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There’s a growing drumbeat that TXU, the Texas utility giant, may be in deep trouble. Seems that the Wall Street geniuses who took TXU private in a highly-leveraged $45 billion deal almost three years ago made a huge miscalculation about the company’s worth.

Here’s a recent story in the The Wall Street Journal:

It was the biggest leveraged buyout ever and one of the last hurrahs of this decade’s private-equity boom. Two years later, the former TXU, now Energy Future Holdings Corp., is struggling to pare down its debt, like so many other big, overleveraged companies that went private at the peak of the market.

And, like many other LBO’ed companies, this first attempt at restructuring will only nibble away at the problem and postpone the inevitable day of reckoning.

Ultimately, EFH and many other private-equity-backed companies likely will have to sell assets to rationalize their balance sheets before their debt matures.

What went wrong?

To understand the answer you need to know a little bit about how the deregulated Texas electricity market works. The market functions in a way that allows natural gas to set the price of power. When natural gas prices are high, nuclear and coal-fired power plants are extremely profitable. That’s why TXU, in its previous incarnation, was hellbent on building 11 new coal-fired power plants; at that time, coal plants looked like a mint.

The two private equity firms, KKR and Texas Pacific Group, essentially placed an enormous bet on natural gas prices remaining high. Whoops! Gas prices have tumbled and are expected to remain low.

EFH’s balance sheet wasn’t designed for this scenario. It currently has roughly $43 billion in debt. Based on first-half earnings before interest, taxes, depreciation and amortization of $2.3 billion, that equates to leverage of more than nine times. Worse yet, debt has crept up as EFH has husbanded cash by exercising its toggle rights and servicing some of its notes in kind.

Let’s not forget that many folks anticipated that something like this could happen. During the Public Utility Commission review of the buyout, consumer advocates and some large industrial power customers argued that the level of debt was unsustainable and could bring about the collapse of the state’s largest utility.

Yesterday, I called up Geoffrey Gay, an Austin utility attorney who represents cities in rate cases, to get his reaction.

“This was foreseeable,” Gay told me. “The buyout partners were putting a higher value on the company than the company officials themselves.”

As part of the buyout deal, the regulated portion of the company – Oncor, which oversees the electric grid – is supposed to be protected from the risky retail and power generation components of Energy Future Holdings.

Gay says that he doubts the parent company will file for bankruptcy. Still, consumer advocates worry that the equity firms could move to drain EFH of its assets, putting the electric system in danger.

“It’s clear that the wires company is the cash cow,” said Gay, “and it funnels money up to the company, its owners.” In a recent rate case, Gay said the PUC awarded Oncor suspiciously high rates, perhaps in a bid to prop up the parent company. 

“There’s part of me that believes that the financial loads of the parent were a motivating factor in Oncor getting as much relief as they did,” he said.

The silver lining, though, is that the breaking-up of EFH could reduce TXU’s outsized market power. Allegations of market manipulation have dogged the company for years.

Whatever happens I doubt the Wall Street players are going to go without a meal.

A recent New York Post story (“Private equity firms milk ailing buyout”) looked at the fees the attendant firms are paying themselves.

As part of the [debt] restructuring, KKR is seeking an exchange-offer agent fee, while TPG wants an advisory fee and Goldman is eyeing a restructuring fee. The payments, which total $13.5 million, are contingent on the restructuring, sources said.

However, many observers think EFH can ill afford to cough up even that amount of cash.

Nice work if you can get it.

Just before taking office, Barack Obama called on the millions of people involved in his campaign to stay active: “I don’t want them to just sit around and wait for me to do something,” he said. “I want them to be pushing their agendas.”

Well, since he asked for it, let’s shove this agenda forward: Jobs. Middle-class jobs. Jobs with a future and a satisfying purpose. Lots and lots of those jobs.

Obama has talked often about jobs, but he’s put little presidential heft into creating them. Indeed, even as unemployment soars to 10 percent and the number of underemployed Americans almost doubles that percentage, the administration lacks the sense of urgency that ordinary families feel.

Debbie Kransky, 51, who lives in Milwaukee, has been out of work since February despite constantly being on the hunt. Her unemployment benefits have run out, and her life savings have been depleted. As she told The New York Times, “I’ve got October rent. After that, I don’t know. I’ve never lived month to month my entire life. I’m just so scared, I can’t even put it in words.”

There are millions of Debbies, yet Obama doesn’t seem to be in touch with the aching anxiety and growing anger of these people. They saw the unprecedented, multi-trillion-dollar federal bailout to save Wall Street banksters. Now they hear the recession is “over.” Yet there are six unemployed people for every job opening. Obama, however, recently brushed off this reality, saying: “As you know, jobs tend to be a lagging indicator; they come last.”

