News and Politics | October 03, 2008 | 12 comments

Enron was the pit canary, but its death went unheeded

source: http://www.guardian.co.uk/commentisfree/2008/oct/04/enron.creditcrunch

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Vierotchka
History is repeating itself as companies hide debt, blame the market for their failings and expect the taxpayer to pony up.

By Bethany McLean

Bad experiences are supposed to be good, in a twisted sort of way. That's because we're supposed to learn things that help us avoid the same mistakes the next time around. But it's hard to argue now that anything good came out of the bad experience called Enron. In fact, one thing that is crystal clear amid all the chaos of these days is that the lessons from Enron went unlearned - or were just forgotten.

Start with the Houston-based energy trader's notorious lack of transparency. After Enron's implosion, everyone talked about how important it was to be able to understand how a company makes money. Now raise your hand if you understand how a modern financial services firm makes money. No hands? The truth is, there is no way to understand. These companies are as opaque as Enron. Just as Enron had off balance-sheet vehicles - SIVs - that allowed it to book earnings and hide debt, Citigroup and other financial institutions had structured investment vehicles that did the same. Indeed, Citigroup had to take almost $50bn of SIVs back on to its balance sheet after they ran into trouble. It would be nice if the accounting rule-makers would grasp this basic tenet: if they want to hide it, we want to know about it.

Of course, SIVs are only a small manifestation of the deeper problem, which is the evolution of financial engineering into a dark art. Enron now seems like the canary in the coal mine. After its bankruptcy, Steve Cooper, who was in charge of restructuring it, told the Wall Street Journal his task might leave him "in a wheelchair and drooling" due to the complexity of its financial structures and the "unbelievable amount of debt accumulated around the company". Doesn't that sound like our entire financial system?

Just as Enron packaged bad investments into a private equity fund run by its chief financial officer, Wall Street packaged mortgages given to people who couldn't afford the payments into sleek new instruments called RMBS and CDOs. But Enron's machinations couldn't make the losses go away, and Wall Street's shiny acronyms can't turn a defaulted mortgage into good money.

* * * * *

Click on the link for the complete article.

Over the past almost eight years, as I observed America and American politics, and as I studied Bush and his maladministration, I frequently commented that I was witnessing the Enronization of America at the hands of the Neocons, Bush, and the Corporations. Did you know that the "blueprint" for Enron's shenanigans, fudging the books, and opacity, was practically written by Dubya in the running of his various failed business enterprises? Do you remember that Enron video of Bush senior as well as Bush junior who were congratulating and backing Ken Lay?

Methinks this bailout is just another successful heist, robbing the poor to benefit a handful of the richest.

Welcome to the successful Enronization of the USA.

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12 comments // Enron was the pit canary, but its death went unheeded

  • WhiteNoise
    • 0
      WhiteNoise  

    • FASCISM IN 2008 : HIGHEST BIDDER TAKES ALL !

      "Politics is the entertainment branch of industry." - Frank Zappa *

      Meanwhile...

      GOING UP !
      Top 1% share of total income
      Income gap between rich and poor
      Foreign debt as a percent of GDP
      Age at which one can receive Social Security
      Hunger
      Consumer credit debt
      Housing foreclosures
      Severe poverty rate

      GOING DOWN !
      Real income
      Real manufacturing wages
      Percent of single women and mothers in the workforce
      The bottom 40%'s share of national wealth
      Older families with pensions.
      Workers covered by defined benefit pensions.
      The savings rate
      US manufacturing jobs

      ALSO...

      Protest restricted/ignored
      Dissenter labeled terrorist/traitor
      False-flags
      Elections suspect
      Leaders benefit from wars/disasters
      Use of propaganda/lies & partisan mass-media
      Claims that War is needed for everchanging false reasons
      Secret/extrajudicial/torture camps
      Curtailed/suspended civil rights/liberties
      Wiretap/intercept/surveillance net
      Stealthily expands int'nl influence/power
      Judiciary/Opposition ineffective/ignored
      Legislation to defy Constitution

      All the while...

      PENTAGON SCORES A BIGGER RIP-OFF THAN BAILOUT
      http://current.com/items/89342370_pentagon_scores_a_bigger_rip_off_than_bailout

      & of course...

