazprom expressed an interest in mid-1999 but then withdrew at about the same time that Gaz de France danced a similar hesitation-waltz. The joint venture Armrosgazprom held discussions with the National Iranian Gas Company (NIGC) in mid-February 2000 and agreed on a price of U.S.$ 90 per thousand cubic meters, but that is over a quarter again as expensive as the same quantity from Russia. The World Bank nevertheless expressed interest in the project and construction began only to be halted in mid-March once more for lack of funding. In April, the World Bank explicitly refused to subsidize the excessively high interest rate that China demanded for the U.S.$ 80 million loan it had offered to Armenia for the project. In mid-July, after the project consortium was restructured to include Armrosgazprom, NIGC, the National Gas Corporation of Greece (DEPA) as well as Gazprom, a significant trilateral meeting occurred in Yerevan among the European Commission, Iran and Armenia. The European interest in the pipeline from Iran to Armenia stemmed originally from its nuclear safety program for the new post-Soviet states. It desired to shut down Armenia's Medzamor Nuclear Power Plant, but Armenia refused to do this until an alternative source of energy was identified and made available. Iranian natural gas would satisfy that requirement. At the Yerevan meeting, however, the European Commission decided to sponsor the Iran-Armenia pipeline project under its INOGATE program. INOGATE, an important and comprehensive if little-known initiative to address questions of multi-modal transportation throughout the former Soviet area, stands for interstate oil and gas transportation to Europe. Iran, oddly, is the only participating country or observer country at INOGATE that has not signed the European Energy Charter Treaty (ECT) that forms the basis, in all of Europe and beyond the Urals, for non-discriminatory harmonization of national energy sectors. The current practices in the Iranian oil industry make Ukraine look like sparking spring water. IMPLICATIONS: Contacts among the European Commission's President Romano Prodi, Germany's Chancellor Gerhard Schroeder and Russia's President Vladimir Putin at the end of September 2000 initiated strategic discussions of the possibilities for long-term European participation in the development of the Russian energy industry, especially the natural gas sector. The EU intends to increase the proportion of natural gas in its fuel consumption mix over the long term, for environmental reasons. The European move on Iran is from one standpoint just a maneuver to pressure Russia on price. Yet Europe has declared itself willing to take from Iran whatever amounts of gas Russia is unable to sell. There are some problems with the idea of piping Iran's natural gas to Europe via Ukraine, whether the route goes overland through Russia or under the Black Sea. If the pipeline goes across Russian territory to Ukraine rather than under the Black Sea, then this would give Russia a still greater potential stranglehold upon the EU's natural gas supplies. Ukraine and Russia have long been at odds over the question of Ukraine's alleged pilfering of natural gas exported across its territory from Russia to Europe. Such problems may be expected to continue so long as the Ukrainian energy sector remains fundamentally unreformed, and would certainly affect Iranian gas transiting the country as well. Indeed, in early 2000 Tymoshenko had accused the state oil and gas concern Naftogaz Ukrainy of siphoning gas out of Russian pipeline, and declared that the country's net debt for gas was U.S.$ 1.7 billion, or twice what Naftogaz Ukrainy had claimed. Later that year, in mid-August, after continued denials of the pilfering, President Leonid Kuchma created a sensation when he told the German magazine **** Der Spiegel **** that gas thefts were being carried out on the order of Ukraine's government. The Russian side thereupon claimed Ukraine was more than U.S.$2 billion in arrears, including fines for late payments. The same vested interests in the Ukrainian energy sector that did not favor Tymoshenko's policy of monetizing resource flows also oppose a TCGP to Ukraine, because this might mean leverage in favor of demands for greater transparency in accounting and business methods. One of the reasons for Tymoshenko's recent ouster was her insistence on implementing fundamental reform in Ukraine's energy sector. As far back as last August, Ukraine's Prime Minister Viktor Yushchenko suggested that parts of Ukraine's gas transportation network might be sold off or given to Russia as payment for the Ukrainian gas debt. Tymoshenko's recent forced departure may easily make it more likely that Gazprom and Itera will come to control, if not own outright, parts of Ukraine's gas transportation network. CONCLUSION: The INOGATE program was originally established to promote cooperation between the EU and the newly independent states. A pipeline in the INOGATE framework has also been suggested from Turkey to Greece, channeling gas from the Caspian Basin, and Iran in particular, to Europe. Turkey is moving slowly on this idea because it still believes in the TCGP from Turkmenistan under the Caspian Sea. The disadvantage to Turkmenistan of going through Iran is precisely the same as going through Russia: The transit country with control over the taps is a competing gas supplier to the ultimate consumer. It is noteworthy that the definite moves by the European Commission to back the Iran-Armenia pipeline came only after the TCGP negotiations all but collapsed early last year. In November last year, Turkmenistan's acting oil and gas industry minister stated that his country still gave priority to the TCGP project over the Iranian route for Ashkhabad's gas to Europe. Delays in the Blue Stream project for Russian natural gas to go under the Black Sea to Turkey, and in the Shah-Deniz project for Azerbaijani gas to enter Turkey through Georgia, have both recently encountered delays for complicated technical and engineering reasons. This gives Niyazov an unexpected window, which was on the verge of closing, to make a deal for the TCGP. The Iranian option to Europe has to impress Niyazov even more forcefully that if he does not build a TCGP to somewhere, then he will be left with only one buyer, Gazprom, which would then be in a position to dictate the price. Niyazov's only choice is to bite the bullet and agree to build the TCGP with minimal further delay.

THE TURKISH-ARMENIAN DIALOGUE Presented by The Armenian General Benevolent Union of Toronto and The Zoryan Institute of Canada A Dialogue Across International Divides: The Turkish-Armenian Dialogue and the Taboo in Turkey Regarding the Armenian Genocide A Lecture By Dr. Taner Akçam Research Scholar in Sociology, Hamburg Institute for Supporting Science & Culture Visiting Scholar, Armenian Research Center, University of Michigan-Dearborn Screening of `A Wall of Silence' Friday, May 25, 2001, 7:30 p.m. AGBU Alex Manoogian Cultural Centre 930 Progress Ave., Toronto Admission Free

But how about those people who live not in the dream world, but on the soil of real Armenia? Do they count at all as far as the behavior and the attitudes of the dreamers are concerned?

Domino, The irony is that Armenia is not a dreamland or a land from dreams. It is a real country, with real people, with real problems, with real joys and real sorrows. It is not an image, either. I think this is what is being overlooked by many Armenians.

I suspect there is a little bit of difference between France and Armenia, however insignificant it may be. Therefore, not everything which works in France may work for Armenia. What “powerful” oligarchs are you aware of in Armenia? Sustaining of macroeconomic activity without microeconomic growth is not anomaly in Armenia. It is resulted from the significant cash inflow from the Armenian population abroad – primarily those who have family and relatives in Armenia. In what way is the unemployment in Armenia related to the tight economic policy? If the industry is paralyzed due to lose of the traditional markets, primarily, how is the Central Banks activity going to change it? All the Central Bank does as a function of Central Bank, it either dumps currency/gold or withdraws. Indeed there has to be well thought out policy of having the foreign investments serve their purpose.

