CaliFires: Someone of a conspiratorial mind-set might look at the unfolding disaster in the NorCal area and wonder if some evil force is behind the fires of late?
In the latest, there’s part of I-80 closed near Vallejo, but worse, power blackouts threaten nearly a million as what should be a workweek rolls around. As of this morning (5:28 A Central), the company website was telling of outages continuing into tomorrow as well:
“10/29/19: PG&E may proactively turn off power for safety
Weather conditions, including potential fire risk, have been forecast that may impact electric service to portions of our service area.”
The power problems of PG&E, as one of our commenters alluded to, are a kind of financial kindling that is likely to propagate into the future. The sequencing, going beyond the immediate fire dangers, ripple in all directions.
To begin with is the cascading financial hit to PG&E. With a million customers (there abouts) with outages, that’s about 18% of PG&E customers (5.4 million electric accounts).
One place the outages have already rippled is stock price. A year ago (November) the stock was trading above $48 a share. Today, it is possible it could bounce from the $5-buck area where it closed Friday.
Pacific Gas and Electric is owned by PG&E Corporation and offers investors a financials-oriented page over here. But, an equally important page details the paper-shuffling since PG&E filed for Chapter 11 re-organization in September. Docs and court papers available here.
With power off, it means that electric revenues will drop. And, to a certain extent, there’s likely to be a decline in natural gas revenues, at least among people not home. Extrapolating a bit, the declining revenue will begin being felt with this month’s billings, and since more power outages are planned, it will probably result in smaller revenues next month.
As long-time readers already know, Ure’s truly is skeptical (to the MAX) of Sacramento state government’s ability to do much of anything right. The state has (idiotically) enacted many regulations to “protect the environment” preventing brush cutting or imposing tough regs. Which leads to more fuel being available for fires. Ergo, the State has some skin in this game.
Next come the PG&E vendors. When will they become nervous and want to cash on the barrel head, rather than a place in line at the bankruptcy?
Of course, there’s a HUGE investment in the in the Silly Con Valley area by high tech companies. Take a look at the map here (it’s a PDF) and notice that PG&E also serves a lot of the nation’s Central Valley food basket, too.
With so much at stake, there will be a game of “hot potato” coming that should be spectacular to behold: PG&E investors, the bondholders, they’re already slammed. The State, one might argue, may have some culpability, but expect the state do “cry poor.” Which, to the extent they get roped into bailing out the company to ensure ongoing service, means what? Oh, higher taxes?
The Federal government would be petitioned to bail out, more than likely. “Too much to lose in the high tech area if we don’t!” I can almost hear it now.
Yet, it would be a hard sell to the FedGov because any such action would have to come from the House (where spending bills originate). There, states both blue and red, would have compelling counter-stories to the “Poor California” narrative.
Texas, for one, would point to its completely independent state power grid, and wonder why California didn’t address its issues long ago. Even liberal Washington State, blessed with gobs and oodles of hydro, would point to local city-owned utilities that do an amazingly effective job of keeping the lights on. Such outfits as Seattle City Light, Tacoma Power, and the Snohomish County PUD would likely be too polite to comment directly. But, out of stater’s might wonder “How can California’s foxtrot uniformed bubble be something people in Oklahoma,” for example, ” should pay for?”
It’s a hard discussion to have, but easy enough to see how it works out. Hands go out: “Brother can you spare some megawatts?”
No, thanks. We gave in our home state.
Our proposed solution: Have the parent company do an internal break-up. Take the fire prone area and call it PG&F and give existing shareholders 1:1 stock. Keep the solid assets in a separate company. Very similar to the purported Deutsche Bank plan to dump all their turkey assets into a “bad bank” and spin that off.
Not a bad idea…but would that be allowed? Probably not. But in the piney woods of Texas, it looks better than just pulling the plug.
Terror: Another One Bites the Dust
(Maestro: Theme Please?) Politics of death as president Trump announced a successful military operation to take out Abu Bakr al-Bagdadhi, leader of ISIS. Predictable, Fox News headlined it as “Al-Baghdadi takedown catches Dems flat-footed, blunts criticism of Trump’s Syria pullback.” CNN, from the other bleachers, labeled it analysis in “Baghdadi is gone, but ISIS isn’t dead yet — and could be poised for a resurgence.”
