Also:
And:
What a ridiculous mess. We’d have been much better off if California had never heard of Enron.
Just to be clear, this doesn’t mean they could be without electricity. At worst they end up back on the regulated utilities syste: PG&E, SCE, or SDG&E, although probably paying more than their contracted amount with Enron. It is not clear with the new rules in place whether or not they wil be able to go to another supplier.
<Italics mine>
Ah, so my first supposition was correct. Thanks for the explanation.
Another impact of Enron’s implosion is the likely collapse of the downtown real estate market. Enron owns or has holdings in several large buildings and is in the process of building at least one more building that’s mostly finished. If Enron goes away, they leave a LOT of empty office space in a market that’s already fairly soft. A new name for the Astros’ stadium is the smallest of their problems.
Robin, whose apartment window looks out on Enron’s buildings.
The notion that the Bush administration, or even deregulation in Texas under then-governor Bush, has been dealt with pretty well by IzzyR. But this point needs addressing.
[Checks to be sure this isn’t GQ]
The position that private industry is, as a general matter, superior to government intervention in meeting the needs of Americans is still a valid position to hold.
First of all, Enron is hardly the only energy trading company out there; they’re a big, important one to be sure, but their demise isn’t the end of energy trading as we know it. Market-based solutions have a measure of redundancy built in since other competitors can step up to fill the breach when a company fails.
Second (but related) is that when private industry fails, the damage is more limited. The suffering of 8,000 now-former Enron employees (and, to a lesser degree, Enron’s suppliers and customers) is indeed a terrible thing. But consider: Enron screws up, 8,000 people suffer; the government screws up (at least at the federal level) and 260 million people suffer.
In a competitive, free-market economy, companies fail. Sometimes even big companies. That is the natural order of things. That fact shouldn’t diminish enthusiasm for free-market solutions.
[Notes that this is in the Pit]
So Fuck fuckety fuck fuck fuck, and your momma too.
Dewey: [sub](btw, your Car Talk handle is very cool)[/sub]
That is a ridiculous statement. As Tranquilis pointed out, there are some 700 million outstanding shares of Enron. Many many thousands of investors and many pension and stock funds now hold virtually worthless Enron assets. The direct and indirect effects of this debacle will certainly affect many more than just the employees of Enron. It’s impossible to say how many people this will impact, but it’s possible that a million people or more may be hurt indirectly.
And the appearance seems to be (my opinion, but others here have said so already) that Enron didn’t “screw up” – the Enron officers cooked the books, to thier short term benefit and to the great detriment of thier employees and Enron investors. It’s not a darwinist survival-of-the-fittest situation as you seem to be painting, it’s criminal malfeasance.
The free market is indeed a powerful economic engine and should be tampered with only with trepidation. However, the temptations for companies to illegally manipulate thier own finances for thier benefit must be countered by oversight and regulations that reduce the chances of debacles like this one. This is a just and proper role for Federal regulation in the free market.
[sub](also noting it’s the pit)[/sub]
And if it turns out that Texas or Federal regulators conveniently turned a blind eye to Enron’s [alleged] malfeasance, I’m gonna be pretty damned pissed.
I cannot work up a lot of sympathy for the Enron shareholders. As the shareholders, they are also the OWNERS of the company. The CEO and everyone on down work for them, and they had the opportunity to replace them with someone more trustworthy. Every year, there is a shareholder meeting where the shareholders can elect new management. They did not do so. Why? I suppose because they thought he was doing a great job. Bad decision by the ownership, apparently.
If you have a substantial piece of your overall wealth invested in stock, it is YOUR responsibility to understand what you are investing in. It is YOUR responsibility to be diversified. It is YOUR money, if you’re stupid with it and put it all into the ownership of a company you don’t understand, tough luck buddy. Even little kids know “Don’t put all your eggs in one basket”, “Don’t count your chickens before they’ve hatched” and “A bird in the hand is worth two in the bush.” These shareholders were fucking adults, and should know better.
Everybody who was an owner of Enron made a conscious decision to become an owner. They made the decision to put their financial future in this company. Nobody has the power to force you to put your money in one stock or another, even the employees had to make some decisions along the way. The company was a house of cards, and they didn’t care to look, because the stock was doing GREAT.
That said, anyone working for Enron who committed fraud deserves a nice long trip up the river. That includes the executive management, accounting mananagement, and external auditors, if applicable. It does not change the fact that the shareholders OWNED the company, and should be responsible for their own finances.
