A BuzzFlash Reader Commentary
The Twelve Enron Explanations
February 15, 2002
1. The "God is the Marketplace - Enron is the Wisdom of the Marketplace" Explanation
Here we find God linked with the Marketplace as in Ken Lay's bumpersticker slogan: “I believe in God and I believe in free markets.” Or there is the wisdom of the ancient Wall Street theologian, William F. Buckley, who claims the Enron critics are no more than haters of capitalism (and God). Buckley urges true believers to be firm and to turn a deaf ear to "all the clichés that are trotted out at every opportunity to attempt to discredit the theory of capitalism (and God), whose unhappy side is that just as there are winners, there are also losers." Another divinity of the Wall Street temples is Treasury Secretary Paul O'Neill and he too has a bumpersticker slogan, if a little long: "Part of the genius of capitalism is people get to make good decisions or bad decisions, and they get to pay the consequences or to enjoy the fruits of their decisions." Then there is Bush economic adviser and former Enron employee, Larry Lindsay, who called Enron's fall "a tribute to American capitalism."
Politely left unsaid in this world-view is a shared belief in the sacred mystery or superstition of the "Invisible Hand." The all knowing hand, in its wisdom, decides who will be life's winners and losers, or in O'Neill's words, just who will "pay the consequences or enjoy the fruits of their decisions." There seem to be no innocents in this particular Darwinist theory and its disciples routinely assure us that the planet is inhabited only the deserving rich and the undeserving poor.
Recent studies also show that this linkage between God and the Marketplace is now the USA's most popular religious belief. Loosely known as Marketplace, or state-of-the-art Christianity, in many areas of the country the new faith has completely replaced the ancient and outmoded ideas of Sermon on the Mount Christianity.
other characteristic of the God - Marketplace explanation should be noted
and that is the complete silence of America's religious leaders on the
subject. For whatever reasons, and there are many, the nation's spiritual
elite believe religious principles must not interfere or judge America's
corporate culture. Thus the popularity of another bumpersticker slogan
of Marketplace Christianity --- "Jesus says: 'You can't be too greedy'."
Here we have history as morality, thus the "moral climate theory." Another popular belief, this dogma simply explains the Enron debauchery as a symptom of a permissive moral climate. Which means we go back to the 1960's -70's which ushered in dope, draft dodging, college deferments used to dodge the draft, free love, abortion, trial lawyers, environmentalism, peaceniks, hippies, uppity minorities, uppity women, uppity gays, and disbelief in such things as guns, segregation, police dogs, napalm, and war. This theory was given a shot in the arm in the 1990's with the election of the dope-smoking, draft- dodging, gun-hating Bill Clinton and his accomplice wife Hillary Clinton.
The reasoning here is the liberal inspired moral climate led to a situation ripe for the Enron debauchery and the helpless Enron executives were no more than victims themselves of a moral climate brought on by liberal permissiveness. Adherents of this theory claim only one conclusion can come from the current Enron debauchery. "Permissive Liberalism" is responsible for Enron.
3. The "Enron Tried too Hard" Explanation
This theory is the specialty of the right wing think-tanks as they grapple with the difficulty of creating a plausible explanation for the Enron debauchery. I have loosely labeled these efforts as the "Enron Tried too Hard Theory." A typical example of this approach comes from Irwin Steizer, who is classified as the "Director of Regulatory Studies" at the Hudson Institute. Steizer's approach is that the liberals, "who see every shrinkage of government power as a threat to their control, will call for reregulation." And whatever Enron's sins were, Steizer concludes: "creating competitive markets was not one of them." Steizer does not mention the $50 billion (not million) of consumer dollars that disappeared in California energy prices last year.
The Cato Institute offers another version of the "Enron Tried to Hard theory" which is that overregulation of the electricity industry caused Enron's demise although how this explains Enron's insistence, which was a little more drastic than what we think of as regulation, that electrical utilities be forced by law to get out of the generating business as happened in California. Like the Hudson Institute, the Cato mob believes the tragedy of the Enron collapse is not the plundering and looting that came with the Enron debauchery but the cries for the return of regulation.
argument for the "Enron Tried too Hard" theory can be illustrated
by the thousands of bookkeeping and money transfers. Imagine - the work
and dedication required to set up at least 3,000 affiliated partnerships
backed by an additional 880 or so money laundering partnerships and subsidiaries
in foreign countries. And if the right-wing think tanks have been silent
on the partnerships and the money laundering as well as a drop of $60
billion or so in the value of Enron stock, I have been assured by reliable
sources that these prestigious think-tanks are giving the matter deep
thought and we will soon hear from them.
