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Archive for September, 2014

Exelon CEO Chris Crane

Exelon CEO Chris Crane

Crain’s reports that NRG, which bought four Illinois generation plants from Edison Mission/Midwest Generation out of BK, will not be asking Springfield for a bailout. In contrast, Exelon’s hands have been working busily a day shopping for legislators. Read the story here:

NRG won’t ask Illinois for financial assistance – Crain’s Chicago Business.

That bailout, incidentally, will not be funded from all that spare cash sitting idle in Springfield and just looking for a home (NOT). Its cost will be passed through to ratepayers. Under Exelon’s version of “competitive markets,” when electricity market prices are high the company and its shareholders reap the rewards; but when market prices fall, ratepayers must shoulder the downside of competition. Electricity CEOs refer to this type of market as “robust.”

If Illinois ratepayers stand by and let Chris Crane get a publicly-funded bailout for his “competitive” generation plants, they will have proved John Kass right: they are chumbolones.

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The efficient markets hypothesis (EMH) states, more or less, that an efficient market incorporates all known information into the price of any asset available for purchase in that market. The University of Chicago School has provided some of this theory’s strongest proponents.

So as the story goes, one day two U of C economists, one a senior professor and EMH advocate, and the other a graduate student in economics, are walking through the Quadrangle when they see a $100 bill lying on the pavement in front of them. The graduate student bends over to pick it up, but the professor stops him.

“Don’t bother,” the professor says. “If that were a real $100 bill, someone would have picked it up already.”

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The Raisuli - The Real McCoy ca. 1900

The Raisuli – The Real McCoy ca. 1900

President Obama’s promise to degrade or destroy ISIS certainly was not based solely on ISIS’s barbaric killings of two American journalists, though that must have weighed in the balance. Had the same actions been taken by the Tamil Tigers we probably wouldn’t be making airstrikes in Ceylon, even though the acts would be equally abhorrent. Green tea from South Asia just doesn’t carry the same economic oomph as crude oil. Even so, “degrading or destroying” doesn’t have a ring to it. Obama’s intellectualism and inherent caution are not bad properties by themselves, but every once in a while he should consider whether the verbal equivalent of bareknuckle boxing would be more suited to the occasion. History, as always, provides an example, this time from almost exactly 110 years ago.

Gregorios Perdicaris emigrated from Greece to the United States around the 1830’s, and being an enterprising type he started a textile business in South Carolina. His business grew, and he opened up other manufacturing operations in New Jersey. When he died, his son Ion Perdicaris took over a fairly substantial business empire.

By 1904 Ion Perdicaris had retired, and he, his wife Ellen and his son, Cromwell, were living in a lovely villa on the coast of North Africa overlooking the Mediterranean and enjoying the sunsets. One night in the spring of that year, the Perdicaris home was raided by a sharif (or, as some would term him, a Berber bandit) named Mulai Ahmed er Raisuni, a/k/a the Raisuli. The Raisuli kidnapped Ion and Cromwell Perdicaris, but left his wife Ellen behind. That may seem a somewhat gallant gesture, but somebody had to raise a ransom, and who better than the loving wife and mother.

1904 was a presidential election year in which Theodore Roosevelt was running against the now forgotten Alton B. Parker. (Who?) Other candidates for the Democratic nomination included William Jennings Bryan and Citizen Kane himself, William Randolph Hearst. A substantial faction in the Republican party disliked Roosevelt and his radical trust-busting ways, and the two big issues in the campaign, the gold standard and the Panama Canal, didn’t really hold a lot of emotional appeal.

Then news of the Raisuli’s kidnapping of an American broke. This was a gift to TR. While the American public watched, he would have another chance to charge up San Juan Hill, or whatever the corresponding hill was called in the Atlas Mountains.

Roosevelt dispatched seven U.S. Navy warships to North Africa, including a contingent of Marines. That made the news and caught the public’s attention. The Marines ultimately went ashore to guard Ellen Perdicaris from any further predation.

Raisuli actually treated Perdicaris and his son quite well, in contrast to what we would expect today from ISIS.

When the Republican National Convention began in Chicago that June, John Hay, Roosevelt’s Secretary of State, told the assembled throng that Roosevelt had issued an ultimatum:

Perdicaris alive or the Raisuli dead.

And the crowd went wild. A decisive President was acting to show that Americans overseas would not be left undefended.

What Hay neglected to tell the Republican delegates, though, was the slightly disconcerting news that they’d learned just as the seven battleships approached the North African coast: Perdicaris was not an American citizen after all.

Shortly after Ion Perdicaris took over the business, Fort Sumter was fired on and the Civil War broke out. In 1862, the Confederate States of America adopted legislation to confiscate all property in the CSA owned by United States citizens. In order to avoid this confiscation, Ion Perdicaris sailed to Greece, renounced his U.S. citizenship, and became a citizen of Greece. The family business was saved.

But why let mere facts get in the way of campaign momentum?

There are a few lessons here. First, make sure you check all your facts before you send warships overseas with loaded guns. That’s a point in Obama’s favor, because he is at least careful.

But if you’re going to rouse the American people, you have to put aside that polished demeanor for a little while and show a few sharp and rough edges. Imagine what would have happened if Teddy Roosevelt’s messaging for the Perdicaris Incident had been “We intend to degrade or destroy the Raisuli.”

Alton B. Parker would have had a fighting chance that November.

The Perdicaris Incident is all but forgotten today, but it did play a large role in American popular culture. The American press played up the angle of Raisuli as a gentleman bandit. Rudolf Valentino later modeled his silent film role as the Sheik of Araby on the Raisuli. And the Perdicaris Incident was the basis for the 1970’s film “The Wind and the Lion,” with Sean Connery as the Raisuli (the first North African Berber warrior with a Scots accent.) Of course, the movie changed things around so that the wife, played by Candice Bergen, was the one who gets kidnapped. Brian Keith played TR.

Sean Connery as The Raisuli, 1975

Sean Connery as The Raisuli, 1975

Not a bad likeness between Connery and the original.

Candace B_ and the Scots Raisuli. He even let her carry the shotgun.

Candace B_ and the Scots Raisuli. He even let her carry the shotgun.

Obama might well have watched a little bit of “Wind and the Lion” in the White House theater.

“Foley and Sotloff alive or ISIS dead” would have had much better resonance.

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