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Texas electric firm files for bankruptcy citing $1.8B in claims

reuters.com

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Re: Texas electric firm files for bankruptcy citing $1.8B in claims

#141

Post by eqvinox »

clcaev wrote: post #123
snidane wrote: post #94

Earlier quoted context omitted.

It's actually well understood that privatisation for platform industries is bad, privatisation for businesses running on top of platforms is good. Networks and infrastructure = little to no competition. Eg. networks naturally settle in a optimal geographical location and utilize economy of scale then. Can't compete with that. So don't privatise platforms. Rather - make them monopolistic and make them share the revenu…

While I agree with your sentiment, this was not exactly a private operator: this was a rural electric cooperative, that intentionally runs close to cost hile holding reasonable reserves. Its voting members were distribution cooperatives, whose voting members are individual households. This is about as sane as a platform ownership as one might have. This is not an obvious problem nor solution. As posted downstream, ri…

The cooperative that went bankrupt isn't the platform that the argument applies to. In fact, you could create another cooperative without much trouble and start a parallel implementation of the same scheme.

This really applies to the power grid itself. Even the power plants aren't covered by the argument, since if you have a reasonable grid, you can build another power plant of any kind you feel viable in some reasonably suitable place.

[Ed. add.: the grid is actually the market. It facilitates the transactions between power plants and consumers.]

Re: Texas electric firm files for bankruptcy citing $1.8B in claims

#142

Post by eqvinox »

bko wrote: post #112
eqvinox wrote: post #98

Earlier quoted context omitted.

Road networks are a great example. Just assume the hypothetical position of a competitor. Where are you gonna build a competing road in, say, NYC? Each block only has 4 sides, and each of them already has a street. You could maybe compete on interstate highways or other long-area bits. Maybe. That's stretching it. Build a competing water supply network to each house? Another set of sewers? Electricity distribution? H…

I don't know if NYC infrastructure is a good example. The second avenue subway was the most expensive subway in the world on a per mile basis. Considerably more expensive than Paris or Tokyo > The estimated cost of the Long Island Rail Road project, known as “East Side Access,” has ballooned to $12 billion, or nearly $3.5 billion for each new mile of track — seven times the average elsewhere in the world Similarly, t…

> The estimated cost of the Long Island Rail Road project,

> The competing services for infra in NYC are cabs, car pools, private buses, bike rentals, scooters, subways.

You're conflating the infrastructure with the service on top of it. The equal comparison would be railroad project to motorcar roads & bridges. And the latter also have their share of cost overrun stories...

(Also, bridges are the rare case where a ship can compete. But, well, every rule has its exceptions.)

Oh and the fact that it's (even unreasonably) expensive has no bearing at all on the argument. There ain't gonna be some competitor building their own railway line regardless, or especially since the first one was so expensive.

Re: Texas electric firm files for bankruptcy citing $1.8B in claims

#143

Post by exporectomy »

azujus wrote: post #33

Interesting does this mean that global warming will cause the insurance crisis in the US?

The effects of climate change are expected to be gradually increasing frequency and severity of extreme events. So that's not too hard to calculate probabilities for on the time scale of typical house insurance policies that are renewed annually. It's not going to be one giant storm that takes everyone by surprise.

Re: Texas electric firm files for bankruptcy citing $1.8B in claims

#144

Post by m4rtink »

eqvinox wrote: post #98
snidane wrote: post #94

Earlier quoted context omitted.

It's actually well understood that privatisation for platform industries is bad, privatisation for businesses running on top of platforms is good. Networks and infrastructure = little to no competition. Eg. networks naturally settle in a optimal geographical location and utilize economy of scale then. Can't compete with that. So don't privatise platforms. Rather - make them monopolistic and make them share the revenu…

Road networks are a great example. Just assume the hypothetical position of a competitor. Where are you gonna build a competing road in, say, NYC? Each block only has 4 sides, and each of them already has a street. You could maybe compete on interstate highways or other long-area bits. Maybe. That's stretching it. Build a competing water supply network to each house? Another set of sewers? Electricity distribution? H…

Seems to work fine in Japan for railways - there are three different rail connections from Tokyo to the Narita International Airport for example, each run by a different company (at the same time, we have 0 rail/subway connections to the Prague Airport:P).

Same thing in many other places - in Kyoto there is big and nicely build station by JR and, Transport Tycon style 200 meters from it another big station by IIRC Kintetsu.

Or in the middle of Tokyo, the Minami Senju station is effectively three station - One on the JR Joban line, one on Tokyo Metro and deep bellow another one on the Tsukuba express line.

So its definitelydoable, even in the most densely populated of places, at least with rail.

Also when you compare with places that have little to no competitionon the rail network you can clearly see the lack of service quality resulting from that. Well, if you get any service at all. :P

Re: Texas electric firm files for bankruptcy citing $1.8B in claims

#145

Post by ericmay »

volta83 wrote: post #73
jonplackett wrote: post #41

This is the side of privatisation that gets ignored. When private companies screw up, who gets left with the bill? Private companies have no incentive to be ready for really big problems because they know they’ll get bailed out, or just not have to pay. Privatise the profit, socialise the losses.

> . When private companies screw up, who gets left with the bill? The share holders (which often includes the leadership). Their shares drop relatively quickly to close zero. I think, however, that this is not enough. Share holders of a company should be liable as individuals for the damages the company causes in case the company cannot pay. This would strongly encourage share holders to pressure the CEO (which is al…

So who is paying who? Am I just transferring money from my 401k to someone else’s and then they transfer it back since we both own shares in index funds?

