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Non-Tech : Greenspan, Rubin & Co - the Most Irresponsible Team Ever??
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To: Thomas M. who wrote (283)1/4/2001 11:29:59 AM
From: Cynic 2005  Read Replies (1) of 309
 
(The following is entirely my speculation about the situation - do not place any bets based on this speculation. -Cynic)

Why Did Greenspan and the Feds Panic?

I believe that the Feds' and California Government's solution to the energy crisis in CA is to let So. Cal Edison and PG&E file for bankruptcy! That way they don't have to pay the bills to the power generating companies. I am not sure if the power generating companies can take the blow without they themselves going under. But I am guessing they can afford to write off these receivables.

After this crisis is over, the congress will renege on the power deregulation and put clamps back on the utility companies.

What is the Feds' role in this? First of all, if S. Cal Edison and PG&E are going under, that will be a tremendous blow to the confidence in the credit markets. Therefore, they have tried preempt that blow with a pre-bankruptcy- filing-rate-cut! If this speculation is true, whether the Feds' effort will work or not remains to be seen.
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