Similarities between Enron and current situation

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MikeyPooh's picture
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Joined: Sep 20 2008
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Similarities between Enron and current situation

Well, hello everybody!  Long time lurker, first time poster. 

I will start with the usual word of thanks to everybody who makes this site such a valuable resource.  I read a ton of different blogs/forums and I must say that this seems to be the most level headed place around, with some of the most intelligent discourse I've seen.  I really appreciate the insights I've gained from all the members.  I tend to just read and absorb at all the sites I visit, but I'd like to try and contribute something to the community.  When I found this site I was caught up in a world of conspiracy sites, and although my tin-foil hat mojo is still strong it was quite the breath of fresh air to find the crash course, a straight forward nuts and bolts resource that I could actually share with people in my life.  Like many other posts I've read, I too have trouble getting people to realize the magnitude of what we are actually facing right now, and I find it therapeutic to come and read what other like minded folks are thinking and doing. 


So, about a week ago I watched "Enron - the smartest guys in the room"  (worth watching IMO) and I was struck by several things.  

The gist of the movie goes something like this:  Enron didn't start out as a criminal organization, it started with some bright people who had an idea they really believed in, and they made it happen.  As time went on, it was more and more difficult to keep the stock price rising so they did whatever they had to to keep "making the number."  It appears that the head honchos were thinking "well, if everybody really believes this, if everybody is buying what we're selling, is what we're doing really fraud?"  This thinking lead to "creative accounting", rolling blackouts in California and to the creation of financial entities (Raptor, LJM, etc...) whose only assets were Enron stock (which was known by the bigshots to be essentially worthless) and whose only function was to get loans from banks with that collateral and shuffle the cash over to Enron in order to keep things rolling. 

Towards the end of the movie there was a woman (I forget her name, I believe she was a secretary) who turned whistleblower, and she said something to the effect of "don't think this type of culture can't develop somewhere else."  Combine this with the laundry list of banks and institutions that had their finger in the pie with Enron, and I cannot help but feel that the corporate culture of Enron essentially went viral and spread into the entire financial sector.  Or maybe it was there all along,I dunno.  So the big players needed to find the next big thing, and they found it with the explosion of derivatives (and??)  Now that the financial sector is imploding there is talk of the creation of a bad bank to soak up wothless assets, and in my mind I really can't tell how this would be substantially different from the Raptors that Enron created.  Is there a difference?  What is it?  Am I wrong, or have our financial guru's Enron'd our whole economy? 



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