ENRON & FRIENDS


September 18, 2003:  I just bought the domain name enronandfriends.org to point here.  Whoopee.

To celebrate, let's take a trip to the lovely vacation spot of Cancun, Mexico, where the World Trade Organization just held its fifth ministerial conference.  The main issue debated at the conference was agricultural import/export rules, and the debate was between two main interest groups: rich countries like the United States who were basically arguing for unlimited corporate access to every third world market, and poorer countries who didn't want the corporate power structure to continue taking advantage of their position of poverty to enrich others at their expense.  A group of the latter decided that it was time to draw the line and resist the proposals submitted before the conference.  They formed a group which called itself the "G21".  And the United States delegation went into full armtwisting mode.  Representatives of many countries were privately approached and told that if they joined G21, there would be reprisals against them.  A Ugandan delegate described the tactics as blackmail.

Sometimes I wonder what it must feel like to be someone in the government of some small country that gets into a disagreement with the United States these days.  From stories like this, I get the impression that it's rather like being a family restaurant owner when the local Mob decides they want you do do business their way.  Any little random thing you do that affects their financial interest, they have not the slightest embarrassment about coming around and telling you how you ought to run things... for your own good.  If you resist or even just stall them, they quickly resort to threats.  And if people defy them openly, whoever is the loudest and most belligerent gets made an example of.  And those who submit find themselves working for somebody else's gain.

Anyway, this time the threats didn't work, the G21 countries resolved to hold steadfast, and that they did.  The entire conference collapsed and was abandoned.  This might sound like a failure, but for the G21 it felt like victory.  As one person put it, the rich countries were grumbling and scowling, and the poor countries were cheering and high-five-ing each other.

One source inside the UK delegation said the American delegation, once they saw how things were going for them, avoided people and stayed in their hotel... "They're behaving like the Soviet Union in the eighties."

This is the second time such a conference's agenda has been blocked.  The developing countries are starting to feel their oats, and starting to hope that the WTO can really become something other than a new tool of economic colonialism, which is pretty much what it has amounted to so far.


The latest weird bit of unprecedentedness in the California recall election may end up catching the U.S. Supreme Court in a titty-twister.  One tactic that opponents of the recall used was to file suit to delay the election until next March's primaries, avoiding a special election on October 7, which is what is currently scheduled.  And a three judge panel of the Ninth Circuit Court of Appeals agreed.  Their reasoning, oddly enough, drew from the same arguments that were used in the Supreme Court decision of Bush v. Gore in 2000: that having voting machines of widely differing reliability in different districts violates the 14th Amendment.  So they should put off the election until the remaining counties in California that still use those shitty punch-card ballots can switch to new systems, which presumably will be finished by spring.

(What I always hated about Votomatic punch cards is that they produce false tactile feedback -- the hole that the stylus goes through produces a downward "click" that feels a lot like you just punched the hole, when you haven't yet.)

The legally awkward part about using Bush v. Gore as a precedent is that the ruling explicitly says it is not to be treated as one -- that it is a totally unique one-time ruling that cannot be generalized to apply to any other case.  And since the GOP promptly appealed the ruling, the Supremes may soon be in a position where, if they want to overturn the ruling and make the election go ahead, they have to explicitly invalidate their own justification for how they intervened in Florida.  If they refuse to touch the case -- which, by all precedent before 2000, they should -- that just emphasizes how Florida should have been none of their business either.

But the ruling can't go directly to the Supremes -- the first appeal goes to a larger judicial panel within the 9th Circuit.  As I write this, I just heard that a ruling is expected tomorrow.  Scalia and Rehnquist and their gang are probably praying that the first appeal overturns the ruling, which would make it much easier to just avoid the whole issue.

I'll feel a little awkward if the election is delayed until March, because I just already sent in my absentee ballot.  I hope they can hang onto it until then.  I'm planning to stick to absentee voting until my county gets rid of its Diebold touch-screen voting machines -- see below for the Diebold story.

Aside from this, the recall election is shaping up much as could be expected.  When the recall petition was first approved, Governor Davis's poll numbers for being kept in office were in the low twenties, and Schwarzenegger was the clear front-runner to replace him.  There were four other Republican candidates in the contest, besides Ahnuld.  My friends started gloomily assuming that he would be the next governor, and I told them "Don't worry, Arnold will not win."  At the time, I got very little agreement.

Now the anti-recall poll numbers are climbing fast, to around half now saying they won't recall him -- which fits my theory that the better informed a voter, the more likely they are to vote against the recall, meaning that the recall campaign peaked at its start and can only weaken now.  And Cruz Bustamante is solidly ahead of Ahnuld among the replacement candidates, 30% to 25%.  Three of the four other Republicans have dropped out: Darrell Issa, Bill Simon, and as of today, Peter Überroth.  (Who admitted, before he left, that the financial crisis is not Governor Davis's fault... but still said he should be recalled.)  That leaves Tom McClintock as the sole GOP "spoiler"... and his numbers are surging upwards.  In the latest poll his numbers were two thirds of Schwarzenegger's.  They were half of his less than a week ago.  In the first candidate debate, the pundits pronounced that if there was anyone who "won", it was McClintock.  The one who lost big was Ahnuld, who didn't show up.