      TOP 25 CENSORED STORIES FOR 2009
      http://current.com/items/89327026_top_25_censored_stories_for_2009

      One of the saddest lessons of history is this: If we've been bamboozled long enough, we tend to reject any evidence of the bamboozle. We're no longer interested in finding out the truth. The bamboozle has captured us. It is simply too painful to acknowledge -- even to ourselves -- that we've been so credulous - Carl Sagan

      These past years were more than just the most shameful, corrupt and incompetent period in the history of the American legislative branch. These were the years when the U.S. parliament became a historical punch line, a political obscenity on par with the court of Nero or Caligula -- a stable of thieves and perverts who committed crimes rolling out of bed in the morning and did their very best to turn the mighty American empire into a debt-laden, despotic backwater, a Burkina Faso with cable. - MATT TAIBBI

      * RIP USA REPUBLIC *
      http://current.com/items/89362640_rip_usa_republic

    • 3 years ago
  • WhiteNoise
    • 0
      WhiteNoise  

    • We do seem to cling to a romantic definition of fascism. That's why the Mussolini quote sets the table right. The will of "We The People" being replaced by the corporation's iron fist which the documentary "The Corporation" nailed. http://freedocumentaries.org/film.php?id=102

      The nationalism fervor is wiped up much more rapidly under external threat than any other way. So no mass parades are in order anymore...

      "Every collectivist revolution rides in on a Trojan horse of 'emergency'. It was the tactic of Lenin, Hitler, and Mussolini. In the collectivist sweep over a dozen minor countries of Europe, it was the cry of men striving to get on horseback. And 'emergency' became the justification of the subsequent steps. This technique of creating emergency is the greatest achievement that demagoguery attains." - Herbert Hoover - (1874-1964), 31st US President

      "Terrorism is the best political weapon for nothing drives people harder than a fear of sudden death." - Adolf Hitler

      "Dictatorships start wars because they need external enemies to exert internal control over their own people." - Richard Perle

    • 3 years ago
  • AveryMoore
    • 0
      AveryMoore  

    • Damn.

      What a beautiful summation.

      We've been hearing from the left the same tired diagnosis - it's Fascism. But it isn't that slick. No mass parades, no enormous army and melodramatic twilight speeches thundering with bloodlust and nationalist fervor that we are destined to rule a thousand years..

      Its simple Politburo banditry. It is the same disease that crippled the Soviet Union and in due course will push either the Chinese population or the army to overthrow the CCP and rewrite history yet again.

      It's a group of self-interested, well-connected crooks, served by a fifth-column of media sycophants all of whom declare themselves patriots while together they rob the public blind.

      Everything is an enemy.

      Laws? They are just goddamn words on "goddamn pieces of paper." The vote? It must be corrupted or rigged, Money? It must be debased. Jobs? Send them off shore and dis-employ the population in the name of Trade thus trading accelerated elite wealth for population poverty. Nothing new in that.

      Only wars get thumbs up. And isn't it odd that what tipped the balance against the Soviet Union was an insipid attempt to liberate Afghanistan from itself?

      As though that blunder weren't enough - add in permanent occupation of a destroyed Iraq, invasion [without consent] of Pakistan, and heavy breathing about the urgent need to bombombomb Iran - regardless of the known consequences. Do the generals think it insane? What do they know! Treat them like clerks and fire them.

    • 3 years ago
  • WhiteNoise
    • 0
      WhiteNoise  
    • Image

    • "A nation can survive its fools, and even the ambitious. But it cannot survive treason from within. An enemy at the gates is less formidable, for he is known and he carries his banners openly. But the traitor moves among those within the gate freely, his sly whispers rustling through all the alleys, heard in the very halls of government itself. For the traitor appears not traitor, he speaks in the accents familiar to his victims, and he wears their face and their garments, and he appeals to the baseness that lies deep in the hearts of all men. He rots the soul of a nation, he works secretly and unknown in the night to undermine the pillars of a city, he infects the body politic so that it can no longer resist. A murderer is less to be feared." - Cicero, 42 B.C.

      Summary Of The Bush Crime Family History
      http://www.sonic.net/~taryfast/destruction.html

      The Bush Crime Family Tree
      http://www.oldamericancentury.org/bushco/bush_crime_family.htm

      "Such sovereignty-busting gangsterism has its pleasures, but Bush's biggest cribbing from the Hitler playbook is `permanent revolution.' Developed by socialist theorist Leon Trotsky in 1915 and applied by such totalitarian masters of control as Hitler, Stalin and Mao Tse-Tung, permanent revolution is the pinnacle of the art of mass distraction -- one continually changes the subject of debate by striving for new goals that are always just beyond reach. The idea is diabolically simple: by the time people start grumbling about the problems created by your Great Leap Forward, you're causing new difficulties with your Cultural Revolution. Opposition takes time to materialize; taking the nation from one crisis to the next neutralizes your enemies by focusing them against initiatives you've already abandoned.

      "On the domestic front, Bush has launched so many political offensives that it's impossible . . . to launch a coordinated resistance. . . . In a blizzard of legislative and regulatory activity, virtually everything on the right-wing wish list is now being proposed. Previous presidents spaced out their initiatives in order to build popular support; Bush prefers to leave elected representatives out of the equation. The more legislation he throws at the wall, the more he'll get passed -- and the more people will forget that his is an illegal regime."

