Enron.

In 2000 I was in Greece doing my military service, and I kept getting phone calls from my wife about the collapsing California power infrastructure.

I remember hearing that the problem was too much demand and too little supply. I remember thinking that the financial boom that Northern California had thanks to the stock market bubble was finally over-taxing the basic infrastructure. I remember hearing how imperfect deregulation had created a catastrophe. I remember being ridiculed by my Greek friends. I remember the power generator NetApp built to deal with the power shortages. I do not remember hearing about Enron.

Then I watched the documentary Enron: The Smartest Guys in the Room and I realized that those pig-fuckers in Texas had goat-fucked the entire state of California. And I was pissed off in a way that I had never been pissed off.

What had happened was that the Enron traders convinced the power production companies to cut their power supply. As a result, the consumers of power had to buy power on the spot market at higher prices. As the supply shrank the power on the spot market increased. Because California’s power deregulation did not cause end-user prices to spike, the effect was felt primarily by the power distribution companies that suddenly were being squeezed, unable to raise prices to conusmers and watching their prices for power go up.

And if that was the only thing Enron’s bastards did that would have been sufficient. Crippling the entire power system of the seventh largest economy of the world sounds like the plot of an evil villian from a James Bond film, not the actions of the 8 largest company in the world.

They preceeded that coup with the limited partnerships financial shennanigans. Essentially Enron created a financial instrument that let it sell assets to other companies for Enron stock and those companies would make money by selling Enron stock later.

And yet all of this tremendous evil that was carefully engineered by less than 10% of the company would have been palatable if it had not been for the fact that thousands of people (20k) were destroyed by this, excluding the people who were hurt by the engineered power crisis (40 million).

Now that I think about it, the engineered power crisis is enough for us to put them in jail for an exceptionally long time. In Stalin’s time, the Soviets talked about saboteurs who were wrecking the economy. Here at last are some true wreckers. And still Skilling and Lay protest their innocence.

As a final note, in 1999 I remember thinking that there was something wierd about how Enron did business. A sales guy came back from the bidding that ocurred around the Enron-Blockbuster deal for the streaming media infrastructure. He said that what he found fascinating is how Enron booked all of theoretical profits from the deal immediately without ever making a dime. I remember thinking, but that sounds wrong.

But I figured that I was an ignorant engineer, and it was just too advanced for me.

It was. It was thievery on a scale that I could not conceive.

There was one good thing to come out of this. Thanks to Andy Fastow and the criminal enterprise that was Enron, Sarbanes-Oxley emerged and thanks to it the compliance market for storage. As an employee of a storage vendor, this is good news. Andy Fastow created the SnapLock and LockVault market, so I guess I should be thankful for small things…