Hello—jobs are not an “indicator,” they’re the sustainer of families, the lifeblood of our middle-class society. Franklin Roosevelt made jobs first, not last. And so should Obama. Soon. In fact, now would not be too soon.

For more information on Jim Hightower’s work—and to subscribe to his award-winning monthly newsletter, The Hightower Lowdown—visit www.jimhightower.com.

The Big Bend Sentinel has been reporting for some time that the U.S. government plans to ship 700 men a week to the international bridge in Presidio. The Mexican men ages 20 to 60 are being bused from Tucson, Arizona, to the tiny Big Bend border town to “remove the aliens from the smuggling pipeline,” according to Marfa Sector Chief Patrol Agent John Smeitana. The program began November 1. Governor Rick Perry apparently received his telegram a little too late. He sent a letter to Homeland Security on October 31 “expressing his deepest concern” with DHS’ new program. “Turning the Presidio area into a way station for the repatriation of illegal immigrants adds responsibility to local authorities and holds the potential of increasing the strain on local and state infrastructure and resources,” Perry wrote.It also puts a huge strain on impoverished immigrants and will undoubtedly result in more deaths in the Big Bend region. Isabel Garcia, a lawyer in Tucson and co-chair of the nonprofit immigrant rights group Derechos Humanos, says the deportations in Presidio will only put more poor people’s lives in danger.”It’s very maddening to me,” Garcia says. “They are treating immigrants like international criminals without looking at the root causes of the immigration such as abject poverty.”Garcia pointed out that her hometown of Tucson was not a hotbed of illegal immigration until Homeland Security cracked down on other regions of the border pushing immigrants into more dangerous desert crossings. Since 2004, 1,193 people have died in the Arizona desert according to a database run by the Arizona Daily Star. ”These are 15-year old boys, 19-year old girls many of them are desconocidos and will never be identified,” Garcia says. They also saw the number of smuggling operations increase as more people tried to cross the perilous Sonoran desert. Garcia predicts that something similar could occur in Ojinaga, the Mexican town that borders Presidio.”They didn’t sell their homes, borrow money and make the treacherous journey north just to go back,” Garcia says.The ACLU reports in a new study that more than 5,000 people have died since Operation Gatekeeper began in 1994 pushing immigrants into more rural and dangerous border crossings.This is a truly shocking number that illustrates what a terrible humanitarian crisis we have on the U.S.-Mexico border. A crisis that only seems to worsen as both Mexico and the United States ignore the underlying causes of illegal immigration.

The uninsured problem in Texas is worse than you thought, at least according to a new study.

There are nearly three million low-income women in Texas, and 52 percent of them lack health insurance.That’s the stunning finding of a recent study of women’s health insurance coverage by the Kaiser Family Foundation, the California-based nonprofit that specializes in health care policy studies.

The report includes a state-by-state breakdown, and the numbers for Texas aren’t pretty. It’s no secret that many Texans lack health insurance. For years, the state has boasted the highest uninsured rate in the nation.  But the Kaiser figures are especially alarming.

Women in Texas are more likely than men to be uninsured. Twenty-eight percent of women in Texas lack health insurance. That’s the highest rate in the country and far above the national average of 18 percent. (About a quarter of all Texans are uninsured. If 28 percent of women are uninsured, it means the rate for men must be far lower.)For poor women, the prospects are even worse. The 52 percent of low-income Texas women without health coverage is the highest rate in the country. No other state even tops 45 percent.

The Kaiser has similar reports going back 10 years. While skimming the numbers, I noticed that while the percentage of Texas women without insurance has always been high, the numbers spiked by about 5 percent after 2003. That was the year the Legislature passed a bare-bones budget that cut hundreds of thousands of Texans off Medicaid and the Children’s Health Insurance Program. Hard to know if that’s the cause, but it’s an interested correlation.

The bottom line is this: Uninsured women lead less health lives. They postpone getting treatment and are much less likely to received preventive care such as mammograms and Pap tests. National health care reform might change all this. Under the plans that Congress is debating, nearly all low-income women would be covered by Medicaid. Many other women would receive government subsidies to buy insurance.

In Texas, that would help millions of poor women.

Talk about jumping the gun. From the Philadelphia Inquirer:

A Message To Our Readers,A Macy’s advertisement in today’s Inquirer incorrectly offered Phillies 2009 World Championship merchandise. The Inquirer deeply regrets this error. Macy’s is a great corporate citizen, supporter of this region and our sports teams. We apologize for this error and any inconvenience this caused.

This one strikes close to home for the Contrarian — a native Philadelphian and die-hard Phillies fan who’s been crying in his coffee this morning after last night’s unpleasantness.

But — being a contrarian and a die-hard — I’m still holding out hope that the Phils can win the World Series in seven games.

And if they don’t, I’ll blame the ad department at Macy’s for creating a jinx.