Unsurprisingly, Ahnuld's support is far stronger among men than among women.  Some women have already organized protests based on "notorious" stories or rumors of the movie star's fondness for groping and other sexually disrespectful behavior.  The most damning published article alleging this behavior is probably the one by John Connolly in the March 2001 Premiere magazine, listing many incidents.

Another little Schwarzeneggerian embarrassment is that back in another '70s interview, he supposedly said that blacks would not be able to run South Africa if they gained political power there.  Apparently an ABC news reporter dug this up, and then the network spiked the story for some reason.  This story was revealed by Matt Drudge, who apparently really doesn't like Ahnuld.  But then, Drudge has been known to just make stuff up...

McClintock is the only real right-winger among the five original Republicans.  (And in response, Ahnuld is now working hard on wooing the hard right.)  His views on the polarizing hot-button issues that pundits like to divide candidates by, such as abortion and gun control and so on (the same ones that I called "fake issues" last winter), are all on the minority side with the California electorate.  Yet he is so clearly better prepared and qualified for the responsibilities of the office than Ahnuld is, that he could well end up being the primary Republican candidate, with Schwarzenegger coming in fourth in votes behind him and Bustamante and those who vote to keep Davis.  Admittedly, that looks a bit unlikely with today's poll figures.  But if McClintock starts to catch on, you might suddenly see the GOP behind-the-sceners leaning on Schwarzenegger to drop out and make room, rather than on McClintock as they are probably doing now.  Especially since Ahnuld has become a rather severe embarrassment to the Christian moralist contingent, what with his past record of smoking dope, and boasting of orgies and gang-bangs and how the ladies say "ooooh, it's so big", and so on (which he now says were made-up stories he told in order to get publicity).  McClintock has promised he's in for the duration.  If he were to drop out today, the polls say that would give Arnold a modest and uncertain lead over Bustamante.  McClintock challenged Ahnuld to a one-on-one debate, and of course the challenge was not accepted.

Interestingly, all six of these challengers, conservative and liberal alike, support legalized medical marijuana.

McClintock's core argument is an interesting one.  He says the state fiscal crisis is caused by waste, and as evidence gives this statistic: under the administration of Pat Brown in the sixties (a Democrat), Californians paid less in taxes even after adjusting for inflation, and yet got better services.  So even a Republican whose policy recommendation is for smaller government is admitting that the state did a better job in the old days when it wasn't constantly pinching pennies and doing a half-assed job with every vital program it funds... even he liked it better when the state funded its work properly instead of trying to stretch everything thin and make one coat of paint do the work of two, as it's done for the last ten or twenty years.  He claims that we can get back that better level of service by reducing waste and mismanagement.  When I heard this, I knew that this was certainly not the whole story.  Adjusting the tax burden of forty years ago for inflation doesn't really correct the figures to correspond between different eras; the inflation figures do not track the whole rate of change in the size of the state's economy, or in your personal economy.  It can correct for the changes of prices in individual goods, but not, for instance, for the effect of new and different goods becoming part of the economy.  The best question to ask is not how big the state budget of those days would look in artificially computed 2003 dollars, but whether taxation takes in a bigger or smaller portion of the state's economic activity.  Let's go looking for some numbers...
 

Year Gross State Product Tax Revenue Percentage
1966 $ 83,006,000,000  $ 3,838,000,000   4.6 % 
1977 $ 229,468,000,000  $ 14,825,000,000  6.4 % 
1989 $ 743,472,000,000  $ 43,052,000,000  5.7 % 
2000 $ 1,344,623,000,000  $ 88,128,000,000  6.5 % 

In a bit of a surprise to me, it turns out that McClintock is partly right.  Tax revenue has gone up since 1966 as a portion of the state economy... but overall it's been reasonably flat over the years.

McClintock also claimed that revenue has kept going up, the only problem is that spending has gone up faster.  This is just wrong.  The immediate problem is that this year, revenue has plummeted -- not just in California but in most states.  While the national GDP per capita dipped down by only a fraction of a percent, total state government revenues have dropped by seven percent.  In California, total tax revenues dropped twenty percent.  The reason, apparently, is that before this the state was benefitting from people's capital gains in the booming stock market.  It's probably around 5.5% of the size of the state economy now.  And it has to do more than it did five or twenty years ago, because the federal government is doing less.

We probably will never recover the ideal economy of the sixties, because I would bet it was predicated on Europe having, at that time, recovered enough from WWII to become a major market, but not yet enough to become a major competitor.

If McClintock has a point, it's probably in the growth of the number of state employees... and if you want to look at where major excess has built up there, I suggest taking a look at the prison guards' union, which has been said over the last five years to be the state's strongest political lobby, and which has gained great increases both in the number of jobs and in the pay rate for those jobs.

For those who want to select their candidates by the quality of their grammar, here's a quote from Tom McClintock's writing: "Remove the bureaucratic obstacles that once produced affordable housing and clean, cheap and abundant electricity."  The obstacles produced these things?  (And by the way, why does he think our electricity was clean back then?)

