DISASTER CRAPITALISM? OR DISASTER SOCIALISM?October 30, 2019
This is one of those days that my high octane speculation isn't even my own, though I've privately thought along these lines for some time. Rather, the high octane speculation today is that of C.M., who also shared the article. If there's anything in today's high octane speculation that is my own, it's the details, not the central core itself.
And it concerns those seemingly never-ending fires in California, and disaster capitalism.
Disaster capitalism, or as I like to call it, disaster crapitalism, may be briefly outlined as the creation or staging of "natural catastrophes" in order to achieve a political goal, and along with it, usually a financial goal, such as driving people out of their ruined homes and picking up assets on the cheap (think of Stalin's purges of the kulaks in this regard). The first step in our hypothetical scenario is to create an interlocking network of corruption involving four families all from the same area, let's call them the Newbrown's, Feinosome's, Pelostein's, and Gavinsi's (with pardons for the apostrophes, which are used simply to clarify our surnamic obfuscations). Through a variety of means involving kickbacks, graft, corruption, Chinese chauffeurs doubling as spies, and outright election fraud, one can then cement a one-party control over our fictitious state's regurgitature in the state capital of Scarymental. The state luddocracy is quickly filled by shuffling bureaucrats and regulators who, moving at the speed of evolution when it comes to doing some genuine good for the people of our fictitious state, can move at warp speeds when it comes to imposing a tranche of wacky environmental rules to protect "natural habitats", and turn the state's once highly productive and lush San Giacomo valley - which lies between two mountain ranges - into a dust bowl, and prohibit cutting underbrush from the state's powerlines and so on. The result of these policies is predictable, as the kulaks...er... family farmers are driven from their farms, and others lose their homes to the inevitable brush fires. You can then blame all this mess on the opposition, on the conspiracies of Trotskyites and conduct more policy implementation and purges.
With that little hypothetical background in mind, consider this article that C.M. spotted on Zero Hedge, and passed along:
There are some things to note in this article, that form the basis of C.M's accompanying high octane speculation, and my "added details" today:
According to a note by Citi's Praful Mehta, while it is still unclear if this week’s fire in Kincade was indeed caused by PG&E equipment, the prospect raises the risk of wiping out PG&E’s equity value, which would also undermine the recovery plan favored by PG&E and its shareholders, and make it more likely that a rival plan from bondholders will win approval, one which leaves the current equity a donut.
The Citi report comes one day after PG&E admitted that its transmission lines in the area of Kincade fire were not de-energized because forecast weather conditions, particularly wind speeds, did not trigger the Public Safety Power Shutoff protocol. In a statement, the company added that the wind speeds of concern for transmission lines are higher than those for distribution, adding that the transmission tower was inspected earlier this year as part of PG&E’s Wildfire Safety Inspection Program. Of course, none of that will matter if California finds that the Kincade fire was indeed the company's fault.
Mehta echoed his bearish sentiment from earlier this month, when the analyst set a Street-low price target at $5 on PCG shares (they are trading at $5.30 after today's drop), predicting there was a 75% probability the California power company’s stock would fall to zero. On Friday, he repeated his call, saying "shareholders are worried -- and should be." (Boldface emphasis in the original, italicized emphasis added)
Previously, when writing about the burning of California - and yes, I believe a portion of it, not all of it, but a portion of it, to be deliberate disaster crapitalism - I have entertained a hypothesis and speculation shared by many others, that behind it is a suspicious land grab, since many of the fires occurred in areas prized by Silicon valley to enable its "expansion," and so on. On that view, the primary targets are the people and victims being literally burned out of their homes and land. And even in the case of genuinely accidental fires, much of the blame for these can be squarely laid at the feet of the luddocracy in, and the policies coming out of, Scarymental.
But given the collapse of Pacific Gas and Electric's equity value, I believe C.M.'s speculation may have some traction, namely, that the goal is not only to acquire land on the cheap, but also, perhaps, to acquire PG&E itself, in the ultimate and literal power grab of the nomenklatura in Scarymental. It could easily be done in the political swamp the state has become, as equity could be demanded in return for a "bail out". There are in fact any number of ways that it could be done. And once that happens, the blackouts could really ratchet up.
See you on the flip side...