I think your posting speaks volumes on your intellectual capacity and on your integrity. I'll keep it undeleted for you come back every-now-and-ten and enjot it. It is not my obligation to educate every pretentious immitator of a thinking person, who cannot hold a simple streight line in his own argumemts, who would trhough things around wihtout even understanding of the words and concepts he uses. Is it my duty to correct everyone? I don't think so. Live with your illusions, but go back to school to learn some elementary manners, and learn the difference between your mouth and your "ass," becasue it seems like they both perform an equivalent function.

Alpha, This is not about the credentials, but not claiming things that we have never studied or thought about. I pay significant amount of money on a monthly basis to buy the materials from the professional sources. And I get significantly compensated for the analysis that I provide. So let’s leave it there. However, I can refer you to one valuable, in my view, public online material, which true, is not about California, but the events of the summer of 1998 in MidWest. The magnitude of the problems in California is nowhere close to the magnitude of the problems in MidWest that has faded away in the result of the measures taken subsequently. However, the problems are very similar, and the market forces are the same. It is a Report written by a special investigative commission of FERC – Federal Energy Regulatory Commission, whether there was market manipulations in Electricity Markets in the MidWest in the Summer of 1998. Here it is: http://www.ferc.fed.us/electric/mastback.pdf . It is an 87 page report, however. As to the sources, it is very difficult for me to accept a projection published in Time Magazine as a credible source. The only credible source on conservation may come from the energy specialists, who have had considerable experience in the retail side of the market, and who understand the physical fundamentals of the process of generating energy commodities. And on that capacity, no professional would claim that we can conserve 20-40% of the energy demand. It is just nuts. I can assure you that I have open mind, but I have zero tolerance for non-professionalism and partisanship. As to the subject of the progressive taxation, as we know the taxation in the US is progressive, and it is proposed to remain so. Additionally there are a few systems of financial aid in place for law income people. The most significant contributors of these programs are the so-called “rich.” I am not aware of any declarations regarding abolishing the national and state financial aid programs. To the contrary, it is the position of the current administration that the states have to have the discretion of determining the way to help the less fortunate people, and the Faith Based Organizations have to be encouraged and supported to organize support on a local level. On a Federal level, the current Administration has demonstrated the initiative of strengthening the Social Security System – something that the former administration has not only refused to do, but has blocked any bi-partisan attempt to do so. The same concerns the MediCare system. In the previous 8 years, the administration has not only avoided these issues, and has demagogued them, but has blocked any initiative that the Republican and Democrat Senators have tried to bring together for the purpose of providing solutions for these much important programs. Now, this Administration, being in the office for less than 120 days, has taken on these issues. I presume you have never attacked the previous administration in eight years, but you do so the current one after 120 days. And the very things you accuse them of failing are the things that have been failed in the last administration, while this administration is trying to fix. About raising taxes to help for paying for the increase of the rates, and it being the only shield against the energy industry. To be honest, with all due respect, this is not an argument of an economist, but a left-leaning partisan. First of all, I hope you would agree that you don’t know much about the physical underlyings of the energy markets, nor you do so about their market structure and the interaction of different forces. The taxpayers and the ratepayers are the same people – you and me. It doesn’t make much difference whether we pay for energy consumption from our left pocket or from the right pocket. Both pockets are ours. If the taxes are going to be raised, we are going to pay for it. If the energy rates are going to be raised (and this is where Grey has manipulated the public opinion) – still we are going to pay for it. However, it makes huge difference in terms of facilitating investments, without which, in the next 30 years, the US Energy Markets would be in disarray. As I have mentioned earlier, the Federal Energy Administration has estimated that in the next 30 years, so that to satisfy only the electricity needs in the nation, we need in average one new plant a week to go online. Where is this money going to come from? You may be tempted to say from the taxes. However, I don’t think that you would understand the magnitude of the presumed tax hikes you might propose. That would basically imply a fundamental change of the social, political and economical structure of the US, which I can assure you that even the most ardent liberals would not advocate. As evident, the absolute majority of the US population if supportive of the opposite – tax cuts. And it is supportive of the Bush Tax cut, otherwise it would’ve not had a chance for passage in a 50-50 Senate. As the energy markets are concerned, the very deregulation has been initiated so that to promote infusion of capital into the energy markets, since the fed was not able to facilitated the investments in the regulated markets, when no matter what kind of risks you take, you are guaranteed fixed margins. Additionally, it was expected that the energy prices would come down after the deregulation. It has not happened. Why? For a variety of reasons. One reason being the implementation of wrong models. But this is similar to the deregulation of telecommunications industry. If you might remember, right after the deregulation of that industry, the long-distance call prices went up for quite some time. However, the competition from all the small companies forced the AT&T, MCI and Sprint to lower the prices. It took few years. The same is the case in energy industry. The prices are high because the deregulation process has been hampered by the regulators, states, the Fed, and those old day energy companies, which do everything to preserve the status quo. This is a subject that can be discussed for very long time, and I don’t believe that the Hye Forum is the right place for it. To address your question on why you surprise me, let me just say because you are much smarter than your latest arguments. Let’s go to the article in the Economist, now. ”• On May 11th, Rick Perry, the new governor, signed into law the “James Byrd Hate Crimes Act”, named after a black man chained to a truck and dragged to his death. The law specifies harsh punishments for crimes committed against particular groups of people. Mr Bush opposed it as governor and on the campaign trail.” There have been three perpetrators of the mentioned crime. Two of them have been sentenced to death, and the third one has been sentenced to life-in-prison. Seems like it is hard to think of something harsher. Additionally, the logic of the proposed crime is to have special category of sentencing for the crimes when they are committed against the blacks, for example. I think it constitutes reverse racism. I share Bushes stance in this regard – no matter what race of people or what minorities the crimes are committed against, they should be categorized equally, and be punished equally by the law. Can you tell me what is wrong with this logic? Do you feel that killing a white man is less of a crime then killing a black man, and there should be a special law against killing black men? “• The state’s House of Representatives has passed a bill that would set a two-year moratorium on new charter schools (privately managed public schools, a Bush favourite), and voted to postpone by a year Mr Bush’s planned abolition of social promotion.” So what that is has been postponed. Bush has been recognized primarily for his success in the area of education in Texas. I don’t know what is going on in Texas currently, but I know the following – he has been able to receive the support of the democrats and the republicans alike (including the Ed Kennedy types) to implement his education agenda nationwide. This is characterized even by the left leaning media as an overwhelming victory by Bush. “• The legislature is working on several bills to moderate death-penalty laws. One would provide better legal defence for indigents (a bill Mr Bush had earlier vetoed). Another would extend the use of life imprisonment. A third would stop the execution of mentally retarded murderers.” This bullets say that there are efforts underway. We’ll see what the result would be. (Personally, I am not much supportive of