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Congratulations to you and Rena.
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When is the due date?
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Kevin
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Wow, what a gracious thank you.
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I'm speechless.
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Hope everything's been going well lately.
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I'll talk to you soon.
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By the way, are you going to any events during Gas Fair?
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Kevin
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Thought you might appreciate this.
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Brian, Unfortunately I won't be able to make it, but thanks for the email.
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Hope everything is going well with you.
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Have a great time at the party and tell Sweets I said Happy Kevin
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Leroy, Thanks for the email.
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Sorry it took so long to get back to you - I actually am just catching up with my emails now - Friday at 5pm.
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I'm interested in talking to you about the lunch discussion.
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Kevin
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BL, Have you experienced any blackouts yet?
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I think you'll see a lot this summer.
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What does everyone think about the situation?
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Do they think it's a threat or not?
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I think the state is in for a horrific summer - I hope it doesn't turn out that way, but it'll be incredibly difficult to avoid.
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Hope everything's going well with work and with the family.
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When's the next time you'll be in Dallas?
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Let me know.
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KR
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Great to hear from you.
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Looking forward to meeting in Houston for a baseball game.
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Conway will be in Corpis soon so we should be able to do a weekend.
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We should start construction on the house in May - what an incredibly long process it is.
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I definitely would not do it if I had to do it over again.
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One redeeming factor is that we bought on a good block.
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We definitely have the ugliest house on the block.
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We should get a pop in real estate also when all the California companies start migrating to Texas.
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Joking aside, unless you guys have incredibly mild weather this summer combined with a lot of rainfall, you're summer will suck.
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There is no doubt that the CA economy is going to suffer a great recession.
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You have a shortage of supply so the only way to ease the problem is to reduce demand.
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This usually occurs when prices reach levels where the price sensitive buyers cut back.
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However, with your boy Grey Davis pushing for price caps, this won't happen.
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The next way for demand to be trimmed is for companies to leave, so this will probably need to happen to an extent for the problem to ease.
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The other factor, of course, is that you could have an increase in supply - new power plants.
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But being that the amt.
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of time it takes to develop and build a power plant in CA is about 3 times as long as in most other states combined with the fact that CA hasn't had a new power plant in the last 10 years, an increase in supply doesn't seem likely in the short term.
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Again, this is only my opinion, so you could take it with a grain of salt.
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Talk to you soon.
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Kevin
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That state will never be the same.
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My prediction is that the state will be bankrupt within the next 2 years unless the Federal Gov't bails it out.
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I hope Lowery has held off on buying his house.
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Talk to you this weekend.
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I blew off the Montana trip so I'll be home.
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KR
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Did you go to any parties last night??
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I was lame, I didn't go to a single one.
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I heard there were some decent ones.
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How's life at Duke been?
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I haven't talked to you much since you've become a big ICE trader.
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Talk to you soon.
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KR
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I don't think many buying opportunities out there.
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The economy is going to get crushed this year.
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There's only one place to put one's money now, and that is in cash.
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The manufacturing sector is in dire straits and you will continue to see an increase in plant shutdowns and company layoffs.
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The Fed could continue to lower rates but there'll be little capital investment if consumer spending dries up.
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I feel we've just seen the beginning.
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I think the Dow will be trading under 8000 by the end of April.
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Psychologically, the California crisis will add to consumer fear.
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The crisis is not a short term problem.
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As a result, barring any Federal bailout, you could kiss that state's economy goodbye.
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Let me ask you a question; if you were paying (1) the highest real estate prices in the country, and (2) the highest energy prices for the least reliable power, in (3) the midst of a hi-tech meltdown, what would keep you or your company from closing shop and moving to a different state??
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If you own any CA real estate, sell.
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The only way to solve the CA energy crisis is to reduce demand or increase supply.
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Since CA doesn't want any power plants in its backyard, the supply issue likely won't be solved anytime soon.
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So, how do impact demand??
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You have to price energy(power/gas) so high that the discretionary user (household, manufacturer, commercial store) conserves by closing its plant, cutting back on the thermastat or running the commercial operation during off-peak hours.
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California will see this reduction in demand over time.
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If the blackouts subside it's because so many businesses have closed their doors for good or moved to another state.
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Without this, the blackouts will get much worse.
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If the state tries to get into the business of buying and selling electricity and gas, I would bet it will go bankrupt within 2-3 yrs.
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Could you imagine the impact on the national economy from the bankruptcy of the U.S.'s most prosperous state.
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Obviously this is only my opinion, but I would keep my eyes on the energy markets - that's where the key to the turnaround lies.
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Take Care and thanks for the email.
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Kevin
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Glad everyone had a good time at Sweets'.
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I hope he had a blast.
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In terms of your email reply, you can have Calpine.
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How are they going to make money long term if price caps are instituted?
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This obviously would be the stupidest policy.
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In addition their exposure to the CA crisis must be pretty significant - when and how are they going to get paid?
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I wouldn't want to bank on the energy market in the most regulated state in the country.
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Plus, if the state backs energy purchases, it's going to get to the point where who wants to own CA credit??
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PG&E and Edison International are doomed, as they should be.
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The state of CA is going to go down the tubes unless they find some good leadership.
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Unfortunately, noone out there seems to have the least clue on how to solve the problem.
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The politicians are a complete joke.
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It is incredibly disheartening to witness the absolute stupidity of the CA politicians in addressing this issue.
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They seem to be much more focused on finger pointing than coming up with a viable solution.
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I honestly think they are incable of solving the problem.
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KR
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You're correct, Enron doesn't get too involved in these conventions.
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