Going to $0.00 is plenty of incentive for shareholders to demand accountability. It makes no sense to me to somehow go even lower than that. And why would shareholders be specifically punished but not creditors? If there is some liability claim how are shareholders not just equally responsible as everyone else including creditors? If Joe down the street buys a share of Enron he’s going to get sued? If Jane who works as the company nurse owns stock is she now getting sued? How does she with her 10 shares effectively make management “less fraudulent”? What leverage?

C’mon.

When a company goes bust or bad things happen, shareholders everywhere lose their investment. That’s a big enough deal as it is.

> If everyone involved with the company would be personally liable...

Liable for what? Are creditors suing shareholders for losses? I guess banks won’t hold shares of companies because then they’d just be suing themselves.

If a company “does damages” and the government failed to regulate the company properly can we sue the government too? What about suppliers? Why draw the line at shares? Maybe everyone who was ever paid by the company should be held liable?

What you’re proposing here could use some work. You’re trying to create a system of infinite liability that just doesn’t make much sense.

Re: Texas electric firm files for bankruptcy citing $1.8B in claims

#146

Post by hahahahe »

jonplackett wrote: post #41

This is the side of privatisation that gets ignored. When private companies screw up, who gets left with the bill? Private companies have no incentive to be ready for really big problems because they know they’ll get bailed out, or just not have to pay. Privatise the profit, socialise the losses.

And the same management team stays in place coming out of bankruptcy. Capitalism is a complete joke. But we got ten varieties of Cheerios so there’s that.

Re: Texas electric firm files for bankruptcy citing $1.8B in claims

#147

Post by ericmay »

dkersten wrote: post #138
meepmorp wrote: post #89

Earlier quoted context omitted.

Do we prosecute the janitors, too? What about the admin staff? I'm fine with burning HR at the stake, but some fairer minded folks might point out their general lack of involvement in business decisions that affect the public, as a reason to spare them. The kindest thing I could think to call your idea is naive and poorly conceived.

Do the janitors and admin staff hold shares? Ie do they benefit from the companies profits and do they have power over the board and executive teams? If not the shareholders, someone in control of the company should be held accountable to avoid a "company in trouble? oh well, just shut it down, debt go poof, start again elsewhere, pocket the profits" situation or a situation where the company does something like dama…

Do they benefit from wages paid by the company? Why do you draw the line at shares???

Re: Texas electric firm files for bankruptcy citing $1.8B in claims

#148

Post by clcaev »

eqvinox wrote: post #141
clcaev wrote: post #123

Earlier quoted context omitted.

While I agree with your sentiment, this was not exactly a private operator: this was a rural electric cooperative, that intentionally runs close to cost hile holding reasonable reserves. Its voting members were distribution cooperatives, whose voting members are individual households. This is about as sane as a platform ownership as one might have. This is not an obvious problem nor solution. As posted downstream, ri…

The cooperative that went bankrupt isn't the platform that the argument applies to. In fact, you could create another cooperative without much trouble and start a parallel implementation of the same scheme. This really applies to the power grid itself. Even the power plants aren't covered by the argument, since if you have a reasonable grid, you can build another power plant of any kind you feel viable in some reason…

If this cooperative was not the platform, what exactly is the platform being discussed?

Why do you could think one could recreate such a large cooperative like this without much trouble? Isn't the likely outcome of this bankruptcy a sale of assets to private equity: a situation that can probably never be reversed?

What do you think this cooperative did if it was not facilitating the transactions between power plans and consumers? I'm confused by your assertion.

Re: Texas electric firm files for bankruptcy citing $1.8B in claims

#149

Post by phire »

SomeHacker44 wrote: post #135
phire wrote: post #88

Earlier quoted context omitted.

> . When private companies screw up, who gets left with the bill? In theory, the company is meant to declare bankruptcy (or seek more investment from shareholders) as soon as their books say they are insolvent. A company is Insolvent when it's liabilities are higher than it's assets, even by a single dollar. The theory is that because the company is required to declare bankruptcy as soon as possible, it should only b…

I do not think this reflects reality. Companies declare bankrupcies when their negative cash flow exceeds their cash reserves and they cannot put off creditors any further. Until then, they are a going concern. Alternatively, they declare bankrupcy when it will best help their owners. Assets and liabilities do not play much into the calculus. Just my observation from decades of startups and small companies and readin…

"cash reserves" are on the assets side of the balance. Often in smaller companies and startups they may be the only real asset, so when it runs out, the company is insolvent.

The other aspect to liquidation is cashflow. Sometimes companies have plenty of assets on the book to cover their liabilities, but these can't feasibly be sold in a timely manner to pay the creditors who want their money now.

If the company is healthy, a bank will be willing to offer a bridging loan. But if the company is less-than-healthy, the only option might be liquidation.

I didn't cover this about, because in these cases, the creditors are almost guaranteed to eventually get 100% of their money back.

Re: Texas electric firm files for bankruptcy citing $1.8B in claims

#150

Post by cies »

refurb wrote: post #116
cies wrote: post #91

Earlier quoted context omitted.

> many investors will have bought their share in the company, and that is worthless. That's just part of the risk. We're now talking about the bill that is still on the table. If the "investors" were fully responsible for their "investments" they would not have worthless shares, but they would have to pay up for what the company still owes. That their risk stops at "shares being worthless" is exactly what I mean by t…

So you think them losing 100% of their investment is being “shielded”? I mean, they aren’t the only investors.

Yes. If you are operating a business as a natural person, you remain liable for all, also the debts of your shop.

With limited liability the investors are never liable for the debts. That's exactly how limited liability shields investors.

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