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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
