The Stench From Enron's Crash-And-Burn

Fort Worth Star-Telegam ^ | December 11, 2001 | Molly Ivins

[bigdog]

AUSTIN - Hail and farewell, O Enron! What a flameout. The Establishment media, sucking its collective thumb with unwonted solemnity, is treating us to meditations on two themes: AUSTIN - Hail and farewell, O Enron! What a flameout.

The Establishment media, sucking its collective thumb with unwonted solemnity, is treating us to meditations on two themes: "How the mighty have fallen" and "Who would have thunk it?" Pardon me while I snort, in lieu of ruder noises, and offer two themes of my own: "What took so long?" and "Anyone with an ounce of common sense."

If you want to know what this story is about, pretend that Bill Clinton is still president. Pretend that Clinton's long-time, all-time biggest campaign contributor - a guy for whom Clinton has carried water for over the years, a guy with unparalleled "access," a shaper of policy, a man with a veto on regulatory appointments affecting his business, with connections at every level of the administration, a political fixer beyond the wildest dreams of James Riady - imagine that this guy's worldwide empire has tumbled into bankruptcy in just three months amid cascading reports of lies, monumental accounting errors, evasions, iffy financial statements, insider deals, a board of directors rife with conflicts of interest, top executives bailing out with millions while regular employees see their life savings shrink to nothing. Imagine all this back in the day of Bill Clinton.

Holy moley, we'd have four congressional investigations, three special prosecutors, two impeachment inquiries and a partridge in a pear tree by now. The Republicans would all be drumming their heels on the floor in full tantrum.

But this is not President Clinton; it is President Bush - so of course different standards must apply. The fact that Ken Lay, Enron's chairman, has been Bush's chief money man and key backer since he first went into politics is mentioned only in passing. The media don't want to be impolite. They have been credulously swallowing Enron's PR and overlooking the obvious for years.

The main problem with Enron is that it has never produced much of anything in the way of either goods or services; it has not added a single widget to the world widget supply. Enron is in the business of "financializing," making markets, trading in wholesale electricity, water, data storage, fiber optics - just about anything. One Enron executive told The New York Times that the company's achievement was to create "a regulatory black hole" to suit its "core management philosophy, which was to be the first mover into a market and to make money in the initial chaos and lack of transparency."

Enron started as a gas pipeline company that went into trading natural gas, and even then the company's critics claimed that Enron was making profits by stoking volatility in gas prices. The same charge showed up again in spades with the newly deregulated electricity markets. Enron had lobbied for utility deregulation relentlessly, formidably and very expensively at both the state and national levels.

The company seemed to spend more time influencing government than doing business. Like Long Term Capital Management, the hedge fund that went awry, it seemed to have only a parasitic relationship to actual economic activity. The problem with deregulating utilities is the reason that they were regulated in the first place: Monopoly power and the threat of market manipulation are a set-up for unholy price-gouging. How many times do we have to relearn that lesson?

Just a few spiffy eye-openers on Enron's connections:

• Lay and Enron together donated $2 million to Bush. In 2000, a company memo that was an open strong-arm recommended that employees give campaign checks for Bush to the political action committee; low-level managers were urged to contribute $500 and senior executives at least $5,000. Another $1 million was given to mostly Republican congressional candidates. It gave more money last cycle than any other energy company.

• Lawrence B. Lindsey, Bush's top economic adviser, got $50,000 from Enron in 2000 for consulting, presumably giving the company the same excellent economic advice now proving so healthy for the nation's economy.

• Karl Rove, Bush's top political strategist, sold between $100,000 and $250,000 worth of Enron stock earlier this year after being accused of conflict of interest.

• The California Legislature passed a contempt motion against Enron for failure to respond to a June 11 subpoena. The Legislature is investigating whether power-generating companies willfully manipulated the electricity supply in order to drive up prices last year.

• Lay was the only energy executive to meet alone with Vice President Dick Cheney while Cheney was drawing up a new national energy policy in secret.

