Enronization

How, exactly, is it that Jon Corzine is not incarcerated at this moment? Wouldn't you consider him a flight risk? Apparently our Justice Department (or is it the Department of Justice?) doesn't assume that the ownership of a fleet of private jets and continued access to a half billion dollars of other peoples' money could be, in any way, shape or form, construed as risk-worthy.

A parallel: In our electric power industry we are [supposedly] bound by the North American Electric Reliability Councils (NERCs) reliability standards. One example: the loss of a single generator, transmission line, or transformer should not result in the overload of any remaining facility, in that we operate with sufficient capacity to absorb the loss of that one resource. Well, PacifiCorp did indeed have an issue in 2008 where a lockout relay failed to operate, resulting in 15 standards violations and the loss of a few hundred thousand customers. What I was floored by, in reading the report of this event, was how PacifiCorp was fined $4 million but did not have to admit to having failed to meet any of these reliability standards. They violated 15 standards, but do not admit having violated them! And NERCs position is that they didn't violate them, either! But $4 million was levied, $4 million was paid, and everyone's hands have been washed.

Corzine will be allowed to do the same thing, you watch. The SEC will levy a token fine in the coming years, say, fining his defunct company $50 million for having looted $800 million but also not having to admit to having done anything wrong or illegal...and most importantly, Corzine cannot be prosecuted for anything because he did not have to admit to having done anything.

Say there were a string of crimes committed here in Elk Grove. A murder at the Post Office, a kid caught for selling meth on a street corner and a robbery at the Safeway. I'm linked to all of them -- because I drove through that intersection where the kid sold the dope, was caught on the red light camera, as I was driving to the post office to ship a Christmas gift and to Safeway for a 6 pack. But instead of being charged, I meet privately with the county prosecutor and we cook up a deal -- I don't have to admit to having committed any crime, but I'm willing to spend the next 20 months under housal unit arrest with an ankle monitor.

What judge would sign off on that? Did I murder someone or was I just selling a dimebag on Franklin Blvd? Or was I innocent? But these are just the way these sorts of SEC fines are levied -- we don't get to know the true level of fraud committed, and clearly by accepting to pay a fine some presumption of guilt is assumed...but really, this is just the simple cost of doing business, having to work with such a regulatory agency. PacifiCorp did exactly that with NERC...and I argue that my utility SMUD should approach the levying of fines in exactly the same way -- treat them as any other cost of doin' business here in our grand nation where one-eye-open justice reigns on high.

Jon Corzine and MF Global -- if this one case doesn't provide you with all the ammunition you'd need to encourage you to take your money out of their criminal hands, well, continue to chase such hallucinated rates of return and prepare to lose the surplus wealth you think you "were entitled to" based on your "years of hard work." Here's a further example of how Enronized accounting is still a legal form of theft some fifteen years after Kenneth Lay (God Rest His Soul, May Peace Be With Him) started it. Indeed, ratings agencies gave sterling marks to MF Global right up until they declared bankruptcy.

If you can't see how this whole system is geared not to providing needed liquidity to producers and sellers but also to bilk you out of a percentage (yes, sometimes 100%) of your money, well, I'm glad you're there to lose it instead of me, to grease the skids of our wonderful free-market economy.