Username: Password:
Welcome! Please Sign In or Register

The Enron Scandal

Item added by mikeholly93. Added on 05/11/2004
RSS Icon

3 Reviews

abichara
02/02/2009

The Enron Scandal 1

Yes, Enron gave plenty of cash to Bush, but so did plenty of Democrats.

Enron benefited heavily from the deregulation of the energy commodity markets back in the late-1990's. That really was what catapulted Enron into a major corporate player. At that point, Enron managed to gain the corner over these markets, much to the objection of prominent consumer groups, many of whom believed that this move would give Enron's energy traders enough power to manipulate the market for their gain. It turns out that these groups concerns were completely founded.

Remember back in the summer of 2001 when California was suffering through rolling blackouts? Well, it turns out that later reports indicated that Enron energy traders were intentionally removing power from the energy grid in a attempt to create a supply crisis in the market, thus driving up the price of electricity while making it intentionally scarce. Eventually the federal government stepped back in and established reasonable price targets along with enough supply to ensure that the market demand for electricity was met.

This was a case where the market was poorly designed, it encouraged the monopolization of a public resource in the hands of one private company whose employees/management gamed the system to their benefit. It wasn't a failure of the free market in the purest sense, rather it was simply a poorly designed market.

Enron's rise was as sudden as its fall. Once the government began investigating Enron, it found that it had hid some significant losses that it had taken back in 2000. Only insiders knew this information and they began selling off their stock in the company when its price was still high. But as these individuals like the former CEO Ken Lay began selling their shares in the company en masse, the price of the stock began going down. Outsiders however kept buying the stock with the belief that it would rebound, that the companies financial's were solid. Turns out they weren't, and the stock price continued to go down through 2001.

Eventually, this became a huge scandal that embroiled many organization and individuals, including large accounting firms that helped "cook the books" for Enron. In many respects, this whole situation was a precursor to what occurred later in the decade with the financial markets, where big investment banks used similar principles to game the system to their benefit.

Add your vote! 3 Helpful / 0 Funny / 1 Agree / 0 Disagree

Redoedo
08/14/2004

The Enron Scandal 1

Ah yes, corporate corruption was completely absent from soceity before Bush took office. Bush clearly is responsible for the actions of a bunch of corrupt and greedy CEOs.

Add your vote! 1 Helpful / 0 Funny / 0 Agree / 0 Disagree

cisco1127
06/16/2004

The Enron Scandal 1

You know all the main problems at Enron happend in 1999 and 2000. Now who was in office then.

Add your vote! 1 Helpful / 0 Funny / 0 Agree / 0 Disagree

3 reviews!     « Previous  |  Page    of  1  |  Next »

view stats
2.11
average based on 9 ratings