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Enron Anyone?

By: Marco Miranda , Posted On: Saturday, February 17, 2007

Recent disclosures about the disastrous Enron episode have removed some of the uproar it created. For a while it had everyone confused, except those who lost their savings, their pension plans, homes, yachts, shares, options, bonuses and other forms of legitimate avarice. They were simply pissed.

Like many, I became curious about this phenomenal example of greed, avarice, selfishness and incredible moral turpitude. I decided to check with the Professor. He is not only well informed but also can provide that incisive analysis that has made him a welcome guest at hearings and discussion panels that perform detailed intellectual autopsies to situations in our society.

Remember Enron? I asked.

He smiled and motioned me to follow him to his electron nest as he calls the ample room where several computers, TV screens, printers and various electronic machines are carefully installed. He pointed at one large screen, pressed a key and the screen came alive with figures and what looked like a highway map.

The best way to feed you background information is if I show you how you can get your own Enron underway. All you need is a quick mind, a loose tongue (preferably forked) and a flair for exaggeration, delusions of grandeur, a great dose of greed accompanied by a thick patina of selfishness and indifference toward the human condition.

He paused and pressed some more keys in another computer. He asked me to sit down and began to read from one of the screen while a printer started to spew pages and pages and pages. This is the story:

Here is what you do. Let us say that you run a small shop selling hairpieces. You deal mainly in silky, multicolored hairpieces made of the finest hair from selected regions of the US and abroad.

You make a comfortable living and manage to put away a few bucks for the distant day of your retirement. But you are not really satisfied. You want a company jet so you can do what the big shots do on Television. You know, arrange meetings in places like Gstaad, Aspen, St.Johns Island and Cozumel. You also want a modest apartment in Manhattan with a view ofCentral Park and a furious red Ferrari Testarossa; you also want to operate from your own stainless steel, glass, copper, aluminum, brass and marble offices complete with a shopping arcade, overlooking the citys best angle.

You take a good look at your clients. They are not as enthusiastic about hairpieces as in previous years and there are fewer of them. Then, one day the miracle happens. You wake up one morning and realize that you cam improve client relations and distribution if you limit your operating risks; so you buy an Updated Derivatives Package. You insist on a negotiable debt, for which you are ready to buy an Insolvency Derivative at half the market rate, but still better than taking a total book loss. It is a clever but simple accounting artifice based on controlled ROI results under current amortization schedules and relative incidence of net present value ratios.

Once this is accomplished, you quickly buy Contract futures, for which you commit to 50% additional contract values. This will guarantee delivery of outstanding debt in three months time. You hedge the transaction by buying additional equity put down through some Reassessment Bonds.

At the Hairpiece and Nuclear Submarines Contract Desk in Houston freshly starched yuppies are studying the worldwide Hairpiece Contract markets and starting to have doubts about those rich delivery clauses. Business to business transactions in the hairpiece market is being affected by the overall excessive growth of registered share values which result in fewer contracts. They figure that the appropriate solution is to protect contract liquidity, without affecting the debt-equity ratios, so they sell 40% of the contracts to a European commodities broker at a 30% loss. But they make up the loss by creating a subsidiary in the Bahamas that takes in the loss, while agreeing to capitalize the company at 5 times the contracts value, so that the books can show that the deal left a sizeable profit.

Then, unexpectedly, good news arrive at the trading central hub. The banks of computers spew out great news. Hairpiece contracts are making a shocking return in Scandinavia Andorra and Nepal. The sudden demand leads to immediate offers and options on international Linked Contract Swap Double Derivatives tied to the gap in the contract value assumed by the Bahamas subsidiary. This will allow you to compensate the imbalance caused by the dumping of futures contracts in Europe and at the same time it will enable you to put together a delivery in either market contract that will automatically wipe out the previous loss and allow you to get on the Internet Online Trading System.

By now it is clear to you that the answer lies with the subsidiaries, so you create 22 more companies in various parts of the world, for which you convince your wife, if you have one, all the relatives nearby and a few of your trusted collaborators to co-sign the deeds of incorporation. You reward them with hefty stock options and some of the cash from the first futures transfer.

The shares traded in stock markets all over the world show an explosive growth. Your Madison Avenue PR consultants have succeeded in turning the contract trading baseline into something akin to the Gold Rush, except that only the greedy rich can do the mining. Besides, the Hairpiece Contract craze has infected every one of the major brokerage houses on the Street. As the pressure builds to develop large portfolios among banks, insurance companies, pension funds and private investors, the futures liability is understated by your clever auditors and as a result, a special bond issue is floated. Green with envy, government agencies begin to buy, same as major pools of overseas consortiums. By now, consulting fees exceeding 250 million dollars are paid, plus discreet contributions to unnamed officials in a dozen governments. The share values have no place to go but up.

You have reached the top. The companys net worth is now estimated at 85 billion dollars. But in the back of your mind , you know that here must be a flock of flies in the ointment of your good luck. So, you sell the company to a consortium made up of Rupert Murdock, Halliburton, George Clooney and Oprah.

Do you retire to the ranch you bought in Manhattan (that was widely known as Central Park)?

The professor smiled as I tried to recover from the dizziness caused by the avalanche of facts and figures filling the screens. He turned to me and said:

Let us go to lunch. Now that you know how to become a potentate, you pick up the check!

Article Source: http://www.many-articles.com

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