the death penalty, however I don’t have a strong stance on it from the opposite point of view, either.) The absolute majority of the US population is supportive of the death penalty. The population of Texas is even more overwhelmingly supportive of it. The death penalty is not introduced by Bush. It was there during all previous administrations, even when the legislature and the executive branch of the Texas government all were Democrat. No attempts were made then to change it. Why is this Bushes legacy, I cannot understand. Additionally, Bush, Clinton, Gore and Liberman alike have been supportive of the death penalty. This is not a partisan issue. It is a cultural issue. As frequently quoted, there is no evidence that anybody in Texas has been executed without having full access to the courts, and the ability to appeal. On of the lately executed, in fact, has had the ability to appeal it almost 30 times in the last 12 years, if my memory doesn’t betray me. The governor of Texas, by the constitution of the state has no discretion in making decision with respect to the executions. Unless the independent commission established for this purpose makes a recommendation, the governor (no matter who he is) cannot do anything by the law. What Bush claims that no one under his watch has been executed without being proven beyond reasonable doubt that he/she has been guilty of the charges, and he has made sure that everybody has had full and fair access to the courts. Nobody has provided any other evidence. ‘• Both houses have voted to streamline Medicaid, helping poor children to get it (another proposal Mr Bush had opposed).’ No details are provided on the scope and the character of the initiative, and no explanations what Bush has opposed to. No poor child has ever been denied medical help in Texas. In this sense, the Texas system has one of the best systems. True, not every one has Medicaid, but in Texas there are special rules that when people not having any coverage appeal to a Hospital or a clinic, they have no right not to treat them. Additionally, this system has been in Texas since ancient times. It is not Bushes invention. However, Bush has dumped significant funds into the system, so that no one in need of medical help is returned. • The House has voted against the state’s practice of allowing 700 ageing factories to volunteer to cut their pollution (only one has done so, surprise, surprise). In Bushes watch, the environment in Texas has been cleaned at much higher rates then during any other administration or in any other state. True, Texas (primarily Houston) is not the cleanest state. But it is a major industrial state, and a huge chunk of oil refineries are located around Huston. This is not Bushes legacy, either. It has always been like this. ‘• A proposal has appeared to repeal a property-tax cut that Mr Bush pushed through in 1997. This is going nowhere, but the fact that it was even considered is a gauge of the broader implications of the Texas debate. ‘ Hundreds of proposals are appearing on the floor of legislature every year. Few of them pass, the absolute majority don’t In what way does this undo Bushes legacy – I don’t see. For Democrats, there is an obvious lesson to be drawn from all this. If Mr Bush’s agenda of tax cuts, education reform and business-friendly deregulation has proved too much even in a conservative bastion such as Texas, surely his attempt to reproduce those policies on a national scale is doomed? In fact, Mr Bush’s Texan legacy is more complicated. In terms of specific policy issues, the current rebellion says very little about his national agenda. But, in terms of fiscal shortsightedness, the message is much more worrying. I don’t see where does this conclusion come from. The evidence the author demonstrates in the 6 bullet points above is a sloppy, inconclusive evidence. Things which have nothing to do with Bush are being attributed to him. When there is no evidence that something is being undone, it is being characterized as “Bushes legacy is being undone.” Very peculiar standards I should say. This is why I have called this material garbage. In the schools that I have gone, these people (I mean of the type of this journalist) would’ve not graduated and received degrees. At most, the attempt to roll back the Bush legacy is a limited one. As Mr Perry Just what is this journalist trying to say? What is his claim? Both the attempt to keep social promotion for an extra year, and the moratorium on charter schools, are being held up in the Senate by one of Mr Bush’s fervent supporters, who has the power to kill them. Many of the criminal-justice provisions will get through, but probably not the environmental toughening. Any details? What is the reason of holding the promotion for a year? Financial reasons? Questioning the merits of the promotions? What is it? Moreover, even if the education bills were to become law, it is an open question whether they should be considered ideological reversals. The reason for keeping social promotion for an extra year is not really to do with the underlying debate about whether abolition would penalise poor pupils. Tell me what is this journalist trying to convey? Which side of the issue is he in? The school year when social promotion is due to end, 2002-03, is also the year when new school tests (tied to a new curriculum) will be introduced. Supporters of a moratorium worry that teething problems with the tests may undermine support for another Bush hobby-horse, accountability. Does this give some explanations to the previous statements? So, what is being held here against Bush? Something similar is afoot with charter schools. The original bill was pushed through in a fit of enthusiasm, with very little supervision of the people setting them up (for which Mr Bush must share the blame). Although a few charter schools have been educationally outstanding, far more have been egregious organisational failures. Schools have closed in the middle of term for lack of cash. Examples of embezzlement and incompetent financial control abound. The Texas Education Agency says that almost a quarter of the 100-odd charter schools it has studied were inadequate. So should there be accountability as promoted by Bush (his main thesis) or not? In a sense, this example, and that of the death penalty, suggest, in Mr Sadler’s words, that “it’s not about dismantling the Bush legacy. It’s just part of the natural progression of government.” Texas was at the forefront of some of the experiments in local government in the 1990s, and it is unsurprising that it is in Texas that problems have cropped up early. As Bruce Buchanan, a professor at the University of Texas at Austin, points out, the state is changing fast. The huge influx of Latinos, largely from Mexico, as well as the growing number of technology firms, has made Texas more urban than it used to be, and less unique in terms of its political culture. Does this paragraph need a comment? Normally, such gradual changes would make policy reversals gradual as well. The swiftness largely reflects two other changes. The first was the national spotlight beamed on Texas by the presidential campaign. Al Gore spent around $300,000 advertising Texas’s failures to the rest of America. This had its impact back home. “We thought of ourselves as a mega-state,” says Mr Buchanan. “But Texas was embarrassed to become the poster child of industrial pollution and a butt of criticism because of our system of criminal justice.” How about spending $300,000 during a presidential campaign to advertise California’s or New York’s failures? How about the Arkansas failures in the Clinton era. Do you know that Arkansas has the fame of the most corrupt State in the US? The other change was personal. The current legislative session is the first to take place since the departure of Mr Bush and the death of Bob Bullock, his Democratic lieutenant-governor. Mr Bullock was legendary for his strong-arm politics. Mr Bush had a public-approval rating in his latter years as governor of more than 80%. When the two men co-operated (and they co-operated a lot), they could exert a far greater hold over the political process than the indistinct and hapless Mr Perry. Do we need comments here to understand the processes? To the extent that the legislature is delivering a rebuff to Mr Bush, it is reverting to a norm, having been absurdly generous in the 1999 session. As Scott Hochberg, a Democrat in the House, puts it, “Two years ago, when we sneezed, the question was did it help or hurt Bush. Now that pressure’s off.” The 1999 session saw the passage of a tax cut and several new spending programmes (such as a pay rise for teachers) in an atmosphere in which lawmakers were doing their very best to help Mr Bush. Rosy fiscal forecasts, which everybody knew to be bogus, were also accepted with barely a murmur. (Washington politicians, of course, are behaving much more responsibly with Mr Bush’s current tax cut.) So to what extend is it being delivered as a rebuff? Should one also praise Bush for the pay rise for the teachers? How about praising him for being able to bring along the Democratic legislature of the State, and sympathizing the current Governeor