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Enron, Economics, and Cows
22WRF
Member Posts: 3,385
Enron, Economics, and CowsIn case you haven't seen this about Enron--see below First, some brief historical definitions: Feudalism: You have two cows. Your lord takes some of the milk. Fascism: You have two cows. The government takes both, hires you to takecare of them and sells you the milk. Communism: You have two cows. You must take care of them, but thegovernment takes all the milk and may give some back to you. Capitalism: You have two cows. You sell one and buy a bull. Your herdmultiplies, and the economy grows. You sell them and retire on the income.And now, the "Enron Style" You have two cows. You borrow 80% of the forward value of the two cowsfrom your bank then buy another cow with 5% down and the rest financed bythe seller on a note callable if your market cap goes below $20B at a rate 2times prime. You now sell three cows to your publicly listed company, usingLetters of credit opened by your brother-in-law at a 2nd bank, then execute adebt/equity swap with an associated general offer so that you get four cowsback, with a tax exemption for five cows. The milk rights of six cows aretransferred via an intermediary to a Cayman Island company secretly ownedby the majority shareholder who sells the rights to seven cows back to yourlisted company. The annual report says the company owns eight cows, withan option on one more and this transaction process is upheld by yourindependent auditor and no Balance Sheet provided with the press releasethat announces that Enron as a major owner of cows will begin trading cowsvia the Internet site COW (cows on web).
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