Blogus Interruptus

I was doing some research for another post and I ran across this editorial from Paul Krugman. Knowing what we know now about Enron and their trading frauds with names like “Death Star” and “Fat Boy”, read this opinion piece and see if you think Paul Krugman is a guy that has “the Flick”.

Reckonings; California Screaming

”How might market manipulation work? Suppose that it's a hot July, with air-conditioners across the state running full blast and the power industry near the limits of its capacity. If some of that capacity suddenly went off line for whatever reason, the resulting shortage would send wholesale electricity prices sky high. So a large producer could actually increase its profits by inventing technical problems that shut down some of its generators, thereby driving up the price it gets on its remaining output.”

Remember, this is from December of 2000. George W. Bush had just been elected -- for the first time -- and I had never even heard of Paul Krugman.

”And maybe that is the broader lesson of the debacle: Don't rush into a market solution when there are serious questions about whether the market will work. Both economic analysis and British experience should have rung warning bells about California's deregulation scheme; but those warnings were ignored -- just as similar warnings are being ignored by enthusiasts for market solutions for everything from prescription drug coverage to education.”

Oh, that we had listened more closely.

Don Brown
June 29, 2010