for not being as successful. Additionally, during Bushes watch, the State Budget of Texas has had in excess of $1 billon of surplus. Part of it has been returned to the tax payers, part of it has been used on spending priorities. Which part of it has been “rosy?” It is at this point that the main charge against Mr Bush emerges. He failed to prepare Texas for the long-term task of reforming state finances, and thus left the main items of state spending—education, health and welfare—in a bind. What is precisely the allegation here? He hasn’t done everything that Texas needs? So? What are the successive governments for? After all, he didn’t even finish his term… The most dramatic example is welfare. The largest single source of money for welfare payments is a block grant from the federal government. In the name of flexibility, Mr Bush used about a sixth of this grant as a windfall to pay for programmes only tangentially related to welfare, such as family planning and the protection of abused children. This also made it easier for Texas to afford the tax cut Mr Bush pushed through in 1997. It is very interesting to hear that “family planning and the protection of abused children” are tangentially related to the welfare. Does this paragraphs provide information what was the other part of the grant used on? If it was Federal Grant, as the author claims, it couldn’t be used for tax cuts. This is bogus. Additionally, how about the State funds for welfare? Any information about it? Now, after five years of decline, welfare rolls are starting to rise again. Patrick Bresette, of an Austin-based think-tank called the Centre for Public Policy Priorities (CPPP), says that the block grant is already failing to keep pace with the increase in welfare demands and will fall into deficit if the rolls rise further. The money cannot simply be reclaimed from child-care programmes, where the relevant agency now depends on that federal grant for a third of its budget. And the tax cut has eroded the surplus in the general account. What is the logic here? The welfare rolls are rising, and the prior allocated money is not adequate? The first question is why in a state like Texas, where the economy is booming, the welfare is rising? Might it have something to do to the fact that Texas is a border state, and it gets disproportionately large influx of Mexican illegals? Might it be that this is also the reason why in Texas the number of people without medical coverage is higher than elsewhere? How about Arizona? California? Has this issue been studied on a comparative basis? The problem stretches well beyond welfare. Demand for social services of all sorts is rising faster than revenues, partly because Texas has one of the highest proportions of school-age children in the United States. So, after all, there are some idiosyncratic for Texas problems, are there? Since the state must by law run a balanced budget, the contrast between lagging revenues and rising spending cannot show up as a deficit. Instead, it produces fiscal chicanery to balance the books. In its 1999-2001 budget, the state financed only 23 of the 24 months of Medicaid and other social services. This is the only serious argument in this article so far. However, it doesn’t provide an explanation what means financing the Medicade only for 23 months out of the 24. Does it mean that during the 24th month those dependent on Medicare have not been able to receive medical services? Do you think it is possible? So they have reshuffled the funds, perhaps, in the books. It is not desirable, but is it something demonstrating the “failure” of Bushes legacy? To keep programmes at current levels for the next two years, the CPPP reckons, would need $300m more than expected revenues (which themselves would be revised downwards if growth were flat). And that excludes several spending measures that are hard to put off. These include increasing Medicaid payments (most such services have not seen a rise for ten years and some doctors are refusing to offer them); the provision of health insurance for teachers (a few get it now through their school districts, but not all); and a pay rise for state employees. Texas is at or near the bottom of state and local government spending per head. There is a limit to how much more it can be squeezed. Do you know anything about CPPP? Who is this organization? Who is it financed by? How credible are its projections? Do you know anything about them? Has this author, if he is an unbiased journalist, spoken to anybody in the government, or the opposite side of the fence. Is there one instance in the entire article, that both sides are questions, or both arguments are investigated? Isn’t it a primary responsibility of a professional journalist? I am not a budget specialist. I can’t neither refute nor support these allegations. However, it is evident that they are based on a single source, the character of which is not clear to us. Whether this is financed by the opposition party or by Ralph Nadar, per se, we don’t know. In any case, even if it is financed by Nadar, that doesn’t mean automatically it is non-credible, however, as I said, the credibility of such projections requires checking them with other sources. This is something that is absent in the entire article. The underlying problem is the lopsided structure of the tax system. Over half the state’s revenues come from a sales tax on goods, which has not kept pace with Texas’s shift to a service-based economy. The CPPP’s budget expert, Dick Lavine, calculates that tax revenues as a share of personal income have declined from over 9.5% in 1994 to about 8.7% this year, and are still falling (see chart). Yes. Texas has no State income Taxes. It has been the case for very long time. This state has always had booming economy, and the sales-tax has sufficed. If it is not adequate anymore, the Tecans would revisit it, however, I am not going to take the projection of a single (and unknown to us) source as an evidence. The school-finance system is particularly skewed. It depends on local property taxes. There is a cap on these taxes; 20% of school districts are at the limit, and most others are near it. But school enrolment is soaring. Mr Bush promised to increase the state’s share of education spending to 60%; instead it has fallen to 44%. Yes. It is the case everywhere. The school funding primarily comes from the local taxes. If there are problems, that means they require further effort to fix them. As the article says – the school enrolment is soaring. I bet it is also due to the illegal emigration. I don’t know about the education spending. However, as we know, for every $1 spend on education in the US, about 10% of it is reaching the classrooms or the local schools. This is a failed system in general – not just in Texas, and this is the primary reason beyond some attempts to eliminate the Department of Education, the plutocracy of which eats most of the funds. This is a complex issue, and without knowing the particulars, which this article doesn’t provide I cannot comment on them. It may seem unfair to blame Mr Bush for the mess. Underfunding and financial chicanery long pre-date his governorship. And, to his credit, he tried to solve the structural problem by proposing to shift some of the burden of revenue-raising from property taxes to business taxes. Alas, he failed to persuade his own party, which vetoed the plan in the state Senate. Do you have any comments on this? Because I don’t feel I have to comment. The real accusation is that Mr Bush’s later campaigns for tax cuts fed an illusion of fiscal prosperity that Texas is only starting to wake up to. In their next few sessions, the lawmakers will almost certainly have to cut tax exemptions, widen the tax base where they can, and even consider, horror of horrors, an income tax. And a tax rise in Texas really would hurt Mr Bush, as much in Washington as in Austin. Now, this is his opinion. He has the right. What is it based on, however? Does his evidence support it? What are his sources? CPPP? What budgetary committee have expressed this opinion? What projections of state revenues and liabilities is this based on? Is this something that the author “just believes on?” Doesn’t the integrity of this material raise your eyebrows? Look, Alpha. I am a professional man. When I read these kinds of articles – I call them garbage. To write more systematic analysis of this article, I have to spend more time on it. I see no point in doing that. As I have said, it is not my duty to rebottle every single idiot. It is evident that the analysis is shallow, the internal logic of the article is flawed, the declarations made in the beginning of the article don’t correspond to their own evidence and conclusions, the some of the accusations are based on a single source, which is a violation of journalistic norms, etc. It is not clear what is this author claiming here, other than “I don’t like Bush.” This is what I call garbage, and I call a material not worth my time. If you would have more questions on the energy markets and the deregulation process, you can send me a private message, and I would reply to you as my time allows. [ May 23, 2001: Message edited by: MJ ]

