Tuesday, July 31, 2012

India's Power Grid Fails for 2nd Day; 600 Million without Power

This is a hint at what real economic collapse looks like. It's not a Japanese style roll in the park.

AP reports:
India's energy crisis cascaded over half the country Tuesday when three of its regional grids collapsed, leaving more than 600 million people without government-supplied electricity in one of the world's biggest-ever blackouts.

The massive failure — a day after a similar, but smaller power failure — has raised serious concerns about India's outdated infrastructure and the government's inability to meet its huge appetite for energy as the country aspires to become a regional economic superpower.
Here's AP providing the clue to what is going down:
Power Minister Sushil Kumar Shinde blamed the new collapse on states taking more than their allotted share of electricity.

"Everyone overdraws from the grid. Just this morning I held a meeting with power officials from the states and I gave directions that states that overdraw should be punished. We have given instructions that their power supply could be cut," he told reporters.
Whenever you here talk of "too much" of a product being used, it is a sure sign that market prices are not being allowed to adjust to supply and demand conditions and that price controls are in effect, distorting the picture.

If significant price inflation hits the US down the road, the implementation of price controls could be a very real possibility, causing shortages through out the economy.