Subject: AUT: Economics 101 Enron
Date: Wed, 30 Jan 2002 20:14:01 +1100


Lloyd Marbet forwarded this Economics 101 text - 

Traditional 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 Venture 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 the majority shareholder 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 one more. You sell one
cow to buy a new president of the United States from Texas, leaving
you with nine cows. No balance sheet is provided with the release of
the annual report

The public buys your bull and you use a small portion of your profits to
buy Congress's support for deregulating all transactions involving cows.



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