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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (5762)	5/6/2004 4:20:53 PM
From: yard_man	Respond to of 116555

here's a random thought for you: What the heck is Goldman Sachs doing getting into the power gen business?? Are these investment bankers really smarter than the rest of the world?? They are locking prices at 5/mmBtu now I'll tell you what I think for what it is worth. They are dumb. They are essentially, buying very expensive long-term calls on the spread between electrical energy and gas prices -- they will be wrong ... gas prices will go up, but electrical energy will be more cost based going forward. They bought the plants probably because somebody already owed them some major jack on the plants. They are getting in the way of an orderly liquidation of excess investment in generation. Load growth will disappoint for the next 5 - 10 years. They will look very foolish, indeed.