Its never ceases to amaze how every week brings new words and phrases into the national political vocabulary, especially during election season. Some, like "Creationism" "Stagflation," "sound byte," and "Swiftboating" have become so familiar as to elicit nary a hiccup from one's computer spell-check. Others, like "Teapot Dome," "vicuña coat," "hanging chad" and "The Keating Five" are best known to those of us who proudly wear the political junkie's lapel pin -- a garland of placards in a field of greenhouse gases.
The latest -- and potentially most damaging is the "Enron Loophole." And although my spell-check is none too certain what to make of "Enron," Google sure does; as of ten minutes ago, a search for that term brought up no less than 175,000 different sites. Within less time than it takes to solve the Rubik's Cube [another term that the old spell-checker recognizes] the "Enron Loophole" has become so omnipresent that one would presume that everyone knows to what it refers.
For those who don't we humbly offer -- as a public service to our readers -- a brief history, synopsis and dramatis personae of that which could -- and undoubtedly should -- become the one 2008 election-year phrase that will live in everlasting infamy. For the "Enron Loophole" is one, which by all rights, should surpass "Whiskey Ring," "Credit Mobilier," and "Abscam."
Back in 2000, then-Texas Senator Phil Gramm slipped a little-noted Enron-backed provision into the Commodities Futures Modernization Act. Simply stated, this provision exempted from regulation energy trading on so-called "electronic platforms" or "dark markets." Heretofore,
energy trading [electricity, natural gas, etc.] was done mainly under the auspices of either the Commodity Futures Trading Commission [which was chaired during the first Bush Administration by Senator Gramm's wife Wendy] or the heavily-regulated New York Mercantile Exchange [NYMEX]. Their rules and regulations are in place in order to "prevent price distortions and supply squeezes." With passage of the Gramm-sponsored, Enron-backed bill, traders and speculators moved the lion's share of their business over to the unregulated Atlanta-based Intercontinental Exchange [ICE] -- the so-called "dark market."
It should be noted that at the time of its enactment, Republicans controlled Congress, and Senator Gramm was the Senate Banking Committee chair; even worse, his wife Wendy, not five weeks after leaving CFTC was named an Enron director. The bill, which was signed by President Clinton in December of that year, was approved without so much as a Senate hearing. Internal Enron documents which were released in 2002 [after the company had imploded and gone bye-bye] reveal that the then-Houston based company not only helped write the legislation, but baldly lobbied Senator Gramm ["Gramm needs to fully understand how helpful the bill is to Enron," went one internal memo].
Within a year of its being freed from "regulatory interference," Enron began creating false energy shortages in California. They wound up bilking consumers out of an estimated $40 billion. And despite the new Bush Administration's attempts to come to come to Enron's rescue -- W. personally joined in with those fighting against imposing caps on soaring electricity prices -- the Houston energy giant soon went the way of the Stegosaurus and Slide Rule.
But wait; there's more!
In 2006, the "Enron Loophole" permitted a hedge fund called "Amaranth Advisers" to corner the natural gas market. Now trading on the unregulated "dark market," the Amaranth "hedgies" wallowed up to the crap table, plunked down their gelt, and bet that futures prices on natural gas would go "up, up, up and away!"
In September 2006, natural gas prices fell to a two-year low. Amaranth Advisers lost their well-heeled clients about $6 billion, thus proving the truth of the old axiom "He who plays around with unregulated energy futures will most likely get torched." About a year ago, the Federal Energy Regulatory Commission [FERC] charged Amaranth with manipulating prices and has suggested a fine of $291 million plus the forfeiture of "unjust profits," whatever that means.
It is highly likely that the high price of oil is also a result of unregulated activity in the "dark market." Recently, Michigan Senator Carl Levin released a report concluding that "speculative markets" are "partly to blame for surging oil prices that have pushed gas at the pump toward $4 a gallon." And Senator McCain [not to mention President Bush and Governor Charlie Crist] would have us believe that the answer to high prices at the pump in June 2008 is drilling off the coast of Florida! Hey guys, it ain't a question of supply and demand; its a rigged game!
So why has interest in the the "Enron Loophole" issue grown to the point where there are now more than 175,000 sites devoted to it? And, what role might it play in the 2008 presidential election?
First question first: Why has the loophole resurfaced precisely now? Why not six months or two years ago? Simple: the recent $307 billion farm bill. When questioned, Senator McCain said he was against the bill, because "it would dole out wasteful subsidies." One McCain aide, told journalist Jason Leopold that McCain opposed the farm bill because "it rewards lobbyists" by granting rich farmers "lucrative subsidies." OK, that's reasonable. However, the same aide noted that one additional reason for his boss's opposition was a section containing "regulatory language on the energy futures market."
There's that word again . . . REGULATION!!
Who put this idea of hating any form of government regulation into the head of a man who freely admits "I don't know as much about the economy as I should?"
Why former Senator Gramm, that's who.
Gramm, who is often described as "one of McCain's closest friends in politics," is also the campaign's chief economic adviser. Anyone who has followed politics over the past twenty
years will know that Phil Gramm hates government regulation and oversight even more than a Dodger fan hates the Giants. And this is the man to whom John McCain has entrusted his economic game plan?
Let Republicans and Obama haters of all shapes and sizes decry his relationship with Jeremiah Wright. Let them question whether or not he thinks Louis Farrakhan is a stand-up guy. For my money, the two of 'em are full of sound and fury, signifying nothing. To the best of my knowledge, neither has provided a platform whereby consumers could be bilked out of $40 billion or pay more than $4 at the pump. Neither one has paved the way for the richest one-tenth-of-one-percent to profit by human misery. All these two gasbags have done is exercise their big fat mouths.
Instead of continually wondering about Senator Barack Obama's alleged "relationship" with people whose words we may find abhorrent, we would be far wiser to question Senator John McCain's verifiable relationship with the man who made the term "Enron Loophole" such a hot term in the Google galaxy.
Move over "Whiskey Ring."
Stand aside "Teapot Dome."
The "Enron Loophole" is about to overtake you!
©2008 Kurt F. Stone