Ahnuld is apparently favoring the same policy: his only plan for fixing the revenue problem is to audit all the state's books.  All of the Republican candidates have promised in a vague general way to reduce spending, but apparently would rather die than name what specific state services would get cut.  They seem convinced that they won't need to cut anything at all from important things like education, that the money can all be squeezed out somewhere that won't hurt anything, by streamlining and privatizing and deregulating.  We've heard that story before.

Another factor that McClintock is ignoring is how much money is being drained out of the state lately to the rest of the country.  Besides the $45,000,000,000 we lost in the electricity crisis, it turns out that California's state taxpayers are now annually paying out $55,000,000,000 more to the Federal government than the state gets back from it.  For each dollar we pay the feds, we get 86 cents back -- while those in New Mexico get $2.03.  Alabama, a more typical beneficiary state, gets $1.54.  Even when our economy is hurtin', we're still doing more than our share to carry the rest of the country!  This imbalance was smaller before George W. Bush was (cough) elected; the current GOP hegemony in Washington has taken strong measures to make sure that Republican states profit from tax revenues at the expense of Democratic ones.  The state that's worst off is Connecticutt -- they're getting 62 cents on the dollar.  But California's amout is, of course, the largest in total dollars.  And it's not trivial on the individual level: it's about $2000 per adult citizen of the state.  Or to put it another way, about $1000 for each voter in other states who voted for Bush.  I bet they figured voting for Bush would somehow benefit their pocketbooks, but I doubt they knew it would be that direct a benefit.

To get back to the debate: I didn't see the whole thing, but I had a chance to get a taste of the various candidates present.  The structure was like that of the election itself: first came a solo grilling of Governor Davis, answering questions first from a panel of reporters and second from assorted members of the voting public.  Then came a five-way debate between Bustamante, McClintock, Überroth, Peter Camejo of the Green Party, and Arianna Huffington.  And you know who I thought came out best?  There was one of the six who, in my opinion (and rather to my surprise), answered the questions much better than the others -- more substantively, more truthfully, and I would say more persuasively.

Gray Davis.

He had by far the most difficult position to explain and defend, yet he handled it better than any of the others handled the task of undermining him (or each other).  Camejo, Huffington, and Bustamante (all candidates who I might consider vote-worthy in some circumstances) were all a bit disappointing.  I'd say Huffington came out #1 in jabbing others where it hurt, at some cost to her ability to contribute constructive ideas.  (A Huffington moment:  [to Bustamante] "You got quite a bit of money from tobacco companies."  Bustamante: "I also sued them, Arianna.")

Bustamante probably took the most lumps of the five, because he accepted political contributions of $2,000,000 from native tribes with gambling casinos, and had come out against restraints on their ability to make money with those casinos, whereas many others (including Davis) favored the restraints.  (As if we had any right to impose such restraints on what are supposed to be autonomous populations.)  Huffington called this contribution "legalized bribery", Bustamante called it their appreciation for how he stood up for them back when they had nothing.  This contribution would ordinarily be illegal, but it gets by through a loophole: it's officially a contribution for debts from a previous campaign.

Davis, Überroth, and Schwarzenegger have all made some use of the same hole in the law (in the case of the wealthier candidates, mainly as a means to give to themselves), but only Bustamante got hurt by it.  So several days later, he took a bold step to shake off that issue: he took the whole wad of money in question, and maybe some extra -- $4,000,000 all told -- and handed it over to the campaign against Proposition 54, the sole voter initiative to share the ballot with the recall election.  Prop 54 is an attempt to end anything remotely like affirmative action by making the state entirely colorblind -- forbidden to collect ethnic/racial data at all.  Only McClintock is in favor of it.  It comes from the same bunch, fronted publicly by Ward Connerly (the Clarence Thomas of the University of California Regents), who got affirmative action banned in university admissions, in what amounted to an effort to get a bigger slice of the educational pie back in the hands of white people.  Connerly is supported by right-wing "philanthropic" organizations such as the Bradley Foundation.  Enough about that.

One further issue that is likely to hurt Davis and Bustamante is that Davis recently signed a law, which he had earlier vetoed, to remove the ban on illegal immigrants being able to earn driver's licences.  Polls say Democrats are marginally in favor of this but divided, and Republicans strongly against it -- no surprise for the party identified with white people who are self-righteous about privilege, and as befits that attitude, opponents are livid about their privileges of citizenship being shared too generously.  And they see the new law as pandering for Latino votes... probably quite rightly.


Speaking of recall elections and latin voters, Hugo Chávez, the president of Venezuela, just survived a recall campaign.  In his case, his opponents tried a violent coup first and democracy after.  Since the backers of that coup include some of the same people in Washington who support the California recall campaign, I guess we Californians should thank our stars that they didn't just try sending tanks to Sacramento.  [LATER CORRECTION:  The recall initiative effort eventually succeeded in December of 2003, with the vote held in August 2004.]

