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In case you were wondering how Enron came into so much trouble, here is an explanation reputedly given by an Aggie professor to explain it in terms his students could understand:<\/p>\n
\tCapitalism:<\/p>\n
\tYou have two cows. You sell one and buy a bull. Your herd multiplies, and the economy grows. You sell them and retire on the income.<\/p>\n
\tEnron Venture Capitalism:<\/p>\n
\tYou have two cows. You sell three of them to your publicly traded company, using letters of credit opened by your brother-in-law at the bank, then execute a debt\/equity swap with an associated general offer so that you get all four cows back, with a tax exemption for five cows.<\/p>\n
\tThe milk rights of the six cows are transferred via an intermediary to a Cayman Island company secretly owned by the majority shareholder who sells the rights to all seven cows back to your listed company. The annual report says the company owns eight cows, with an option on one more.<\/p>\n
\tRepeat as necessary until you have $62 billion in assets, then declare bankruptcy.<\/p>\n
\tCourtesy of Linda Blair<\/p>\n
\tLarry Morningstar: mana7@opendoor.com<\/p>\n
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\tNews and Stories related to social and political issues. Not your run of the mill stuff. Low Volume: usually once a week or less. To subscribe to this list: just send a message with the words: "subscribe: Socio-Political eMail List" to: mana7@opendoor.com<\/p>\n","protected":false},"excerpt":{"rendered":"
< In case you were wondering how Enron came into so much trouble, here is an explanation reputedly given by an Aggie professor to explain it in terms his students could understand: Capitalism: You have two cows. You sell one … Continue reading