Azat, You are too insignificant of an outcast for me to go after you. You are not worth my time. Alpha, just out of personal curtesy, I will respond to your last posting, however, I have to say that I have really no interest in the argument.

quote:Originally posted by Azat: MTBE is Methyl Tertiary Butyl Ether. It adds as much as 60 cents per gallon of gas we buy, and as little as 27 cents. And you don't want to know the problems that it has created on the California groundwater. Also taxes on gas in CA accounts for 19 cents federal, 19 cents state plus local taxes. [ May 21, 2001: Message edited by: Azat ] I can assure you that you need to take it with the environmentalists, since it is apparent that th eidea of the additive would belong to them.

quote:Originally posted by Azat: And why did you not tell me this prior to me starting to argue with you. Actually, I did. I have just not read my postings carefully.

It is very funny. Why should I care about this article, and why should I write Economist? Why should I care about it? What kind of nonsense is this? Additionally, I have neither attacked the messenger nor Alpha or you. I am yet to see one single argument on the merits from the either one of you. All you keep saying is "I believe... Many people believe..." So what that you believe? Does it constitute a meaningful argument? I am out of this dispute.

Azat, I cannot commit all my time interpretting nonsense, right? That would take all my time. I think you can read the bullet points in the mentioned article, compare them with the conclusions of the same article, and then make your own judgments if you know anything about the subject. I don't know if their facts are true or not. But I can read their conclusions and think about how do they relate to the evidence. At the and, I would have one question to the author: "What were you trying to convey in this article?"

Mediators say bitter public hurdle to Artsax peace By Rosalind Russell YEREVAN, May 21 (Reuters) - The people of Azerbaijan and Armenia are ill-prepared for a peace deal to end their 13-year conflict over Nagorno-Artsax and hardline public opinion may undermine efforts to reach one, mediators said on Monday. Leaders from both sides have been engaged in intensive negotiations towards a comprehensive peace accord in recent months, but have done little to prepare their people for compromise, the international mediators said. "The people haven't got a lot of signals from the top that they have to start thinking about reconciliation," U.S. mediator Carey Cavanaugh told Reuters at the end of a two-day trip to the disputed territory. "The leaders aren't sending positive messages that everyone has to accept compromises if they want to live in peace." Armenian President Robert Kocharyan said the reason for his relative silence was that he did not want to build up the hopes of the population unduly. "This is a sensitive issue and we don't want to arouse expectations that will be difficult to satisfy, because then the disappointment will be greater," he told reporters on Monday. CONFLICT MORE THAN A DECADE OLD The war over the rugged peaks of Nagorno-Artsax began in 1988 when its mainly ethnic Armenian population tried to break away from Azeri rule as the Soviet Union began to collapse. Around 35,000 people died in the six years of fighting that ensued and at least 800,000 people fled their homes. Armenian forces eventually inflicted a humiliating defeat on the Azeri army and a truce was called in 1994. Thousands of troops still face each other across the "Line of Control" which separates opposing forces and hundreds of thousands of refugees remain homeless. Mediators believe they are closer than ever to a peace deal after Kocharyan and Azeri President Haydar Aliyev held four days of negotiations last month in the Florida resort of Key West. The new U.S. administration has tried to breathe life into the flagging peace process in the hope that a deal would allow a pipeline to carry oil from the Caspian Sea to the Mediterranean. But changing the mindsets of ordinary people, fed on a diet of belligerent propaganda for more than a decade, is the final and most challenging hurdle, the mediators say. Officials from the United States, Russia and France made a whistle-stop tour of Nagorno-Artsax at the weekend, crossing the Line of Control to take the pulse of public opinion. On both sides of the front line they met people who said they wanted peace, but also called for vengeance. In a sprawling refugee camp of tin-roofed shelters in Agcebedi in western Azerbaijan, Azeri refugee Gani Kasumov said he wanted to return home to the ancient Artsax town of Shusha. "We have nothing here," said the 47-year-old economist. "We must go home -- through war if that must be." STRUGGLE TO SURVIVE In Shusha itself, perched high on grassy slopes above the Artsax capital Stepanakert, Armenian refugees have taken over abandoned Azeri homes, but say they are struggling to survive. "Everything was taken from me, everything," said a tearful old woman who lived in the Azeri capital Baku for 50 years. The mediators have kept details of their proposal secret, but say both sides must be prepared to make significant concessions for a peace deal which will unlock millions of dollars of aid to the impoverished south Caucasus region. "We are trying to make it a win-win solution," said one diplomat involved in the negotiations under the auspices of the Organisation for Security and Cooperation in Europe. "The problem is that that idea is anathema to the mentality of this region where people think if you win, the other side must lose." Mediators say the next round of peace talks, scheduled to take place in Geneva in mid-June, would be postponed while the two presidents prepare the ground at home. "There are some last minute jitters," said Cavanaugh. "Making concessions for peace is a dangerous game. Many world leaders have paid for it with their lives." 12:03 05-21-01 Copyright 2001 Reuters Limited. All rights reserved.

MEDIATORS HOPE TO MEET WITH NKR PRESIDENT TODAY IN YEREVAN Mediamax 21 May 2001 YEREVAN The Russian co-chair of the OSCE Minsk group Nikolay Gribkov said the mediators hope to meet with the NKR President Arkady Ghukasian today in Yerevan. He is returning from a working visit in France. Corespondent of Mediamax informed from NKR that Gribkov said the meetings with the Chairman of National Assembly, Premier, Foreign and Defense Ministers of NKR held on May 19 in Stepanakert were "efficient". The co-chairs of the OSCE Minsk group arrived in NKR on May 19. For the first in the history of this conflict, they crossed the contiguity line of the NKR and Azerbaijani armed forces on the road of Aghdam-Barda. Under the observation of the OSCE representatives a mine clearing and demining of the area was carried out. According to the American co-chair Carey Cavanaugh, the observation of the line allows to hope that after a peace settlement is achieved, the roads between Nagorno Artsax and Azerbaijan will be opened. Nikolay Gribkov said that the arrival of the mediators in the region has also a business aim. Besides the meetings in Baku, Stepanakert and Yerevan, the co-chairs visit also the regions that must be reconstructed in case if a peace settlement is achieved. "As far as there is a tense situation in the Transcaucasus, there will hardly be a large inflow of investments," Gribkov said. The French co-chair of Minsk group Philippe de Suremain noted that the mediators take interest in the public opinion of Nagorno Artsax, in order to know what do the people think about the problem and its settlement. "Everybody's interests must be taken into account, for not creating an impression that we are working against one or the other party," he said.

The primary success in my view has been the stabilization of the monetary system without and assistance from the international monetary organizations. The main failure behind the economic growth I think is in the legislative and legal arenas - lack of adequate climate protecting the investmens, and lack of sufficient legislative framework for promoting investments. Additionally, some of the taxation policies, such as VAT are to be blamed for the slow rate of flow of investments. Finally, the political (in)stability is the major obstacle to development of Armenia. To summarize, the failures of the Armenian Economy are due to the factors of Political and Legal character, and not of purely economic.

