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Sent: Monday, February 04, 2002 4:36
PM
Subject: Not hosta but may affect how
many we buy!
As many of you know I do
financial law for Uncle Sam at the Commodity Futures Trading Commission and
most recently I am working on the Enron situation from the commodities side of
things. Many of you have asked me questions about it and I ran across
this item which I thought many of you might enjoy!
ENRON
EXPLAINED
In case you were wondering how Enron came into so much
trouble, here is
anexplanation reputedly given by a Texas A&M professor
to explain it in
terms his students could
understand.
Capitalism
You have two cows.
You sell one and
buy a bull.
Your herd multiplies, and the economy grows.
You sell them
and retire on the income.
Enron Capitalism
You have two
cows.
You sell three of them to your publicly listed company, using letters
of
credit opened by your brother-in-law at the bank, then execute a
debt/equity
swap with an associated general offer so that you get all four
cows back,
with a tax exemption for five cows. The milk-rights of the six
cows are
transferred via an intermediary to a Cayman Island company
secretly owned by
your CFO who sells the rights to all seven cows back to
your listed company.
The annual report says the company owns eight cows,
with an option on six
more.
Now do you see why a company with $62
billion in assets is declaring
bankruptcy?
Kevin P. Walek