I've noticed that when right wingers have power in the US, they will genuinely support democratic processes in some countries, but not others... and you can usually tell which category a given country is going to fall in by asking just one question: is it inhabited by white people?

Hopefully that's changing.  For all that I despise about George W. Bush, one thing I have to admit is that he, and his generation of neo-cons, are leaving behind the racist attitudes their parents' generation tended to hold.

By the way, Greg Palast says that the reason Chávez survived the coup attempt is because he got a warning from the secretary general of OPEC, who happens to be a Venezuelan -- Ali Rodriguez.  And the warning came because Libya and Iraq were planning to call for a new anti-US oil embargo to put pressure on Israel, and Rodriguez figured that when the US heard this, that would trigger them to push the Go button on the coup, to help disrupt OPEC.  Four days after the warning, three days after the Iraqi statement, the coup was launched.  The warning enabled Chávez to spring a booby-trap on the new "president" and force him back out of the palace.

Ironically, it was Venezuela which broke the back of the 1970s oil embargo, back when it was not yet an OPEC member.  Now, thanks to Chávez, Venezuela is a leader in rebuilding OPEC's strength... and that, children, is why George W. Bush wants him out of power by fair means or foul.  (Chávez claims to have videotape of US military officers meeting with the coup plotters.)  It might even be what triggered the Iraq invasion, because the revived OPEC had succeeded in nearly doubling the price of oil, after years of high production and low prices.

The administration has not given up on trying to paint Chávez as tied to Islamist terrorists, despite Chávez having nothing in common with them except being in an oil-rich country.  I guess that's the modern version of trying to paint anyone anti-American as a stooge of the USSR in the old days.


Speaking of the election, and especially of the court ruling about punch-card voting, leads to the increasingly interesting -- and frightening -- flap going on over paperless electronic voting machines, particularly the most popular ones which are made by Diebold Electronic Systems, based in Ohio.  The Accu-Vote touch-screen system was first developed by I-Mark Systems, which was acquired by Global Election Systems, which was acquired by Diebold in 2001.  My own county, Alameda, was an early adopter of these machines, despite a competing machine being made by a locally based company (Sequoia Voting Systems).  I voted on one in 2002.  I asked if there was a hardcopy record, and some poll worker told me it actually was recording one, out of my sight.  He was incorrect, the system does not do this.  I wonder who lied to him...

This is one reason why I switched to absentee voting.  The absentee ballot, it turns out, uses an optical fill-in-the-circle system.  This system has surprisingly high reliability -- something like two orders of magnitude better than punch cards.  (Another paper-based system with surprisingly high reliability is one where the voter draws a line from the name of the office to the name of the candidate.  It sounds complicated but those who use it say it produces very unambiguous ballots where any recount comes up with very definite results.)

Another possible reason for one to avoid them is that, when stuffed into the type of voting booth formerly used for cardpunch voting machines, the big bright screen is quite readable to anyone standing around behind you.  Many counties that bought new machines didn't figure out that they also need to buy new booths.

Diebold has been hit with a whole series of embarrassing revelations about the security of their voting system.  An academic investigation into Diebold's security at Johns Hopkins found numerous holes in the source code -- the fact that they were able to even see the source code in itself revealed a major security breach, because Diebold does not believe, as people in the cryptography field tend to do, that the way to be most trustworthy is to reveal the source openly and let people look all they want for ways to crack it.  The head investigator, Avi Rubin, turned out to have stock in a Diebold competitor, but when this was pointed out he severed those ties and stuck to his guns, and nobody has yet discredited the findings.

Another investigation, by Bev Harris, who is doing a book about the issue -- and if you're interested in security details you should really read this one -- revealed that anyone who gets a password into the server collecting reports from the voting machines can open up, and modify, the counting results using nothing but an ordinary copy of Microsoft Access.  And furthermore, they can erase the audit trail after having done so.  And the system is shipped with a default password, which was obtained from Diebold's insecure FTP site, just as the source code was.

Furthermore, it was found that the vote-counting server appears to have redundant counting tables... some of the more suspicious people investigating the issue say it looks suspiciously like the thing is designed to keep two sets of books.

Diebold's control of their source code is so sloppy, in fact, that one journalist found a copy of it just by using Google.  He says, "On that site was a virtual tutorial for vote riggers: it contained all the passwords, schematic drawings of remote access, IP addresses, port settings, technical manuals, testing protocols, source code and simulators so you can actually practice vote-rigging in the comfort of your own home."  It had been wide open to the public for six years.

Another FTP site was found that held, open to the public, vote tallies from an election in progress, while the polls were still open.  That is illegal.  It happened in the March 2002 primary of San Luis Obispo County, California.

Then there's a bunch of internal mail that got leaked... and in one piece, a principal engineer of the system acknowledged that the criticisms made by Bev Harris are legitimate.  He then says that he could have decided to use some of the security measures built into the Access database, rudimentary though they may be, but chose not to because there were too many incidents where support people found themselves needing to mess directly with the database in order to fix problems with the server!