The roots of this explanation can be found in right-wing scapegoat theory which says that if there were no environmental movement the right-wing would have invented one. Robert Novak used this theory recently in an attempt to blame the Kyoto Treaty as somehow being responsible for the Enron debauchery. Novak's reasoning was so hard for me to follow that my head hurt so if anybody understands Novak's explanation, than who am I to disagree.
in reality, what Enron saw was a vague opportunity in being a clearing
house for "pollution credits." Thus, a bad polluting company
would be able to come to Enron to buy "polluting credits" that
Enron would transfer from another, not so bad polluting company. This
Enron idea, like so many others, never got off the ground.
a nation of law-abiding ethical corporations, Enron is the exception to
the rule. It can even be argued that this is why the continued Enron revelations
are so shocking. The weakness of this explanation can be seen in the fact
that, as knowledge of the entire Enron scandal spreads, we will hear less
and less of this point of view.
the election of George Bush Jr. and Richard Cheney the White House was
scheduled to become an inspiring example of personal responsibility. As
we know, the new leadership team brought ideals of openness, duty (as
their heroic Vietnam War actions showed), freedom, merit, excellence etc.,
all of which can be summed up as "personal responsibility" or
the "responsibility era." But in the fast traveling days of
the Enron scandal, the responsibility ideal has been thrown over the side.
Thus we move on to explanation number seven.
the "personal responsibility" scenario deep sixed for the Enron
crisis we will be hearing more and more of the "Clinton Wasn't Any
Better" explanation. A fast-rising favorite of the Bush/Cheney White
House, this theme is, simply put, the line that the Republicans have done
nothing the Clinton Democrats did not, or would not, do. The irony here
is now the law abiding and God-fearing Republicans are saying their connections
with Enron were no different than the earlier presidential activities
of the draft-dodging, dope-smoking Clinton. So look for old Clinton scandals
coming to life as the Enron scandal moves closer to the White House.
answer to the Enron question puts the responsibility of bad decision making
on lower level employees and small fry stockholders who should have known
better than to buy, or hold on to their Enron stock. This is a popular
ploy of fringe right-wing columnists who are trying to ingratiate themselves
with their Wall Street masters and so far, has been given little credibility
among the public.
Here is a scapegoat theory with popular appeal. A bad law, the infamous Private Securities Litigation Reform Act of 1995, originated with two Republican congressional hacks, Newt Gingrich and Dick Armey, who pushed through the Republican congress a piece of legislation bundled up in a patriotic "Contract with America" blanket.
reality, this "reform" stands as one of the worst pieces of
legislation in American history. For this is the law that all but removed
company CEO's, executives, boards of directors, accountants etc. from
investor lawsuits. The bill was later amended and now there are no restrictions
or liabilities for corporate accountants. The only reasonable comment
we can make on the Gingrich/Armey "reform" is that Enron is
a good example of what happens when you let the cat design the canary
The O'Neill scapegoat theory is growing in popularity and for good reason. Treasury Secretary Paul O'Neill prides himself as the world's number one champion of what he calls the "Human Potential Movement" and recently yelled out at a Senate hearing that "I've dedicated my life to doing what I can to getting rid of rules that limit human potential and I'm not going to stop."
has been the world's fiercest defender of offshore tax havens and money
laundering banking accounts, or "low-tax jurisdictions" as they
are known to the right-wing think tanks. Undoubtedly these tax evasion
rackets promote "human potential" for the rich and the Treasury
Secretary has said the Bush administration will not "interfere with
the internal tax policy decisions of sovereign nations" such as the
Enron cash hideout on the old pirate hideout of the Cayman Islands (Sovereign
nation population of the Cayman Islands is 39,335.) where it is rumored
that billions of dollars of cash and plunder that once belonged to Enron
shareholders and employees are stored in secret warehouses. So look for
the O'Neill scapegoat theory to be a serious contender in the coming months
when hard questions are asked about where and how the Enron mob moved
the money out of the U.S. As already noted, according to Enron records,
the mob has at least 874 subsidiaries registered in the Cayman Islands
and other such hideouts that O'Neill calls "sovereign nations."
If, a couple of years ago, somebody claimed they were a mover and shaker in the commodity derivative department at Enron you would have yawned. But if you paid attention you might have seen that the self-described mover and shaker owned eleven new cars and trucks, seven boats, two airplanes, a Houston mansion, houses in Aspen, Big Sky, Montana, and the Grand Cayman Islands in the Caribbean.
So let us start with a derivative which is no more than a piece of paper, sort of a contract that uses such words as options and futures, and for bookkeeping purposes, a price is derived from the value of an underlying financial asset, or commodity. From here Enron went to a "price swap derivative" and at one point even listed as assets 55 million shares of stock it did not own and at a value of $3.7 billion. And this wasn't all as "commodity derivatives" as both assets and losses were moved around Enron and its partnerships like Chinese checkers.
this is where the Enron mystery could get interesting. That is, if the
congress and it's investigators pursue such questions as where did this
$3 plus billion go and just who is involved in the partnerships (e.g.
Chewco, JEDI and LJMtax), as well as the ill-defined and vague tax shelters
or just who are the masked men on the receiving end of the numerous offshore
money drops for contraband cash. Such an investigation remains a big if
and would be fiercely opposed by the White House and its allies.
A popular belief among the right-wing faithful is that if you get to the bottom of anything you will find Bill or Hillary Clinton. While the evidence is still wanting, I cannot discount a hot beltway rumor that claims Fox News and the Christian Coalition are planning an upcoming special titled Clinton and Enron with Bill O'Reilly and Rush Limbaugh as narrators. So further comment will have to wait until we see whatever is unearthed on the Fox-CC special.
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Contributed by BuzzFlash Reader, Jackie Corr, Butte, Montana
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