What's Involved In Enron?
So much Enron, so little time.
Like a stunning 4th of July fireworks display, this corporate firecracker keeps lighting up the sky with new revelations of its arrogance and avarice, each one more breathtaking than the last. Look, there's yet another top Bush official shooting out of the Enron cluster! Oh, wow, look at Arthur Anderson, Citigroup, and J.P. Morgan exploding from the midst of Enron's firestorm! Ooooo -- who would've thought there could be 3,000 subsidiaries, including 881 secret offshore accounts, hidden in one company!
Less than a year ago, Enron was still being lionized as the ultimate expression of "The New Economy." In this never-never land, companies don't actually make anything, the trade is more important than the commodity, government is just another service to be bought, and CEOs rewrite all the rules as they go -- everyone else be damned.
There's a fun web site (www.haveagoodlaugh.com) that tries to explain economics in terms of cows. Here's how it describes the inner workings of Enron: "You have two cows. You sell three of them to your publicly listed company, using letters of credit opened by your brother-in-law at the bank, then execute a debt/equity swap with an associated general offer so you get all four cows back with a tax exemption for five cows. The milk rights of the six cows are transferred via an intermediary to a Cayman Island company secretly owned by the majority shareholders who sell the rights to all seven cows back to your listed company. The annual report says the company owns eight cows, with an option to buy one more."
This would be funnier if it was not essentially true. There was no "there" at Enron, and unfortunately Enron is no isolated case. More and more of the global empires like Enron are Ponzi schemes.
This is Jim Hightower saying ... The Powers That Be are fast trying to wash their hands of Enron, but the problem is not one rogue company -- it's a totally rogue system built on unfettered corporate greed.