Understanding Enron
All discussions of the death of Enron Executive Kenneth Lay contained a serious factual error, which must be corrected if the whole tragic story of Enron is not to be repeated over and over.
These accounts all stated that "investors" lost the money they had "invested" in Enron. That's not true. An investor is someone that combines his capital with the labor, skill, and ingenuity of others to produce a product that is useful to the public, and to make a profit for the enterprise. That was never the aim of those who lost money as a result of the collapse of Enron.
The people who lost money in Enron stock were "Stock Speculators". They did not release the use of their money for the purpose of increasing the value of the Enron company, or of its product. They bought Enron stock purely because they felt that the stock would go up in price (not necessarily in value). For a long time, they guessed right, and thus accumulated ther vast "wealth" which they later lost when the price of the stock went down.
This up and down travel of the price of Enron stock never had anything to do with the value of Enron's product, if, indeed, Enron ever had a "product". Cetainly none of these speculators, or their advisors, knew or cared what the company underlying the stock owned, made, or produced, but only that its stock was "hot", and was not a "Dotcom" stock, because Dotcom stocks had lost favor with the speculators.
Thus, just as Jeffery Skilling's lawyer somewhat comprehended, and tried to explain to the Court and jury, nothing either Skilling or Lay ever did affected the price of the Enron stock to any appreciable degree. In the end, they were just like all of the other "investors". And Ken Lay paid with his life.
As long as the world fails to realize that the demon in this fiasco was not Skilling, Lay, and others within Enron, but was a Stock Market and a tax system which rewards increases in the price of stocks without any real increase in the value of the underlying company, this sordid and tragic scenario will be played out again and again.
These accounts all stated that "investors" lost the money they had "invested" in Enron. That's not true. An investor is someone that combines his capital with the labor, skill, and ingenuity of others to produce a product that is useful to the public, and to make a profit for the enterprise. That was never the aim of those who lost money as a result of the collapse of Enron.
The people who lost money in Enron stock were "Stock Speculators". They did not release the use of their money for the purpose of increasing the value of the Enron company, or of its product. They bought Enron stock purely because they felt that the stock would go up in price (not necessarily in value). For a long time, they guessed right, and thus accumulated ther vast "wealth" which they later lost when the price of the stock went down.
This up and down travel of the price of Enron stock never had anything to do with the value of Enron's product, if, indeed, Enron ever had a "product". Cetainly none of these speculators, or their advisors, knew or cared what the company underlying the stock owned, made, or produced, but only that its stock was "hot", and was not a "Dotcom" stock, because Dotcom stocks had lost favor with the speculators.
Thus, just as Jeffery Skilling's lawyer somewhat comprehended, and tried to explain to the Court and jury, nothing either Skilling or Lay ever did affected the price of the Enron stock to any appreciable degree. In the end, they were just like all of the other "investors". And Ken Lay paid with his life.
As long as the world fails to realize that the demon in this fiasco was not Skilling, Lay, and others within Enron, but was a Stock Market and a tax system which rewards increases in the price of stocks without any real increase in the value of the underlying company, this sordid and tragic scenario will be played out again and again.
posted by Sam Simpson | 6:46 AM
