A Quote by P. J. O'Rourke
What Enron was doing, what caused investors to embrace it in a rapture of baffled awe, was hiding debt.
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Enron had already collapsed and filed for bankruptcy protection by the beginning of 2002. But despite complaints from short sellers that corporations had used accounting gimmickry to inflate their profits, many investors thought the crisis at Enron was an isolated case.
Debt is not caused by spending, it is caused by buying things that you don't pay for. Or, it's caused by cutting revenues that you don't offset ... by cuts in spending.
The CEO of Enron, Jeffrey Skilling, married one of the Enron secretaries this week. It's amazing how romantic these Enron guys can be when they realize that wives can't be forced to testify against their husbands. Skilling said today she was the best secretary Enron had ever had. She could shred 950 words a minute. ... I guess they are on their honeymoon right now. That's going pretty well. Hey, he's used to screwing Enron employees.
Our experience is that most entrepreneurs are able to attract debt, even for risky and early stage investments. There are investors who provide debt, but very few who fund through equity.
The moment a large investor doesn't believe a government will pay back its debt when it says it will, a crisis of confidence could develop. Investors have scant patience for the years of good governance - politically fraught fiscal restructuring, austerity and debt rescheduling - it takes to defuse a sovereign-debt crisis.
If it were not for government regulation of big corporations, executives at companies like Enron, WorldCom, Tyco, they could have cheated investors out of millions.
All the central banks are doing is substituting one form of debt with another form of debt. They're issuing short term debt and using it to buy long term debt. In finance, we tend to think that's a neutral activity, even though those stimulus programs are huge.
The amount of U.S. debt held by countries such as China and Japan is at a historic high, with foreign investors holding half of America's publicly held debt. This dependence raises the specter that other nations will be able to influence our policies in ways antithetical to American interests.
I think that the failures of Enron and WorldCom and other companies are partially failures of investors to recognize companies that are selling for a thousand times nothing, but chances are they may be worth only that.
The not-quite-sort-of lie works here too - often an ad will announce that "Congressman Johnson voted for a bill that gave tax breaks to companies like Enron." True - although the bill allowed all companies to accelerate depreciation of copying machines. Yes, Enron benefited, but Enron also benefited from the revolution of the Earth around the sun. Hardly an argument to freeze the planet in one spot.
I remember when I did my Enron film, my executive producers at the time felt very strongly that I should mock the Enron executives more viciously because everybody wanted that moment.
I happen to represent Enron here in Houston. We have many good corporate citizens here in Houston. Enron happened to have been one.
The only beef Enron employees have with top management is that management did not inform employees of the collapse in time to allow them to get in on the swindle. If Enron executives had shouted, "Head for the hills!" the employees might have had time to sucker other Americans into buying wildly over-inflated Enron stock. Just because your boss is a criminal doesn't make you a hero.
During the Enron debacle, it was workers who took the pounding, not bankers. Not only did Enron employees lose their jobs, many lost their retirement savings. That's because they were at the bottom of the investing food chain.
Until the church is holy there'll be no rapture - I don't care what theory of the rapture you have.
The financial crisis of 2008 was not caused by investment banks betting against the housing market in 2007. It was caused by the fact that too few investors - including all of the big investment banks - bet too heavily on the housing market in the years before 2007.
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