One critic raised the point that if these were electronic slot machines instead of voting machines, they would be infinitely more secure.  Gaming companies have no trouble running their video slots with good protection against hackers... if they don't, they lose actual money.  To me, as a computer professional, the whole pattern of bad security at Diebold cannot be considered as either understandable slip-ups in an otherwise solid effort, or as the outcome of any kind of Machiavellian plot to fix elections: it's clear as can be that they simply aren't even trying to do a decent job with security.  They are fumbling around with it like incompetent amateurs.

And just in case you thought the sole worry is that Diebold might make it too easy for partisan hackers outside the company to tamper with election results...  Diebold's CEO, Walden O'Dell, is a big Republican supporter who wrote, in a fundraising letter, that he is "committed to helping Ohio deliver its electoral votes to the president next year"!  Just how committed are you to that goal, dude?  As committed as Jeb Bush was in Florida in 2000?

Diebold competitor Election Systems and Software is also run by committed Republicans.  The head of ES&S was campaign manager for Senator Chuck Hagel (R-IN), who is ES&S's previous CEO.  ES&S machines are especially scary because while running they maintain a permanent two-way modem connection with ES&S headquarters.  Hagel's own election was, I've heard it alleged, tabulated largely on his own machines, and showed a suspiciously large victory, especially among segments of the population who normally vote Democratic.  The Senate ethics panel tried to grill Hagel about this conflict of interest, and within 48 hours the head of the panel was fired and a new one installed who pronounced Hagel ethically clean.

These two companies now cover more than half of all the votes in America.

The state of Ohio has gone through a contentious debate over whether the machines can be certified as trustworthy for counties to use in the next election.  Many county commissioners argued vigorously against certifying the machines.  Even if it's reliable, they say, it's being rushed into use too quickly.  Secretary of State Ken Blackwell, a Republican, is widely suspected of being less than impartial in the decision.  Sequoia Voting Systems, the competing maker of voting machines, has already sued with allegations that they were unfairly excluded early in the certification process, and they won reinstatement.  The efforts at restraint were in vain: Diebold was certified by Blackwell, along with Sequoia and two other brands.  Fortunately, counties can choose for themselves which one to buy.

But Ohio is nothing compared to the mess in Georgia.  They made the mistake of buying Diebold machines state-wide there, as early adopters.  The first election using the machines had some glitches, with numerous problems and outages and many calls to Diebold service techs.  Voting machines got set up with candidates listed wrong, some voters reported the wrong name lighting up when they poked the screen, and some polling places were closed for two hours in the middle of the day.  But of greater concern is the fact that the software approved by the state was amended several times -- as one would expect given the shoddy and buggy quality of the source code earlier revealed on the FTP site -- including one software patch that was installed shortly before the election, with no oversight from state officials to check what might have been in it (though such oversight is legally required).  The patch was supposedly to fix a problem with screens freezing up, but for all we know it could have added anything.  It doesn't help that the patch was not against the "GEMS" voting software itself, but against the Windows CE operating system.

Bev Harris, for one, argues that votes were indeed rigged in the 2002 Georgia election.  The outcome, after all, was a "stunning" and "historical" upset that gave the Governorship and one Senate seat to Republicans who, a week before the vote, had been well behind in the polls.  The incumbent Senator widely expected to retain his office, and no Republican had won the Georgia governorship since the days of Reconstruction.  The FTP site contained several more patches, in a folder suggestively named "rob-georgia".  We don't even know whether any of them were used or not.

Coincidentally (?), it was on the November 2002 election that the Voter News Service exit polling system broke down, and we never got the usual data for how voters said they had voted.  That data only just now finally came out.  Or rather, it's been released to a couple of academic groups and will be released for the public a little later.  The VNS data could be a valuable check on what really happened in some of these questionable elections... after all, it has a record of correctly predicting the winners in past elections.  In 2000, for instance, they correctly called every state for Gore or Bush, including those with only a few thousand votes difference... except for Florida.

For her trouble, Harris got a cease&desist order filed against her website, blackboxvoting.com... on grounds of copyright violation for publishing their internal memos!  At this writing, it is offline, the domain name redirected by the ISP.  The related site blackboxvoting.org, however, is still active.  It describes itself as the "research and activism arm of blackboxvoting.com".  Harris contends that copyright law is superceded because the memos were given to her by a Diebold employee, they "demonstrate a clear intent to break the law", and they serve an overriding public interest.

After the election in Georgia, some people insisted on a fresh debate over whether Diebold machines should still be used in 2004.  The scene was a familiar one: citizens asking demanding questions and officials giving bland smooth reassurances.  Finally, one critic of the Diebold system, a programmer named Roxanne Jekot, had had enough.  She stated that if the officials would set up a dummy voting system, she and her friends (known as the "Menopause Militia" according to a local newspaper in my area) could break into it and start changing votes "in a matter of minutes".  They said they could be ready for the attempt in as little as a week.  The election officials took this very seriously, and agreed to set up the test.  The new governor was willing.  But Diebold objected, and Secretary of State Cathy Cox blocked the deal, and the hacking challenge has not taken place.