Alpha, I tried to read the article you have referred me to. Such a garbage. Couldn't even finish it. It is not worth my time, nor is so the commenting on it. You just surprise me more and more...

Alpha, I believe that you'd agree with me MJ if I said that Economist is one of the most credible magazines. The following link http://www.economist.com/displaystory.cfm?...story_id=624258 outlines the failed policies of our imcompetent president, that he tries to implement his failed policies in Texas on Federal level. Unfortunately it doesn't mention the failures of the "energy policies". Before even I read it, let me say that just because something is published in the Economist, it doesn’t make it more credible. I will read it in the morning. And, yes, many Energy policies in the past have failed (assuming that they have existed). What does Bush have to do with them? As we go, I am growing more and more wary of your partisanship. I don’t see any arguments on the merits, but empty decorations not based neither on knowledge nor on logic. Just on hatred. Also, why do you attack the competency of a person who makes the counter argument, or challenge the validity of his/her resources. I am ready to provide all the resources that I mentioned and stand by my numbers (TIME is also one of the most reputable magazines and 20-40% conservation number was obtained from there). Let’s put it this way – I call things as I see them, and so far I would stick by that statement of mine. Those were not your numbers, as far as I understand, but of someone else. How can you stand by these numbers, if you know nothing about the subject. If you are saying that you have referenced the Time Magazine article truthfully, who has argues that? Lets go back to where the whole energy debacle started. The energy deregulation was signed by notorious Republican governer Wilson, who signed the bills into a law against public outcry, but with consant lobbying of oil companies. Governer Davis just protects public from high energy prices. If you carefully follow his policies you'd notice that he was ready to bail out both energy companies from bankruptcy, but P&GE didn't want to settle for it. Albeit the result was a bankruptcy. If Wilson is Republican it doesn’t make him more competent on energy deregulation. I have never tried to make this argument as a Republican-Democrat issue. Apparently, PG&E was smarter than your governor. You surprise me one more time as an economist. What means bailing out PG&E? Who was supposed to pay the bill? The taxpayers, right? How? What funds was your Governor supposed to use? Now, your Governor opposes having the ratepayers to pay the bill, while he proposes the taxpayer do it. Guess what – these are the same people. Only a political prostitute would like to mislead his constituents this way. And before you repeat his nonsense, just think about it a little bit. Now I will point out one of the companies that I used to cover SCE. Southern California Edison is set up as a holding company for Edison International, which is financially well diversified company. By setting up as a subsidiary, Edison International bought the upside of Southern California Edison's profits, which sends its profit to its parent. Yet when deregulation did not go as planned all of a sudden Southern California Edison was threatening with bankruptcy, and was asking for increased prices on electricity. These corporations know how to go after public's money. Can you explain how? I somehow don’t understand you. There is also an investigation with oil and energy providing companies on price gauging. Duke has even secretly agreed to settle it, but when the whole deal became public state bailed out of it. That's what free reign of oilmen and energy providers does to public, when energy and oil companies are left unchecked. In one of the recent interviews Dick Cheney was advocating for less regulation of industry and no federal intervention, but as experience showed in California regulation of energy sector works for public interest. So what that there is such an investigation. There have been multiple of them. Tell me about the findings of the court. Additionally, my argument has never been that there may not be price gauging. If there is – there are laws in the book, and it has to be settled in the court. But it is very dishonest to explain the problems with price gauging, because that’s not what the problems are about. Additionally, I can see why someone like Duke may want to settle something like that secretly, even if it has nothing to do with market manipulation, as you would like us to believe. No such publicity has positive marketing value for any company. If it has manipulated the market, it is the court’s obligation to punish Duke. But I am ready to bet that nobody is going to be able to provide evidence or proof that Duke has manipulated the market. Are you?

No problem. Only I cannot reply until later tonight.

Six years ago, the Public Utilities Commission ordered the state's investor-owned utilities to contract with private companies that were planning to build 1,400 megawatts of new plants. Southern California Edison objected, and appealed the order to the Federal Energy Regulatory Commission, arguing it would "not need this power until 2005." FERC sided with Edison, and the proposed plants never were built. MJ-Probably. This means incompetence - as simple as that. Azat - True, and i always thought that these officials were smarter that an "Average Joe". Note that in this case it was not the environmentalists that blocked the building of the plant, but the company itself. You are apparently of higher opinion of them then I am. Yes, but not the Texas companies, right? These are the very companies that have suffered in the game. However, that was 6 years ago. If the plants were built 2-3 years ago (if they had started then), California wouldn’t have had the problems today. This is where the environmentalists come in. The following year, the state passed its deregulation legislation, and that slowed plant construction even more, said John Tiner, a professor emeritus of electrical engineering at Johns Hopkins University. "Once deregulation became a factor, the power utilities stopped building plants, with good reason. They knew they would have to divest," he said. MJ - Exactly. Why to blame then the power companies? Azat - Because they were lobbying for deregulation. If the deregulation was done the right way, the problems would’ve not been nearly as bad even with the current available supply, though they would’ve been in place. At least, these companies would’ve not gone bust. MJ - This is not what the specialists think. The increase of demand is steady. In fact, this year, due to the cool weather, the demand has increased less than what normally it would’ve done. Azat - Even more ammunition for me when I ask why we have such a huge shortage. Not really. As I said before, the amount of rainfall has been small this year. Therefore the hydro-plants have not operated at the capacities that they would’ve normally done. The supply was law due to this factor, by in large.

quote:Originally posted by Azat: I am done for the day. So done that you can stick a fork in it. Defending with MJ this energy stuff takes all the energy from me. MJ, so what do you do for a living? And how come you know so much about this? This is part of what I do for living. I mean I am in power markets. [ May 21, 2001: Message edited by: MJ ]