• Enron influenced public policy time and again while Bush was governor here, including the infamous "grandfathered plants" deal. In 1997, Lay asked Bush to contact every member of the Texas delegation to explain how "export credit agencies of the United States are critical to U.S. developers like Enron, pursuing international projects in developing countries." These agencies provide political risk coverage and financial support to U.S. companies abroad. It's called corporate welfare.

• In Texas, Enron was a major player during the utilities deregulation debate, for which Bush lobbied actively, and, of course, in "tort reform," making it harder to sue corporations for the damage they do.

  Molly Ivins writes for Creators Syndicate. 5777 W. Century Blvd., Suite 700, Los Angeles, CA 90045

[EricEssig]

I love Molly. She is never shrill. (/sarcasm)

[Iwo Jima]

If you have read Ayn Rand's novel "Atlas Shrugged" then you have met Ken Lay in the person of James Taggart. His specialty is what Rand call "pull-peddling" or what I would call "cronyism."

[BurFred]

I have heard alot of folks talking about how close Enron and G.W.are, and how they basicly own tons of politicians. The Dems are trying so hard to tie this to Bush. My question is, if Enron had bought so many in washington How come their broke. Can someone give me a brief summary of this mess. Thanks.

[185JHP]

The Democratic Party has people who function like TR's "Black Horse Cavalry" - they get campaign contributions from businesses not so much as a "what we'll do FOR you", but as a "what we'll do TO you", if you don't cough it up. Sad.

[Iwo Jima]

"if Enron had bought so many in washington How come their broke."

Read Atlas Shrugged by Ayn Rand. You can only cheat reality so long, regardless of how many friends you have in government.

Basically, Enron did not provide a good or a service which the market wanted. It only lasted as long as it did due to "smashmouth" tactics which intimidated anyone, including stock analysts, from declaring that the Emperor had no clothes.

But, finally, the fact that the Emporer had no clothes became too obvious to ignore, and then the whole house of cards came tumbling down. This is really a vindication of capitalism. What Enron was engaged in was anything but proper free market principles.

[okie01]

"I can't believe that this passes for economic analysis among hundreds of thousands of this country's most well-to-do morons."

You presume that Miss Molly has an abiding interest in being correct.

You would be wrong.

Miss Molly has an abiding interest only in being clever. And in bashing conservatives while she's being "clever".

Like Maureen Dowd, it makes for thin gruel...

[Free Vulcan]

Enron's main problem was that it had too much debt. That problem was able to be hidden via off-balance-sheet deals facilitated by Big-5 Arthur Andersen, but after a while the truth finally came out.

Ah yes, good old AA. My roommate worked for them. They were as 'creative' as possible in everything they did, and were quite smug about it to boot. Good at shystering too, the State of Iowa paid them a 6 or 7 digit figure for them to do a study on why Iowa can't attract companies. AA of course was supposed to be the analytical wunderkind that would find the secret key to the Golden Kingdom. Their brilliant answer, which everybody had been telling the State for years, was that our tax structure is oppressive and makes the cost of doing business to high. AA milked 'em good on that one.

[ArGee]

ArGee, Enron would not be "flying high" if their stock went from $80 to $.80, which it did. The SEC, or even the devil Clinton himself could not cover that up.

Enron stock started to fall when it was announced that the SEC was investigating Enron. It is likely that their stock would be doing very well, with a Dynegy purchase still on the table, if it had not been for the investigation.

The SEC did not conduct this investigation while Clinton was in office. Perhaps this is because there was no hint of the wrongdoing to cause an investigation to start. It is also possible that there was no investigation because Enron had been pouring money into the Clinton White House. He has a reputation for making sure contributors aren't investigated. President Bush has no such reputation.

Shalom.

[RWG]

This is what is so disgusting about loyalists of both ends. Molly off her meds? What about the facts and what about Silverado and what about baseball ownership and what about everything else? When I screamed about clinton my family called me an extreme right winger, when I screamed about Nixon my family called me an extreme left winger. What about the truth? Loyalists and apologists should all just go to hell so that the rest of us can try and find the truth unimpeded by idiots.