An activist named Jim March in California took the ultimate step: he put together a bunch of Diebold material and some step-by-step instructions on a CD, and created a "rig-a-vote" kit, ready to use.  Jim March is also the one who uncovered the publicly exposed interim results from San Luis Obispo County.  He downloaded an encrypted Zip archive during election day and later found its decryption password: the first name of a Diebold employee assigned to support the county's election officials.

Remember how the court ruled that the California recall election should be delayed because some counties still use punch cards?  Susan M. Weber of Palm Desert has filed a suit that the election should be postponed because Diebold touch-screen voting machines can't be trusted.  I think she's right.  If Ahnuld is unexpectedly elected while behind in the polls, we'll never know whether these machines counted their votes accurately.

Someone in Congress is finally listening to the recommendations made by the Johns Hopkins group, and others: Representative Rush Holt (D-NJ) has introduced a bill to require that all voting machines must make a paper record, which would supercede electronic totals in the event of a recount.  I don't know whether the bill requires the paper record to be visible to the voter, which is a fundamental requirement if we really want to keep the system honest.

Jekot, for one, thinks Holt's bill needs a little beefing up.  She wants the process for certifying voting systems to be handled by a federal office instead of corporate agencies, she wants a rule requiring voting software to be open source, she wants it made clear that vote counting is a job for the state and county governments, not for corporate agents, and she wants FEC testing standards (questionable though they now are) made mandatory instead of voluntary.


Perhaps emboldened by the administration's embarrassing position on Iraq -- namely, that it's now clear they lied their asses off to get us into the war, and that "winning" only made things worse for us (as predicted by many of those who opposed the war) -- Congress has started handing the administration several defeats, mainly on its worst and most egregious policy initiatives.  Many proposals that past editions of Enron & Friends have been viewing-with-alarm are now being turned back, thanks in part to lobbying by unions.

Note: some of these Congressional decisions are not completely final yet, they still have to go through conference committee.

Another bit of gratifying news is that the former treasurer of Enron, Ben Glisan, just got sentenced to five years after changing his plea to guilty.  Apparently this indicates a deal to cooperate with the prosecutions of other Enron figures.  For the sentence to be this long despite cutting a deal hopefully indicates that eventually people like Ken Lay will get serious sentences.

Of course, there are still lots of other bits of corruption going on in that shining city in the swamp... from yet another incident of Tommy Thompson packing a science committee (on healthy diet, this time) to give the answers preferred by industry, to this embarrassing memo illustrating the, ah, close working relationship between the White House and Exxon.  It appears to show the White House encouraging Exxon to sue its own Environmental Protection Agency.  But I'll forego the big list of minor stories this time -- I'm running behind as it is.

But I should cover one thing that is directly related to the California electricity crisis.  The administration's minions at the Federal Energy Regulatory Commission are now going through a process of either clearing, or settling for tiny amounts, the cases against many of the sixty power companies accused of gaming the California electricity market.  For instance, the recommendation of FERC staff is that Portland General Electric settle its case for... wait for it... $12,730.  In the case of Puget Energy Inc., a settlement in the amount of $17,092 has already been announced.  Several other companies had their charges dismissed.  Now presumably these are the small fry, the big fish aren't being named for leniency this way.  Yet.  These are just random utility companies who got caught up in the spiral and did a little me-too profitable playing around with a market catastrophe they didn't create... and maybe some portion of them are innocent, I don't know.  But if some have charges dismissed and others don't, that has to be seen as an admission that the second group is not entirely innocent... and if that is the case, if there is grounds for them to have to pay a penalty for having engaged in piracy in the power market... then what the hell possible excuse is there for letting them off the hook for less than twenty thousand dollars, when even the smallest individual suspect power trades have got to be in the million-dollar range?!?

California officials are furious.  Gray Davis's energy adviser Richard Katz said "FERC keeps talking tough but is weak in response. The message to the generators is, you can rip off ratepayers and we'll pound our chest but not do anything."  Loretta Lynch, head of the Public Utilities Commission and one of the first state officials to confront the piracy during the crisis, said "FERC cut the state of California and any consumer representatives out, and have been making secret back-room deals to settle for pennies on the dollar or less."  A FERC spokesdroid denied this, but what the hell else is it possible to conclude, when you see the outcome?

One thing that the general public often doesn't realize about corporate crime is that often, companies don't worry so much about whether they're found guilty or whether they lose a big lawsuit, they only worry about whether they end up paying the money once all the dust settles.  If you look through the history of big judgements against corporations, you will find that what happens more often than not is that there may be a big news story about the company losing the ruling and, perhaps, having to pay big money... but if you let a few years go by, you find that the money didn't get paid.

The Exxon Valdez oil spill disaster is an excellent example.  The jury ruled that Exxon had to pay $5,000,000,000.  This got plenty of news.  But how much did they actually end up paying?  One percent of that, all covered by insurance.  Even after it came out that (a) they had illegally decided to just not bother preparing to contain a future oil spill in the area, and (b) the reason the ship crashed was because they decided to save a few bucks by refusing to maintain safety equipment.  And the oil is still there on the beaches, just under the surface.