I understand what you are saying, but I think your stance is overly draconian.
First of all, employees DID NOT HAVE A CHOICE to some degree, because the company matched all retirement contributions with Enron stock. My employer matches (doubles, actually) my retirement contributions, but with funds that I can invest however I choose to. Enron employees had no choice for their matching funds. While they could have (and should have) diversified the rest of their funds, all of them were exposed, without any choice.
Also, when things started to go bad Enron froze the pension funds. Employees couldn’t make any changes–they were powerless by the time the truth became evident.
As for them “knowing better” as owners of the company, it sounds as though the shady deals were escaped by both auditors and accountants and are just now being sorted out by the SEC and others. I don’t know if it’s fair to say that the average shareholder is supposed to have investigate powers that would turn up what professional auditors failed to find.
FWIW, the 7-8,000 figure is just for Houston employees. It’s more like 20,000 employees overall.
Cheesesteak, all of what you say would be true, if the shareholders were given a true picture of the actual financial state of the company. Given this important information, an investor could make an informed decision on whether an investment were sound and whether management were doing a good job.
The problem comes in when the management lies about it’s finances. Enron had to restate several years of finances because of incorrect, and probably illegal, accounting practices. This is known as fraud, and the investors and shareholders were the ones defrauded. I’m astounded that you seem to make this the fault of the investors being lied to.
Yes, investing is a gamble. But, the implicit assumption in having publicly available financial records from public companies is that the investor is gambling with correct information. When a company whitewashes not only its future outlook (which is prognostication that can indeed be incorrect), but past financial performance, the investor is getting maliciously and consciously screwed by that company.
I get my news from BBC World service on the radio and I have not heard anything BUT Enron news for the past few days. Its driving me crazy. I believe I know I all I will ever need to know about Enron, its business, its officers, and its shady accounting practices. Its like the All-Enron-All-the-time Channel. And a little bit about Anthrax. Enron & Anthrax, now there’s a name for a band.
Wow shit happens, wish I would have sold the company short.
There were some flags apparent before the implosion to the investors, because I know a few stockbrokers who tried to match figures up in Enron’s accounting statement a few weeks ago and thought something was really wrong. So they sold the company short.
Well it’s going bankrupt, there’s no doubt about that. Must really suck to work there, knowing you’ve lost your job and all the stock option/401K money locked in. Not to think your company of around 20,000 ppl are out of work. Bummer. You think you have it bad?
If one positive thing, the energy sector has been beaten down by this and there are some reeeealy good buys out there.
“Screwed up” may not have been the best way to put what was going on at Enron, but my overall point stands: Private enterprise carries a measure of redundancy and self-containment that government action does not. Whether a company’s failure is due to simply losing in darwinian competition, it’s own incompetence, or malfeasance on the part of its executives, the fact remains that other companies can step up and fill the breach, and that harm from such an implosion is more or less contained, at least relative to the harm from government foulups.
While I’m no anarchist – as a corporate lawyer, SEC regulation is part of my bread and butter – I tend to favor private enteprise solutions in the first instance, a belief I evidently share with the Bush administration. The poster to which I was responding said, in essence, that Enron’s collapse should have made the Bush administration rethink that first principle. I was pointing out that this is not necessarily so.
And what the heck is Car Talk, anyway? [sub]I mean, besides talk about cars, I gathered that[/sub]
And one more point:
Arthur Anderson should be reamed out but good over this. As Enron’s auditors, it’s their professional duty to catch this kind of thing. Look for a big, fat malpractice lawsuit to be forthcoming.
It’s an NPR show, about cars. Very enjoyable even if you’re not a grease monkey.
Anyway, in their closing credits they always mention their lawyers are the firm Dewey, Cheatham, & Howe. From the same old joke you got your name from. I think it’s cute, too.
Principal liaison attorney: Hugh Louis Dewey, known around Car Talk Plaza as Hughey Louie Dewey.
Having worked with a number of AA assosciates, I’m not terribly surprised that they were involved in this fiasco. Some were damned good, many were acceptably competent, but a significant portion were incompetent, green beyond belief, or simply unsuitable. It wouldn’t take willful malfeasance on AA’s part for them to have missed this: Just putting one of their usual teams on the job could have done it. Simple ignorance doesn’t in any way absolve them of responsibility, however…
Welcome to my world. Few scared people in the office now…
From AP (newslink that probably won’t work for long):
I didn’t know you could file a suit on a Sunday.
If you have enough money, you can do anything on a Sunday.
Robin