1.

ENRON TRADER CONVERSATIONS SHOW POWER MARKET MANIPULATION WAS SPORT
By Kristin Hays

Associated Press
June 2, 2004

Original source: Associated Press

HOUSTON -- Enron Corp. traders openly discussed manipulating the California power market and joked about stealing from grandmothers during the Western energy crisis in 2000-2001, according to transcripts of telephone calls filed with the Federal Energy Regulatory Commission.

The transcripts, some littered with profanity, were filed by a public utility district near Seattle.

The calls on the transcripts are central to the Justice Department's investigation of Enron's trading practices.

John Forney, a former top trader in Enron's defunct Western trading operation based in Portland, Ore., is slated to stand trial on charges of wire fraud and conspiracy. Two other former Portland traders, Timothy Belden and Jeffrey Richter, have pleaded guilty to one count of wire fraud and are helping prosecutors.

Energy merchants regularly tape trader conversations to keep a record of transactions.

According to the Snohomish County Public Utility District, which obtained audiotapes of trader conversations from the Justice Department and transcribed them, traders openly discussed creating congestion on transmission lines, taking generating units offline to pump up electricity prices and overall manipulation of the California power market.

For example, in one transcript a trader asks about "all the money you guys stole from those poor grandmothers of California."

To which the Enron trader responds, "Yeah, Grandma Millie, man. But she's the one who couldn't figure out how to (expletive) vote on the butterfly ballot."

Conversations that involve Forney, Belden and Richter appear throughout the transcripts.

In one of those transcripts, a trader says to Richter, "So, uh, somebody's figured out how to set congestion?"

Richter: "Well, we ... we can set it if we want. I mean, it's not a hard game to do ..."

In another, an Enron trader identified as David discusses shutting down a steamer from a generating unit to increase prices.

"I was wondering, um, the demand out there is er ... there's not much, ah, demand for power at all and we're running kind of fat. Um, if you took down the steamer, how long would it take to get it back up?

"Oh, it's not something you want to just be turning on and off every hour. Let's put it that way," another trader says.

"If we shut it down, could you bring it back up in three -- three or four hours, something like that?" David asks.

"Oh, yeah," the other trader says.

"Well, why don't you just go ahead and shut her down, then, if that's OK," David says.

Eric Christensen, a lawyer for the utility district, said it is seeking to convince a FERC administrative law judge that Enron should be ordered to surrender as much as $2 billion in unjust profits.

2.

ENRON TRADERS CAUGHT ON TAPE

CBS Evening News
June 1, 2004

http://www.cbsnews.com/stories/2004/06/01/eveningnews/main620626.shtml

When a forest fire shut down a major transmission line into California, cutting power supplies and raising prices, Enron energy traders celebrated, CBS News Correspondent Vince Gonzales reports.

"Burn, baby, burn. That's a beautiful thing," a trader sang about the massive fire.

Four years after California's disastrous experiment with energy deregulation, Enron energy traders can be heard -- on audiotapes obtained by CBS News -- gloating and praising each other as they helped bring on, and cash-in on, the Western power crisis.

"He just f---s California," says one Enron employee. "He steals money from California to the tune of about a million."

"Will you rephrase that?" asks a second employee.

"OK, he, um, he arbitrages the California market to the tune of a million bucks or two a day," replies the first.

The tapes, from Enron's West Coast trading desk, also confirm what CBS reported years ago: that in secret deals with power producers, traders deliberately drove up prices by ordering power plants shut down.

"If you took down the steamer, how long would it take to get it back up?" an Enron worker is heard saying.

"Oh, it's not something you want to just be turning on and off every hour. Let's put it that way," another says.

"Well, why don't you just go ahead and shut her down."

Officials with the Snohomish Public Utility District near Seattle received the tapes from the Justice Department.

"This is the evidence we've all been waiting for. This proves they manipulated the market," said Eric Christensen, a spokesman for the utility.

That utility, like many others, is trying to get its money back from Enron.

"They're f------g taking all the money back from you guys?" complains an Enron employee on the tapes. "All the money you guys stole from those poor grandmothers in California?"

"Yeah, grandma Millie, man"

"Yeah, now she wants her f------g money back for all the power you've charged right up, jammed right up her a------ for f------g $250 a megawatt hour."

And the tapes appear to link top Enron officials Ken Lay and Jeffrey Skilling to schemes that fueled the crisis.

"Government Affairs has to prove how valuable it is to Ken Lay and Jeff Skilling," says one trader.

"Ok."

"Do you know when you started over-scheduling load and making buckets of money on that?

Before the 2000 election, Enron employees pondered the possibilities of a Bush win.

"It'd be great. I'd love to see Ken Lay Secretary of Energy," says one Enron worker.

That didn't happen, but they were sure President Bush would fight any limits on sky-high energy prices.

"When this election comes Bush will f------g whack this s--t, man. He won't play this price-cap b------t."

Crude, but true.

"We will not take any action that makes California's problems worse and that's why I oppose price caps," said Mr. Bush on May 29, 2001.

Both the Justice Department and Enron tried to prevent the release of these tapes. Enron's lawyers argued they merely prove "that people at Enron sometimes talked like Barnacle Bill the Sailor."

3.

JANE JACOBS

CampusProgram.com

http://www.campusprogram.com/reference/en/wikipedia/j/ja/jane_jacobs.html

[Excerpt]

Jane Jacobs [born 1916 in Scranton, PA, and now living in Toronto, Canada] has spent her life studying cities. Her books include:

- Death and Life of Great American Cities (1961)
- The Economy of Cities (1969)
- The Question of Separation (1980)
- Cities and the Wealth of Nations (1984)
- Systems of Survival (1992)

Systems of Survival moves outside of the city, studying the moral underpinnings of work. As with her other work, she used an observational approach. This book is written as a platonic dialogue. It appears that she (as described by characters in her book) took newspaper clippings of moral judgements related to work, collected and sorted them to find that they fit two patterns of moral behaviour that were mutually exclusive. She calls these two patterns "Moral Syndrome A", or commercial moral syndrome and "Moral Syndrome B" or guardian moral syndrome. She claims that the commercial moral syndrome is applicable to business owners, scientists, farmers, and traders. Similarly, she claims that the guardian moral syndrome is applicable to government, charities, hunter-gatherers, and religious institutions. She also claims that these Moral Syndromes are fixed, and do not fluctuate over time.

It is important to stress that Jane Jacobs is providing a theory about the morality of work, and not all moral ideas. Moral ideas that are not included in her syndrome are applicable to both syndromes. "Echo Books"

MORAL SYNDROME A

Shun force
Come to voluntary agreements
Be honest
Collaborate easily with strangers and aliens
Compete
Respect contracts
Use initiative and enterprise
Be open to inventiveness and novelty
Be efficient
Promote comfort and convenience
Dissent for the sake of the task
Invest for productive purposes
Be industrious
Be thrifty
Be optimistic

MORAL SYNDROME B

Shun trading
Exert prowess
Be obedient and discplined
Adhere to tradition
Respect hierarchy
Be loyal
Take vengeance
Deceive for the sake of the task
Make rich use of leisure
Be ostentatious
Dispense largesse
Be exclusive
Show fortitude
Be fatalistic
Treasure honor

Jane Jacobs goes on to describe what happens when these two moral syndromes are mixed, showing the work underpinnings of the Mafia and communism, and what happens when New York Subway Police are paid bonuses for each arrest they make.