Report: Federal regulators to cap rates

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Report: Federal regulators to cap rates

FERC move would expand electric price 'mitigation' plan By CBS.MarketWatch.com Last Update: 8:02 PM ET June 12, 2001

WASHINGTON (CBS.MW) - Federal regulators will reportedly move to cap wholesale power rates in the western United States at a meeting next week.

The Federal Energy Regulatory Commission, which imposed limited price caps late last month, will consider expanding the caps to run 24 hours a day in 11 western states whose power grids are closely linked, CBS News reported on its web site and in a broadcast report.

The Bush administration and a majority of the commission have strongly opposed rate caps, arguing they reduce incentives to construct new power plants needed to ease California's power shortages.

But political pressure in favor of caps has been building since Democrats won control of the Senate last month. Democrats, including California Gov. Gray Davis, argue that power generators such as Duke Energy (DUK: news, msgs, alerts) and Reliant Electric (REI: news, msgs, alerts) have been gouging the state's residents for months with high prices for electricity.

And on Monday two key Republican lawmakers joined in the calls for temporary caps. See related story.

The proposals are likely to be called "mitigation" rather than caps, to save face for the commissioners opposed to the caps, according to the report.

California's power crisis has forced the state's largest utility, PG&E Corp.'s (PCG: news, msgs, alerts) Pacific Gas & Electric unit, into bankruptcy. Edison International's (EIX: news, msgs, alerts) Southern California Edison unit is also teetering on the brink of bankruptcy.

http://quicken.excite.com/investments/news/cbsmw/notemplates/frame.dcg?symbol=PCG&ntlink=/relocate/co=quotes_cbs;http://cbs.marketwatch.com/news/intuit/story.asp?guid=%7B2A03C266%2D4439%2D4661%2DACB6%2D25A6B01F1176%7D&siteid=intuit&dist=intuit&780851542

-- Martin Thompson (mthom1927@aol.com), June 13, 2001

Answers

It is likely that Greenspan or another major influential economist has conveyed to the Bush Administration and F.E.R.C. that two simultaneous economic crises might be one too many. Japan is facing a fresh round of economic crisis, per the article below.

Martin Weiss has been overly pessimistic in his statements and forecasts in the past, but this still indicates that there is at least the potential for a serious Japanese debt default crisis ahead.

And a serious debt crisis in both California and Japan simultaneously might send the markets "over the brink." To prevent this, California is suddenly being granted at least a partial reprieve by the powers that be.

Or is the crisis abating because the embedded systems that failed with Y2K Bugs are getting fixed?

-------------------------------------------------------------------- JAPAN CRACKS WIDE OPEN! Yen near 11-year lows. Japanese stock market falling off the cliff. New prime minister getting ready to let dozens of banks fail - - including one of the largest in the world, Daiwa Bank, which holds more deposits than CitiGroup and J.P. Morgan Chase combined.

I've been telling you this was coming. Now it's here, knocking on your door, . . .

The new Prime Minister's cure for the economy is to let it collapse; let the banks fail; and let the stock market be slaughtered. It's going to be a bloodbath.

For nearly a decade, the Japanese government has desperately tried to turn their economy and stock market around -- not just two or three times, but a total of TEN times. Every single attempt was a flop, a total failure.

Now, they have a new prime minister whose entire political platform is to quit bailing out bankrupt banks, stop propping up a sinking stock market, and give up trying to stimulate the economy.

He may be doing the right thing for Japan's long-term future. But in 2001 and 2002, it's going to set off the most massive tidal wave of selling ever witnessed in a modern nation.

Dozens of Japan's largest banks will dump hundreds of billions worth of shares accumulated over decades. Insurance companies, trust companies, and other institutions will trash even larger hoards of stocks as well as bonds.

This will be extremely painful for Japan. . . . Daiwa Bank is headed for failure. Giant industrialist Mitsubishi is losing money hand over fist.

The economy is in a tailspin. Unemployment in Japan is skyrocketing. Auto exports are plunging, down a whopping 13% in April. Consumer spending is nonexistent. Japan's national debt is $5.6 trillion, the worst per capita debt of any industrialized nation EVER.

The Japan crisis is rolling like a tsunami across the globe. Japan is the largest or second largest trading partner of nearly every significant East Asian country, including China, Taiwan, Thailand, Indonesia (the fourth most populous nation in the world), Korea, and the Philippines. So Japan's troubles are pouring over onto them.

There's an impeachment and civil war in Indonesia ... a terrorist rebellion in the Philippines ... and political sackings in Thailand. Stock markets are getting creamed in Taiwan, Malaysia, the Philippines, and Hong Kong.

These countries were just barely recouping from the 1997-98 depression. And now their largest trading partner is going into collapse. It's devastating.

Japan's troubles are even beginning to spill over to Europe. Unemployment is running twice as high as the U.S. Consumer confidence is crashing through the floor, and the euro, which has been tanking ever since it was launched, has just suffered a new and devastating plunge. . . .

I travel all over the world, and am fluent in Japanese, Mandarin Chinese, Portuguese, and Spanish. I can tell you that everywhere from São Paulo to Bangkok, investors are more frightened than I've ever seen them. Their economies are going down the tubes, and everything they've worked for all their lives is going down with it. The Asian crises of 1997 and '98 were just the early tremor of the earthquake that's on its way now. Back then, the U.S. economy was strong enough to support the whole world. Not so today. The U.S. is in its own heap of trouble. There is no economic power on earth that can stop a global economic collapse. . . .

It's going to be absolutely brutal. . . . The Japanese collapse is going to shock everyone, even those who think they know all about the decline. The yen is going to be flattened. Unemployment is going to go through the roof. Huge multinational companies that used to dominate the world economy are simply going to go belly-up. Kaput. Gone. . . .

Sincerely, Martin Weiss, Ph.D. Copyright, Martin Weiss; Fair Use for Educational and Research Purposes Only ---------- Short ellipses ... are in the original. Long ellipses . . . indicate editing of investment recommendation information and $5000/yr. investment advice newsletter advertising.

-- Robert Riggs (rxr.999@worldnet.att.net), June 15, 2001.


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