Please read my text after the P.S. in my previous posting. I have just added it. I have not blamed(if I did I was wrong) the oil companies for the price of gasoline at the pump. I have said that the price is high because of the shortage of MTBE and whatever else they add in gasoline to burn it cleanly. So it does mean the price hikes are partially caused by shortages, aren’t they. Are you sure it is just additives shortages, and not refined oil? MJ, I personally do not care much on how much gasoline price is. I drive a compact car and usually laugh at all those people that drive the huge SUVs at the gas station. Too bad, because I am one of these people. Do you have kids? I do. And I feel safe when I put my kids in my SUV and go for long and short-range trips. Besides, I love the comfort it gives me while driving. … but last year we did have a high price on the barrel of oil and in combination to the summer additives the price was at 1.70-1.80 range. We today are a little over 2 bucks and are going for more soon. Also, we do have a shortage of capacity of refineries in CA and if one of the goes down, that we will see 3 bucks a gallon also. Anyway enough about oil. Nothing strange about it. The demand grows on an annual basis. We have more severe shortages this year than the last year due to naturally increased demand. You can call it bogus or anything you want, but this is what is getting published in papers here today. This is where my info is coming from. And no, I am not reading the comics section as you may think. The story is that natural gas companies in Texas have cut the supply of the gas to california because they were using it to transport other things. Period. Do you need a source? No, I don’t need those sources. I have mine. Let’s think together. What possibly can the gas pipelines transport other than gas? Which part of my sources (NY Times, LA Times, Washington Post, Sacramento Bee) did you not like? Neither one. I trust only the professional sources of information as far as the energy markets are concerned. I would never take the word of a journalist in these matters. Additionally, I don’t know about the Sacramento Bee, but NY and LA Times are two of the most lef leaning newspapers in the Nation. Less so the Washington Post. No. The opposite. If there were free wholesale and retail markets, this crisis would have been much mitigated. It is resulted from three sources: 1. The supply has not kept up with the growth of the demand; 2. The structure of the wholesale market in CA has been the most stupid structure in the nation - nobody has repeated this stupid experiment. It is not just the current and previous Governors to be blamed, but also the legislatures, and the previous Federal Government; 3. The wholesale market has been deregulate, but the retail has not. This has meant an industry having its one foot in the regulated world, and the other in the deregulated world, and the ground under feet slipping away. This is another major contributor of the problem. Azat - 1. true, but nobody can tell me why there is such a difference between one year and the other. You have not proven to me why this has happened. The 2% or 4% increase in demand does not account for the shortage. 2. I actually think that both current and previous governors have a lot to be blamed. Wilson allowed for deregulation and Davis screwed it up more. 3. Yes, but both PG&E and SCE had lobbyists in Sacramento asking for this. Even 0.5% shortage may have huge impact on the markets, if it cannot be conserved. This is because the prices would be set in the market by the marginal plants/refineries, etc, and they can push the market wherever they want, since over the sudden, they become the “biggest dog in the corner.” There are ways to fight against it. But that implies to have smart government. ~~~~~~ George Dunn, Governor Pete Wilson's Deputy Chief of Staff (now a lobbyist) brokered the deregulation agreement, largely behind closed doors, with Southern California Edison, its biggest industrial customers and an association of independent power producers. All parties pledged to support legislation that would create an independent power market. (Nancy Vogel, LA Times 12/9/00 "How State's Consumers Lost With Electricity Deregulation.") True. But as I said, this was due to incompetence, not a malicious intend. As you know, one of those who have lobbied is already bankrupt, the other is on the verge of it. Very few specialists, and among them your humble servant, have declared at the time that the California deregulation cannot be digested. "Utilities played a major role when the Legislature drafted and approved the restructuring that has turned sour. They received, at the time, an entitlement to compensation for anticipated losses (apart from any rise in the price of electricity) that was generous." (Editorial, Wednesday, Jan. 31, 2001, in the San Jose Mercury News) Yes, it is true that they have played major role – see my remarks above. But that they have been generously compensated is a bogus. What the author is referring too, I guess, is the utilities ability to capture their so-called stranded costs. It has ended in 1995 or 96, I think. People who reelect the current politicians are the real idiots (if they do reelect them). Probably, so. But they would not understand it until the situation hits them at their pockets. Apparently, judging by the poles of public opinion, they have not quite understood it, yet. So they perhaps will rethink this summer. Fine. But those plants would not be up and running in the summer, as you recognize in another paragraph. That’s when the demand peaks. Azat - I know. I do not have a solution for the problem. I am not even sure if there is a solution in the short term. None. Whatever may be achieved through conservation – that would be it. But it would be a very minor achievement. The other thing would be financial support one or another way – tax cut for the middle class, and financial assistance programs for the low income people. Not wrong, unless you are talking about the difference between the spot and forward market. (I have to admit I don't know one from the other) City of Glendale is producing excess power and is selling it to SCE at price of goods plus small profit. This is one of the reasons why Glendale residents are only going to have a 3% increase in power charges even though the actual cost of producing it has gone up by 15% because of high Gas prices. But I know the difference. Glendale can supply to SCE because they operate in the same transmission zone. Same Glendale cannot sell to Northern California, because the Path 15 of the transmission line would not sustain it. Everybody does not have to produce 100% of capacity. Glendale and others are trying to make money in the deal by doing so and selling it to SCE. I am certain there are cities in the north that sell to PG&E. I haven’t said that. In fact, nobody has the right to produce at 100% capacity, It is a very dangerous thing to do from the system reliability and stability, as well as reserve margin points of views. Well, just as I am soft on the environmentalists, you are soft on the companies and the lobbyist that they have that cater to the stupid politicians that we have in office. I am not soft on the lobbyists. As far as the companies go, I just say that they are not the source of the evil. They operate in extremely difficult and risky circumstances. Most of them lose a lot of money – not overnight as the PG&E did, but steadily. Not wrong at all. Do you remember what PG&E did a day prior to filing bankruptcy? If you don't let me remind you. they gave close to 60 million in bonuses to management and employees. I don’t know about the bonuses. If they have done it – shame on them. However, the $60 mil. is nothing in the scale of the problems we discuss. They were not forced to sell all their plants. The San Onofre Nuclear Generating Station (SONGS) is a 75% owned by SCE. Today, SONGS provides nearly 20 percent of the power to more than 15 million people in Southern California -- enough power to serve 2.75 million households. SCE´s Big Creek hydroelectric system which comprises approximately 90% of SCE´s Hydroelectric generation capacity. Big Creek Hydroelectric System has grown into an integrated hydroelectric project consisting of 23 generating units in nine powerhouses. Check their website if you do not believe me. http://www.sce.com You perhaps are not aware that there is a two-layer structure of power plants: 1. Those which are “regulated” plants, i.e. they have to sell at the cost+small markup. The utilities were not forced to sell these. 2. The “deregulated” plants, which can sell at the market price. They were obligated to sell them. Edison has overstated its electricity-buying debts by failing to subtract the amount of money it paid for power from its own power plants. That amount is at least $1.5 billion, it said. Edison has acknowledged that the debt figure it publicizes most widely, $4.5 billion through Dec. 31, does include payments to itself, but it has not specified an amount. Some speculation has placed the figure at more than $2 billion. PG&E has said its $6.6 billion in electricity buying debt includes about $3.3 billion for power from its own plants(By Dale Kasler, Carrie Peyton and Dan Smith Sacramento Bee 1/30/01 "Audit finds Edison overstated debt: Utility still near end of its cash; PG&E report expected soon.") ~~~~ A formal audit of SCE's books released by the California Public Utilities Commission Monday 1/29/01 confirmed that between January 1996 and November of 2000, they transferred about $4.8 billion of net income to Edison International, their parent company.(http://www.cpuc.ca.gov/Word_Pdf/audit/kmpg_report.pdf) ~~~~ An independent audit of PG&E on 1/30/01 accused the investor owned utility of not heeding months of warnings and for not moving quickly to save money when things turned bad. PG&E Corp. (the parent company of PG&E) spend $800 million of the money it collected from PG&E to support other subsidiaries, auditors said, while providing no cash, credit or other financial assistance to its struggling California utility.(Bian Melley, Associated Press 1/31/01 "Audio Confirms PG&E near broke.") These machinations are irrelevant from the point of view of the disruption of the supply and demand equilibrium in the market. Besides, these are exactly the companies who have suffered in the game. That they have fudged their books is an entirely different story, not having anything to do with the market. Regarding your other comment on power plants being suspiciously offline at the same time. You probably have missed to note three things: 1. Every spring and summer, a whole host of plants are stopped for regular maintenance. It is required. And there is nothing that they can do about this. If they don’t do it, they would be forced to do it in the summer and the winter, which would have much worse consequences, or if they don’t do it at all, the plants would start experiencing frequent random outages, which would have the same results on the spot market. This is similar to your car having oil change. You may not do it, but then, you would need to live with the consequences; 2. A number of the plants that were off lines were the old plants, which don’t satisfy the environmental standards. When they are brought online, the owners of these plants pay huge fines for the pollution of the environment. Clearly, that cost is going to be past to the consumers. Azat - I understand all that and I take all that into consideration, but you do not want to believe that more than normal have been brought down this year. How do you know? Do you know their maintenance schedule? It is a very high threshold to prove such an allegation. I, for example, don’t see how can it be proved. Additionally, it might’ve resulted from incorrect forecasting. To have 5% forecasting error in the demand forecasts is a normal error. This error is tolerated on a daily basis everywhere. But because the region was operating at its limit, obviously this type of error might’ve had dramatic implications. I am not trying to justify them. I am just saying that there may be a number of innocent or justifiable reasons why these plants were off-line. Er…my hands are tired from the typing.

