Enron's Swoon Imperils Grand Experiment

Wall Street Journal ^ | November 30, 2001 | Rebecca Smith, WSJ Staff

[hopespringseternal]

If the SEC let Lazio get away with insider trading, why should the SEC care about Enron?

Wait, you said regulation was good. If Lazio and Enron can get away with insider trading, what use is regulation?

[hopespringseternal]

If the SEC let Lazio get away with insider trading, why should the SEC care about Enron?

Wait, you said regulation was good. If Lazio and Enron can get away with insider trading, what use is regulation?

[discostu]

It's important to note that Enron isn't in trouble for what it did as an energy company, it's not even in trouble for not being profitable. They're in trouble for cooking the books. I'm not sure if it's in this WSJ article but it is in one I read this morning, their auditors were recommending adjustments to their profit and loss statement that were 50% of the net profits (as figured before the auditors showed up), Enron decided that those changes were not material (that's an accounting term but there are no real accountants out there that will tell you that 50% of something is not material). Now they've been caught, so the stock price is gonig through the floor, they're going to be fined up one side and down the other. But when the smoke clears they're still going to be a profitable energy company, just not as profitable as they've been saying they are.

[Tuco-bad]

If Lazio and Enron can get away with insider trading, what use is regulation?

Good point, federal agencies (i.e., SEC) should do their jobs, or disband.

[Carry_Okie]

Indeed, funny how that works. Higher prices brought more supply... gosh.

[NotJustAnotherPrettyFace]

FYI bump.

[Tuco-bad]

But when the smoke clears they're still going to be a profitable energy company, just not as profitable as they've been saying they are

If your rignt at 29 cents a share, one could make a lot of money (think Penn Central).

BTW - I just put my mouth where my mouth is; bought 1 share of Enron.

[6ppc]

Oh my god! Laz invoked the dreaded Tuco-Bad tag!

[hopespringseternal]

Good point, federal agencies (i.e., SEC) should do their jobs, or disband.

Indeed. But that is the crux of the problem. If we could just legislate nirvana, we would be there.

Politicians and bureaucrats are cheap. The end result of populism always benefits the wealthy and powerful.

[Southack]

"Are you still in business, I hear that companies out outsourcing much of their IT budgets to India, and engineering budgets (e.g., Boeing) to Russia."

Yup, I'm still in business and still expanding. Boeing is building their rocket engines here in Alabama, not Russia. Honda has just started making the Odessy minivan here, and Mercedes is greatly expanding their Alabama manufacturing plant. Southern Company is ramping up here in order to pick up the slack from ENRON's exit, and BellSouth is doing rather well. Placements at IBM have stopped, but requests from CSC are up once again (healthcare is booming around these parts). I've been getting a fair amount of bank business, too. AmSouth, SouthTrust, and Colonial Bank are benefiting from the current interest-rate environment.

Life is good.

[Tuco-bad]

Yup, I'm still in business and still expanding. Boeing is building their rocket engines here in Alabama, not Russia. Honda has just started making the Odessy minivan here, and Mercedes is greatly expanding their Alabama manufacturing plant. Southern Company is ramping up here in order to pick up the slack from ENRON's exit, and BellSouth is doing rather well. Placements at IBM have stopped, but requests from CSC are up once again (healthcare is booming around these parts). I've been getting a fair amount of bank business, too. AmSouth, SouthTrust, and Colonial Bank are benefiting from the current interest-rate environment.

Good for you! Sounds like you're entering the big time.

Regards.

[snopercod]

Kind of odd to apply the energy de-regulation argument to fraudulant financial book-keeping, just because a company that did so was in the energy business.

Excellent point. My first impression when reading this article was that the "spin" would be that the "energy pirates" were finally going to share a cell with "Spike".

My apologies to everyone. I posted the thread just as I had to leave for work, and just now got home.

[Ernest_at_the_Beach]

Excellent post.

CNBC has been busy all day discussing Enron's swoon and
what it means and will it really happen (seems certain).

And what role Arthur Anderssen had in the cooking of the books, etc!

[Dog Gone]

There are uninformed, yet highly opinionated, folks who think that Enron's demise had something to do with California's power problems.

They couldn't be more wrong, and this should be a flag to others that their opinions are mere wishful thinking.

[randita]

I'm not disagreeing, but the true purpose of the "security" bill is to ensure that American citizens provide the security, not a foreigner (80% foreigners at Dulles Airport), who might harbor anti-American feelings.

Wrong. The true purpose of the "security bill" was to 1) satisfy the sheeple that the politicians "feel their pain" so the sheeple will have a sense of security (even though it's a false sense) and, 2) place 28,000 more people on government payrolls who will automatically have union dues confiscated from the paychecks to support support political views 40% of them do not share.

The security bill had little or nothing to do with foreigners acting as security guards--in fact, the security personnel did their jobs on 9/11. The screening rules that were in place then--enforced by the FAA were followed to a "T". Name for me one security guideline that was transgressed on 9/11 or one employee who has been reprimanded or fired as a result of the 9/11 incidents.

The "security" bill was a major scam and we all fell for it.

I wish someone would answer what we do when (and there will be a when) someone intent on evil gets through the federal screeners. What's the next step--federalizing the airlines?

[Hamiltonian]

Virginia-based AES Corp., which has missed its recent earnings targets, has scaled back its expansion goals and is selling some of its foreign assets.

IMO AES is the next house of cards to go.

Deregulation?

We have CAA I and II..............
Title V...........................
MACT..............................
TRI's.............................

There's nothing deregulated about "deregulation".

The primary result of the last ten years' "deregulation" has been that the mandated transfers of generating assets have lined the pockets of those on the receiving ends of the required legal costs and commissions.

As for Enron, pimps in the energy business are as old as the energy business. Enron just took it to the next level, and along the way generated enough money to grease politicians of both stripes.

[Tuco-bad]

I wish someone would answer what we do when (and there will be a when) someone intent on evil gets through the federal screeners. What's the next step--federalizing the airlines?

If there is a solution, that might be the only solution.

The hole in the current security plan is the maintenance workers on the airplanes, of which many are non-citizens.

I guess I am the the only one in the world who thinks that's a problem.

[randita]

The hole in the current security plan is the maintenance workers on the airplanes, of which many are non-citizens.

I guess I am the the only one in the world who thinks that's a problem.

If you want to invent problems, you are free to do so. I am not aware of any case of sabotage on a commercial airliner perpetrated by maintenance workers. Doesn't mean it couldn't or wouldn't happen, but thus far, it has not.

I personally do not feel more secure with the federal government being in charge of this--or anything for that matter (except the military). Just look at the track records of the large government agencies like the IRS, the SSA, HHS--the agencies are a mess, the employees are often incompetent and/or surly (if you can actually ever get one to talk to you) and huge amounts of money are wasted or go unaccounted for.

Look at AMTRAK and you'll see how well the federal government handles transportation.

People are so easily duped into thinking their lives will be safer and better if the government runs them. In the case of the duped, perception = reality.

[Tuco-bad]

If you want to invent problems, you are free to do so. I am not aware of any case of sabotage on a commercial airliner perpetrated by maintenance workers. Doesn't mean it couldn't or wouldn't happen, but thus far, it has not.

Sure! Let's close the barn doors after the animals have escaped the barn.