Kind of reminds me of how in any big Washington scandal, such as Iran/Contra, the major figures may go through a lot of public inquisition and maybe a jury trial, but somehow on appeal the verdicts end up getting overturned, even when the guilty party had already confessed.  Thank you Spencer Abraham, founder of the Federalist Society, for 25 years of successfully packing appellate courts with the "right" kind of judges.

So far, the only energy crisis related case that's produced a reasonably decent outcome is the one for El Paso Natural Gas, which has agreed to a settlement of $1,400,000,000.  The settlement is in the final stages of dotting the T's right now.  Most of the others are angling to get away with a lot less.  For instance, AES/Williams agreed to pay a relatively paltry $180,000,000... and, somewhat disappointingly, state attorneys agreed and took it.  I can only guess that they didn't go for more because Williams, after getting all that money from California, spent it all and nearly went broke.  They'd been carrying a bunch of debt and money-losing operations from before the crisis period...  But I have to wonder, as we have all wondered in the case of Enron, how much of the money the company "lost" ended up just being squirreled away by individuals.  And now... hey look, its troubles behind it, a new, reformed, sleek and efficient Williams is bouncing back!  They've retreated back to their core business, which is natural gas.  What a heartwarming story of business redemption: they make a lot of money, mismanage it with ill-considered expansion ventures, get caught in blatant piracy, apparently fritter away all their assets like a bunch of crackheads... and then as soon as the heat is off, they're fine again and the people in charge haven't had to suffer a single real consequence.

In another energy crisis related item, the Sierra Club / Judicial Watch lawsuit against Dick Cheney has just moved one step further, with Cheney losing another appeals court ruling.  He has been defeated at every step, his defenses never succeeding in court, yet the case drags on unsettled, year after year.  I am fairly convinced that Cheney's essential strategy is a simple one of stalling and delaying.


I started taking a fresh look at what's going on in the California electricity market in these post-crisis times, and the findings turn out to be relevant to the recent Eastern blackout.

I don't know what this means, but I got to wondering about why so many California generating plants are still offline so much, and I wondered to myself if we are still importing excessive amounts of electricity.  As older readers may recall, one of my first pieces of concrete evidence that the crisis was being manufactured through holding back electricity supply came from Independent System Operator statistics for generating capacity currently offline, which produced a graph looking like this:

Now I kept watching those figures in the time since the crisis ended, and with the most recent figures, the graph is now:

The later part of that data can be viewed with higher resolution here.

To give you a sense of how high those spikes are: the peak in April of 2001, when the crisis was at its absolutely craziest, is one third of the state's entire electricity production capacity.  The amount of juice being left unused is enough to run almost any other US state.  It was also at that time that the first effective countermeasures were taken, and the crisis was effectively over in another two months.  But the anomalies were not: as you can see, the number of generators still being kept offline looks more like the inside of the crisis than like the outside of it.  Somehow we're still being supplied with a lot less electricity by our state's generating companies than we were before the crisis.  Yet now it's not driving prices way up.  Several possible explanations come to mind:

Even before investigating further, I would bet that all four are true.  As for demand, many conservation measures were taken during the crisis, and some were permanent.  Residential utility rates are still elevated, creating an incentive to save.  The economy has slowed down.  The demand for power was highest in the summer of '99, and has never returned to that level.  I think a major reason for this was that the dot-com boom was in full swing then, and a great many unprofitable startup corporations were running big server farms to deliver their websites with.  Some of these server farms were (and are) so immense that they suck 100 megawatts or more, I've been told, into a single site.  Some of these have their own natural gas turbines to power them.  When the stock bubble collapsed and the giant commercial websites were culled back to only those that were good for something, it was probably enough to make a noticeable dent in the state's power requirements.  But demand has certainly not dropped enough to account for the huge difference between the first 18 months of that graph and the last 18.  It's also true that a few gigawatts worth of new generators were built during the crisis period, but that also is not enough.

As for the ISO's figures being bogus, they warn about this themselves: they have a disclaimer that says the generators have various market incentives both to over-report and to under-report.  That was true during the crisis, but I don't think it's as true now.  So the figures may not be accurate to three decimal places, but I think in broad they're telling the truth about the overall shape on the graph.

Let's look at prices: as I write this, trading in "supplemental" electricity is going on at around $60 a megawatt-hour.  Before the crisis, typical rates were $30 or $40, I'm told, dropping below $15 in the months of lowest demand.  That price was up to $300 around the time of the rolling blackouts in the winter of 2000-2001 (with momentary spikes much higher), and hit $1900 the following spring. The basic local supply of electricity, which doesn't get traded around before reaching you, is cheaper: the cost of one MWH as it leaves the power plant, for most types of generator, is $20 to $50 (nuclear power is more like $60 to $100).  The rate I'm paying on my residential electric bill is $52 per MWH to the generating company, plus $120 a MWH to PG&E for delivering it.  (People in most states pay under $100 a MWH for the entire bill.)  So all in all, it looks like the current market might be mildly inflated above a fair market price, maybe, but not substantially so.