Azat, Here is my reply to the article. This was a short article. Don’t know why, initially it seemed to me a long one, and I decided to look at it later. I could’ve answered immediately. Some of the power generators complaining loudest about California's environmental obstacle course have used the system to hold up the licensing of a competitor. According to Energy Commission documents, 22 energy companies have intervened in 12 proposals by competitors. Some become formal "interveners" simply to glean information. But others aggressively use their status to hire lawyers, file objections and cross-examine competitors in evidentiary hearings. Of the 21 power plants proposed for licensing since 1997, competing companies have intervened in 12 proposals, slowing the process in at least four situations. There is nothing strange or illegitimate about this. Building a power plant means investing hundreds of millions of dollars, if not more. There is an element of gambling in it. It is like a poker. Imagine that the given region has need for extra 500MWH power during the peak hours, and imagine that without knowing, 5 companies come forward and start building 5 plants of the capacity 500MW. Since the market doesn’t have the capacity to absorb them, most likely all five are going to lose their investments. Therefore, the permitting process, besides being a treacherous process from the point of view of passing the hurdles put forward by the numbers of regulating agencies, are also like a game of poker - much like in the stoke market for big players. Six years ago, the Public Utilities Commission ordered the state's investor-owned utilities to contract with private companies that were planning to build 1,400 megawatts of new plants. Southern California Edison objected, and appealed the order to the Federal Energy Regulatory Commission, arguing it would "not need this power until 2005." FERC sided with Edison, and the proposed plants never were built. Probably. This means incompetence – as simple as that. The following year, the state passed its deregulation legislation, and that slowed plant construction even more, said John Tiner, a professor emeritus of electrical engineering at Johns Hopkins University. "Once deregulation became a factor, the power utilities stopped building plants, with good reason. They knew they would have to divest," he said. Exactly. Why to blame then the power companies? Since 1996, the California Energy Commission has tried to speed up new generation with its "one-stop-shop" for plant permits. The result: The commission has licensed nine big power plants, totaling 6,278 megawatts, said Claudia Chandler, an assistant director of the commission. Six of those plants are under construction. Firms are formally seeking licenses for 12 others, she said. When their interests are threatened, energy companies also throw their muscle around. (Stuart Leavenworth and Chris Bowman, Sacramento Bee 1/8/01 "All kinds have foiled new plants") "Assertions that environmental regulations were holding back power production were 'absolutely false.'" - spokesman for Houston- based Reliant Energy, which operates four Southern California plants. Nor, apparently, did environmental regulations play much of a role in California's failure to build new plants in the years since deregulation. In fact, environmentalists generally favored deregulation, because they thought it would lead to the construction of new plants, which would be gas-fired and hence cleaner than the coal-fired plants that still supply much of the state's power. (Paul Krugman, New York Times January 31, 2001 "Smog and Mirrors") I have partially addressed this issue in my previous note. The problem is when all the new plants are gas-fired, that increases the demand on gas, therefore, gas delivery system should be upgraded – pipelines, storage facilities, compressors, etc. More exactly, new ones have to be built. People think that the crisis was caused by a sudden increase in demand. This is not what the specialists think. The increase of demand is steady. In fact, this year, due to the cool weather, the demand has increased less than what normally it would’ve done. The facts are that the utilities took an unusually large amount of capacity off-line for what it described as ``routine maintenance.'' I have addressed this issue in the previous note. At the same time, members of the power-generator cartel also began to systematically withhold power. Ostensibly, this was done because the cartel feared that any power sold to the near-bankrupt utilities on credit would be money lost. The practical effect, however, was to drive wholesale electricity rates through the roof at the same time that the now-artificial electricity shortages triggered rolling blackouts throughout the state. (Peter Navarro, Pioneer Press 1/30/ 01 Navarro is an associate professor of economics and public policy at the University of California, Irvine. Distributed by the Los Angeles Times-Washington Post News Service.) Partially absurd, partially true. Why wouldn’t he give some names of companies that have illegitimately held the supply, and why the regulators do not go after them? Of coarse if the utilities are near-bankrupt (and they were), everybody would fear to sell them anything. How are they going to collect their money? If you were near-bankrupt, would anybody sell you a car or a house? Or if your credit is bad, and you apply for a loan in a bank, and they agree to give it to you, wouldn’t they charge very high interest rates? This is called risk-premium in classic finance/portfolio theory. Higher the risks, higher premiums your counterparties build in. What kind of absurd is it to complain about it? But I think that the "respectable" Professor has to be fired for incompetence from the university due to his statement “The practical effect, however, was to drive wholesale electricity rates through the roof at the same time that the now-artificial electricity shortages triggered rolling blackouts throughout the state.” It seems like he has no clue about how the markets operate even outside the energy industry, for example, in commercial loans’ industry. Would you have a comment, here, Boghos? P.S. Azat, when you first spoke about curtailing the supply, I had an impression that it is about gaming of the market through holding of supply. There is such a topic in the academic literature related to power markets, and I am familiar with it. Theoretically speaking, the power companies can game the market, by holding the supply where needed, and artificially congesting the transmission lines so that to create islands of high demand and no-supply. While the academicians do demonstrate such possibility, there is no evidence that artificial congestion has taken place anywhere in the US. It is a very hard thing to do artificially. This is what I first you were referring to. That’s why I decided to read the article carefully, and then to reply. But what is being alleged in this article is an absurd from the point of view that it is the most natural concern in business – the creditworthiness of the counterparty. From what I understand, the respectable “Professor” is more of a lawyer rather than economist. In a mess like the energy market is, the lawyers hope for another redistribution of the national wealth from the shareholders to the attorneys (much like in tobacco and other industries). [ May 21, 2001: Message edited by: MJ ]