      --Ted Rall, "PERMANENT REVOLUTION - The Real Link Between Bush and Hitler, Yahoo News, 3 Oct 10 2002

      "The doorstep to the temple of wisdom is a knowledge of our own ignorance" : Benjamin Franklin

      "The issue today is the same as it has been throughout all history, whether man shall be allowed to govern himself or be ruled by a small elite." - Thomas Jefferson

      " Of all forms of tyranny the least attractive and the most vulgar is the tyranny of mere wealth, the tyranny of plutocracy " : John Pierpont Morgan

      "I wouldn't call it fascism exactly, but a political system nominally controlled by an irresponsible, dumbed down electorate who are manipulated by dishonest, cynical, controlled mass media that dispense the propaganda of a corrupt political establishment can hardly be described as democracy either." -- Edward Zehr - (1936-2001) Columnist

      "The history of mankind is a history of the subjugation and exploitation of a great majority of people by an elite few by what has been appropriately termed the 'ruling class'. The ruling class has many manifestations. It can take the form of a religious orthodoxy, a monarchy, a dictatorship of the proletariat, outright fascism, or, in the case of the United States, corporate statism. In each instance the ruling class relies on academics, scholars and 'experts' to legitimize and provide moral authority for its hegemony over the masses." : Ed Crane

    • 3 years ago
  • WhiteNoise
    • 0
      WhiteNoise  
    • Image

    • "History will have to record that the greatest tragedy of this period of social transition was not the strident clamor of the bad people, but the appalling silence of the good people." - Dr. Martin Luther King Jr.

      CRUCIAL TO EVERYTHING THAT IS HAPPENING NOW...

      "Fascism should more appropriately be called Corporatism because it is a merger of state and corporate power." - Benito Mussolini

      Modern history proves that all such crises as the present economic collapse lead either to socialism or to fascist tyranny.

      Since the fascists are already in power -- the Republican Party has been the unofficial vessel of U.S. fascism since its anti-Roosevelt alliance with Hitler and Mussolini during the 1930s -- the likelihood is that the United States will become the Fourth Reich: a ChristoNazi theocracy with non-Christians forced into the scapegoat role to which the Jews were reduced in Germany.

      Moreover, any potential anti-fascist opposition has been effectively rendered brain-dead by the public schools and Big Business media that create and maintain the Moron Nation state of mindlessness.

      "A cynical, mercenary, demagogic press will produce in time a people as base as itself": Joseph Pulitzer

      Short of a second American revolution, we're pretty much f@*ked ! - Unknown

      * RIP USA REPUBLIC *
      http://current.com/items/89362640_rip_usa_republic

    • 3 years ago
  • Pericles_Lewnes
  • WhiteNoise
  • AveryMoore
    • 0
      AveryMoore  

    • Some 30 years ago a colleague, roaring drunk at the time, mentioned that the relationship between auditors and gigantic corporations was misunderstood.

      Between slurred words and outrage a picture emerged. Auditors were not the boss. Their say was not final. Their profitability as corporations was their Achilles' heel.

      It was simple, he said. Mega corporation X employs Mega auditor Y.

      Both entities have shareholders, both have financial targets, both have ambitious bosses anxious to move up into ever higher income brackets by pushing profits as high as they will go, and cutting corners.

      Mega auditor Y makes a lot of money auditing Mega corporation X, tens of millions in fact. This money is projected over many years as expected profit. Bonuses and hefty dividends will follow because of it..

      To lose such a customer is not just a one-year disaster, all that money, double in fact, from the rest of the expected earnings must now be replaced. Otherwise investors will ask - what's going on, here? This is not desired.

      What to do if the client in fact has hit the wall? Panic.

      Should Mega company X reject the auditor's findings and seek a second opinion with an inferior firm it's two blows. First to income, second to prestige. How about a bargain then? The auditor will advise caution to the board of Mega Corporation X AND sell 'rescue services' to the company to keep it from going under.

      Such services will be very expensive. In this way both entities continue to mask what is really happening - from everyone. And with this collusion the players inside will squeeze out every cent they can before the game ends.

      Hence perhaps, ENRON.

      The article above actually goes so far past what my friend found objectionable that I would want him to be in an Emergency Room when he read it.

      He was a very honest senior level management accountant who foresaw decades ago the crash we already have just seen and anticipated the abyss we are fast approaching.

    • 3 years ago
  • WhiteNoise
  • Vierotchka
  • WhiteNoise
  • AveryMoore
    • 0
      AveryMoore  
    • WhiteNoise:

      Saw "Smartest Guys In The Room" some time ago.

      Brilliant presentation and precise depiction of what goes on in very large corporation boardrooms.

      Where it gets even more chaotic is at the minion level. Because everyone now knows that the only way up the chain is to out-crooked the next guy.

      Ambitious Employee - "Sure, he'll steal thousands for you, But for you I WILL BRING DOWN THE WORLD ECONOMY!"

      Several Board Members - "Smart, that one. Seems the right sort for promotion. What dirt have we got on him if he gets tricky on us?"

    • 3 years ago
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