As for importation, it turns out there's still quite a bit going on.  In April of '01, when one part of the crisis consisted of out-of-state generators selling us their juice at inflated prices, the quantity brought in tended to have a daily peak around five or six gigawatts (of course, misreporting may have occurred).  Right now, the daily peak of imported power is sometimes around nine or ten gigawatts.  Unfortunately, it's difficult to come up with any statistics that show overall figures for this sort of thing from month to month.  Most numbers available are either for a span of only a day or a week, or apply only to only a small region of the state.  So far I have only been able to sample random days here and there and hope they're representative... they may not be.

It looks like maybe the answer to which of those four reasons is keeping so many generators offline might be "a little of everything", but the importation issue is the one that needs scrutiny.  I don't know if this importation is due to the notorious long-term contracts, creating some legal obligation to buy from out there, or if it's just due to some suppliers out there being able to underbid prices, or what.  I would like to be able to get some answers to these questions.  In particular, I wonder: how much money is still being syphoned out of the state?

Of course, it is summer right now, so demand is going to be higher, but we certainly don't need all of that outside power, except maybe during heat waves.  Maybe half of it, at most.  And it's not like electricity can really be freely traded cross-country, so you can seek out the cheapest source regardless of what state it's in: any time power is transmitted over such distances, a significant chunk of it is lost along the way.  Distance to the generator is an important part of what determines the cost of electricity at any given location.  One effect of utility "deregulation" is to greatly increase the amount of long distance shuffling of electricity between regions.  Now, a free market works with the most efficiency in an economic sense when items of value can be traded quickly and easily... but the electric grid is most efficient in an engineering sense when everybody uses power from the nearest possible generator.

As far as reducing wastage goes, our goal should be to use the long-distance grid only to smooth out variations in supply vs. demand, and minimize the amount carried over long distances.  This is largely what happened under the old fully-regulated system.  But the trend (paid for by industry campaign contributors) is toward shuffling packets of electricity frantically around as if they were pork belly futures, creating lots of activity that isn't really about meeting local demand with the least expensive supply... and this is a major reason why we had the East Coast blackout.  The great increase in more or less pointless long-distance electric transmission, due to trading in electricity that is sometimes purely speculative, is what drove the demand for transmission capacity beyond what the aging grid was built to support.  When all those people were warning that the electric grid desperately needed upgrading, they didn't mean that our communities' hunger for juice was overstretching our capacity to supply them, but rather that the financial game that the electricity industry was being turned into couldn't be supported by a network designed only to carry what we actually needed to move from one place to another.

So if someone asks for your vote to support spending fifty-eleven zillion dollars of tax money to expand and improve the long-distance transmission grid, tell them you could cut demand for it way down by just giving a big NO to the deregulation-mad pirates in the utility industry, and restoring the old legal system that worked far better.  One way you could do that is by supporting Democratic presidential candidate Dennis Kucinich, who on the issue of electricity is the only guy on the current national scene to have really stood up against the piracy, and to have done some real good against it.  I'm not here to endorse anyone on other issues, but on the electricity issue the answer is clear: Kucinich is so much better than everyone else that none of the others is anything but a joke.

Since the longer-term trend is toward generators becoming smaller and more numerous, and the hydrogen economy idea that the current leadership has its eyes on will only accelerate this, it may be that a greatly expanded grid will be, in twenty years, an embarrassing heap of useless metal with no useful purpose any more.  Most of the lines would still be in use, they'd just spend 90% of their time below 10% capacity.  Then, ironically, efficient long-distance trading of electricity might finally be workable, because the lossages would be smaller than they are now... but what good would we get out of it?  Is it worth paying so much for with public money?


Not that I think the hydrogen economy, come to mention it, is actually such a great idea.  There is essentially no advantage to a hypothetical future fuel cell car, vs. a present-day lithium battery electric car, except that refilling it is quicker and there's less loss if you leave the car unused for weeks.  The car industry is gambling that fuel cells may eventually be cheaper than batteries.  They sure as hell aren't now; a lithium-mobile might now cost six figures, but I doubt a comparable fuel-cell-mobile can be built at all.  Lithium batteries will always have a ten or twenty year head start on progress towards reduced prices.  If there's one lesson to take from the persistence of the internal combustion engine, it's that it's awfully difficult for a new technology to supplant a mature one in cheapness.  That's why your computer still uses spinning magnetic disks for storage instead of futuristic solid-state devices.  Lithium battery prices have already come down tremendously, due to their wide usage in portable electronics, and lithium is not an expensive raw material.  Converting electricity to and from hydrogen is at least as wasteful as charging and discharging batteries is.  Hydrogen may be more efficient at storing large capacities of power in giant tanks to smooth out production over time, and just possibly it will be cheaper to pipe hydrogen over long distances than to carry electricity through wires, but the reasons given for using hydrogen at an individual consumer level are basically a crock; it offers no advantages over just using electricity and batteries.  Especially if, as some predict, more and more power starts being generated on a very small local scale.

Even as a means of storing electric energy in chemical form for a car, you'd do about as well with zinc pellets as with explosive gas; zinc/air cells are getting no large investment yet they're probably comparable in usefulness to hydrogen fuel cells right now.
 



 
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