TOTAL LICENSING
banks and the real I believe we have given enough examples of past Now, why am I suddenly hated, looked over with
underlying value of its ups and downs. Human beings are inventive and the loupe of jealousy. Why am I worse than an
tremendous natural are subject to a desire for acquisition of earthly entertainer who makes $25 million for an eve-
resources. Unfortu- goods. If such acquisitions can lead to wealth ning gig, why am I worse than an ex-president
nately, management of and comfort, and if one can find an easy way who writes a book – why me – for all that envy
the resources that the to supplement working income by investment and jealousy. Why do senators make sport with
government sold to income, it is difficult to resist. The gambling something I said some 8 years ago that I hardly
its cronies lagged far instinct also lives in many and to gamble for a can remember!
behind, and, finally, hav- seemingly attainable large profit is tempting. I played by the rules that were there. I did the
ing vainly defended ruble-parity with the dollar, Many new instruments were created by banks best I could, I don’t know any of these poor
Russia had spent its foreign currency reserves. and investment firms which were not under the people everyone says I hurt and I did not mean
Then, there was a tremendous drop in the price jurisdiction of any government agency and the it personally – it was just business.
of oil, and suddenly Russia could no longer pay Gramm Rudman Act prevented government Now they want me to disappear and hide. Sud-
any of its debts and defaulted. (Russia did - all regulation of these instruments. Instead of in- denly, I became a criminal – all my experience
the individual capitalists did not!) vesting we can now speculate on movement of and talents are as though they were for naught.
• 2001 – Enron: stocks, bonds, or anything else. We can even bet I’m lectured on social goals – that wasn’t my de-
Kenneth Lay, its Chief Executive, had a great idea. on the Dow, whether it will go up or down, and partment!”
He and his consultant, Jeffrey Skilling, invented we can purchase “derivatives” that make such Makes you stop and listen, and maybe wonder
a kind of energy bank that would act as an in- mixed investments attractive and seem safe be- whether it wasn’t they but the system. Whether
termediary between suppliers and consumers cause their mix or bundling seems to protect we should have known what the care and feed-
in the energy sector. Lay was well-connected the owner from losses in a particular stock mar- ing of unbridled prosperity would do to us – and
to the Texas energy market, and when, in 1992, ket sector. They can be traded just like shares. learn how not to repeat!
George H.W. Bush (senior) supported deregula- Another view: Now let’s let a few John and Jane Doe’s talk:
tion of the industry and removed government • My educator of the young in North Carolina,
price controls on energy, Enron came to control THE SORROWS OF “THE STREET” – whom I have quoted in my last columns, most
a quarter of the U.S. natural gas business. WALL STREET THAT IS interestingly gave me a good pitch on how to
Enron became global! It laid pipelines from This is the fury of the financial class. We have live more modestly. To him it is clear “that we
South America to the U.S. and began the trade been writing about them – now let’s let them have gotten used to a lifestyle we cannot afford”.
in water and other energy elements. Between talk for themselves. He disdains credit cards, has only one and pays
1997 and 2000, Enron’s stock price increased They are, by self-definition, the (principally) New it off every month. “I just have a few CD’s in
from $20 a share to more than $90. It was a York population, whose taxes have kept the city banks.” I asked him if he had advice for the gov-
rousing success. In the final year of its existence solvent, whose support made the arts flourish, ernment or would back certain measures. His
Enron paid its top 140 executives an average of whose plans and daring made the glass and steel answer was, “No, I don’t think I am sufficiently
$5.3 million each in salary and benefits. Skilling, towers rise. Those, whose bonuses were in knowledgeable to suggest policies.” I countered:
who became CEO in 1997, famously said: “I’ve the seven figures and who for the last 25 years “You have a stake in the future.” He said, “It’s
thought about this a lot, and all that matters worked hard, played hard, girdled the world – true I have a stake but I have no voice.” “No, I
is money. You buy loyalty with money. Money and often lost a lot on their failed hunches and have no investments and want none.”
drives performance.” Enron employees all re- picked themselves up again. Those who made • A truck driver: “It’s all these immigrants. They
ceived bonuses and multiples of their base pay things hum by their toil. came here years ago, have lots of children, often
to keep them loyal and hardworking. The story sounds something like this: are not even legal, and they take away all of the
Unfortunately, Enron’s market manipulation “I wasn’t born with a silver spoon in my mouth, jobs. If we sent them back across the border
almost destabilized California. California had I was on top of my class, I studied while others we’d have lots of jobs open for our citizens. We
protective contracts with Enron to fix natural played, I got into a top school, I worked myself need morals! This is a morally rotten world!”
gas prices while the market dropped radically. up through job changes, I moved, I sacrificed my • An out-of-town orchestra conductor: “I
Enron began to burn through its capital and family, I risked my health, I learned by hard expe- think if instead of bailing out the banks we gave
make tremendous losses. By “adjusting” their rience and anxiety – and when I finally reached the money directly to consumers, they could
books they avoided telling their stock holders the top and started to share the privileges of each get $100,000.” (I think his math is off, but
and employees the bad news and so waited for wealth, when I finally had my membership in top I’ve heard this idea before)
the stock prices to continue to rise. A whistle- clubs, rode my private jet, had my private estate • A similar answer from someone else: “Why
blower went to the Securities and Exchange and had the intellectual challenge of mixing with not give every American $5,000 if they buy a
Commission (SEC) and on November 8
th
, 2001 others of the brightest most competitive, when new car? That will cure the car industry fast
the company had to revise its books to reveal a I was the darling of reporters and journalists, enough and we won’t need to invest.”
$567 million dollar loss. This practically finished mixed with the best. I did what I could to move • My own comment: A lot of these are rather
the firm’s auditors who had been one of the money around to create more wealth. Bet you simplistic answers but I do not envy President
largest accounting firms in the world (Arthur didn’t know that the wealthiest 10% percent of Obama who needs to choose from this, and
Andersen) and hatred and disgust broke out Americans pay 72.4% of the Federal taxes. The millions of other e-mails he receives, a policy
amongst stock holders and employees who had Wall Street Journal says so, and they are never that he can be sure will be a success. That to
lost everything. irresponsible. me seems the most difficult task of all and so I
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