Regrettably, both will likely have it right to some extent.
We awaken on “the strange planet” this morning to dueling subpoenas now (House and the Durham grand jury) and a world that is sinking into digitally-led global revolution. So, yeah, let’s talk about the…
GlobalRev and DMR (Digital Mob Rule)
While al-Bagdadhi is a passing headline, the dangerous memes on the Internet continue to sell the Global Uprising we’ve mentioned many times. While governments have had the sense to prohibit “regular people” from building atomic weapons in their basements, there’s no regulation of software development for the web. Anyone can launch anything…and by doing so, work innocent people into becoming partisans. Whether on the environment, selling a particular gender-bend, or climate…it all’s the same.
Latest hotspots to worry about:
This weekend, the UK Guardian pointed out “41% of the world’s population is under 24. And they’re Angry!” But that misses the key point we’d make: They’re armed. With Phones. And Mommy and Daddy better stop paying the bills in order to avert intergenerational warfare.
Yahoo News summarized a good bit of it in a piece on how “There was a “Surge in protests around the world in October.”
Meantime, pardoning the pun here, but Chile is hot as UN mission to probe human rights abuses in Chile during street protests is covered by the Santiago Times. Along with Friday’s A million Chileans march in Santiago to protest inequality.
Where this is going depends on which glasses you put on. While our view is that it’s anarchy on the web spilling into the streets (something obvious as hell when you study it), those with the rose-colored glasses of Capitalism on see it as something else. An Op-Ed in the Wall St. Journal, for example, suggests it’s “Chilean Capitalism on Trial.” We’d beg to differ, but the collapse seems coming to Chile because there’s an all-too familiar pattern here: One group creates wealth (capitalists in Chile) and as soon as there’s enough of it, out come the online/on-phone anarchists (dressed as socialists) to claim it’s all crooked and they could do better if the people would just support them.
Friday demonstrated with some clarity to me that there are a million fools in Chile.
Not surprising, though. The average person spends >4-hours a day plugged into the on-phone pseudo-reality and nearly half of that time is on 5-big social platforms. And you don’t think there are that many selfies, do you? Nope. Shock value voices all trying to garner a following to assuage their tender, bruised little egos, poor darlings.
Almost counter-intuitively, Facebook may be one reason for the demonstrations. Why, with “likes” going, going….how do idiots online “validate” themselves? Why let’s band together every loose gender and race and round ’em up into a Digital Mob. So-called “news” organizations will handle PR from there. Convince them they’re all victims. Yeah, that works.
Well, this is sure telling us the future…or is it? As of the early futures today:
Also out, new trade figures:
Why a cynic (not that we’re experts on this!) might look at this and think “Buy the rumor, sell the news with the Fed meetings starting tomorrow.” Announcement in time to spoilt a long lunch Wednesday.
Yes? Und Zo?
“We’ll, by Ure’s estimate, if the Fed doesn’t lower then the market will come tumbling down?”
Yes, possibly. And let’s not forget Seattle this coming weekend…Sunday, right? Run markets way up in advance? More money for the insiders, then, right?
In the Shorts
S.A. financial note: Brazil rates to hit record low 5.00%, seen falling further: Reuters poll. You know, with rates hitting global lows like this, when the Second Depression hits (be patient, wait for it) it will be at least as bad – and likely more so – than the 1930’s event. We’re talking serious famine outlook.
Good summary of some harvest outlooks (and planting) info here. And with Europe getting back to its historical norms of drier weather, “Merkel’s Climate Failings Are Now a Matter for German Courts.”
Health watch: Lassa fever – West Africa (36): Nigeria. See also Ebola update (102): Congo DR (NK,IT,SK) cases, WHO/ But the NK reference is to North Kivu-Ituri, so hold the panic down.
On that…shorter columns as focus continues on Peoplenomics. Planning a weekly podcast starting New Years for subscribers.
Go have a dandy Monday and drop by tomorrow or…
Write when you get rich,