Wednesday, September 29, 2010

Hottest Day Ever Recorded in Downtown L.A. 113 Degrees Fahrenheit Leaves Many Without Electricity in Sweltering Heat.

September 29th, 2010

Yesterday reportedly witnessed the highest temperature ever recorded in Downtown Los Angeles since temperatures have been recorded dating back to 1877. Today, it was widely reported that approximately 25,000 homes in the greater Los Angeles area are without electrical power as a result of the excessive heat of yesterday (including many of which in LA-DWP and SoCal Edison territories). I have not heard any reported or specific reasons for the excessive number of power outages. Also, I have yet to actually research the matter for specific reasons for the outages. However, I assume that the outages are due to the antiquated electrical power grid being over-taxed and faulty component failures.

Nevertheless, I wonder if the electrical grid is similar the municipal water systems that repeatedly fail throughout our nation. As with the water systems and water companies, we have small government-sanctioned monopolies which have been in business for a long time. Apparently, even though these monopolies have been getting paid for their efforts, they typically appear to have decided against making any significant capital upgrades or overall system improvements until the existing systems experience catastrophic failures.

Are we to suppose that the aging electrical grid of our nation is subject this same infrastructure logic as well? That is, where we have many government-blessed monopolies that prefer to pocket their earnings with minimal reinvestment shown to the electrical transmission system grid from which they make their earnings? Even if these sanctioned monopolies only maintain these systems and do not actually own them, why is it that they are typically immediately able to cover the costs of repairing catastrophic system failures but appear unable to proactively invest in the infrastructure to prevent catastrophic failures? I suspect because the utility companies would rather wait until a system fails before replacing any antiquated relics in the systems and claim that such makes better economic sense to do so. I, of course, would disagree with any such claimed economic sense that waits until a catastrophic failure to perform system upgrades.

I would counter with the following economic sense:

Maybe its time to rid the nation of these often-times ineffectual yet sanctioned monopolies that are blessed with special treatment from our governments and replace them with a better system. Maybe more competition (or something) is needed to ensure our utility systems are more rugged and operating regardless of the occasional catastrophic weather occurrences. As a result of the utility monopolies’ self-centered and short-sighted quest for profits, maybe the firms we know as our electrical and water companies (as with many other utilities) are, in fact, the true relics and antiques that require replacement; as the paradigms of these firms are what appear to actually impede utility system upgrades necessary to withstand any weather conditions to which the systems are subjected.

Adam Trotter / AVT

Friday, September 3, 2010

L.A. Dodgers’ Theory of Business Management

September 2nd, 2010

According to the article in today’s Los Angeles Times (“Dodger Blue Running Deep in Red,” by Bill Shaikin and E.Scott Reckard), The Los Angeles Dodgers franchise of the Major League Baseball monopoly seems to have subscribed to the likely misguided yet seemingly prevailing thought of Corporate America. It would seem that the prevailing thought in the American corporate world as well as the Dodger organization is to view debt as a good thing – after all, the reasoning apparently goes for such a viewpoint, that debt is a positive cash flow and the greater the debt, the greater the positive cash flow from this debt. Add to this perception, that through recent ‘reform’ legislation, the U.S. Federal Government has apparently agreed to bolster any “too large to fail” corporation through tax-payer funds and would thereby prevent the failure of any major corporate entity that was determined to be vital to the nation’s economy, one can surmise that we will see many other major corporation’s follow this L.A. Dodgers’ Theory of Business Management and leverage their corporations to the maximum level possible; knowing all the while that the U.S. government and tax-payer is holding a safety net for any major corporation’s financial recklessness and ineptitude (regardless of anti-trust status and not to mention bankruptcy possibilities which typically only ‘screw’ those owed money and not the company seeking bankruptcy protection - stock holders not withstanding, of course). Not to insinuate that the Federal government would save the Dodger organization from financial ruin; but the point being that there appears only minimal repercussions to those corporate entities that care not about balance sheets, maintain unrealistic debt levels, and only appear to care about lining their pockets with cash, regardless of whether the cash emanates from a cannibalization of assets which subsequently leads to the demise of their corporation.

Adam Trotter / AVT

The New Jersey Turnpike Theory of Business Management