Category Archives: Politics

A Decade After ENRON and the Minds that Gave Us the Recession: an essay

Unfortunately, the only bad thing to happen ten years ago was not only the attacks on 9/11. The following month, in October 2001, the Enron Scandal exploded in the media. These people are truly the antithesis of integrity, aiming for profits and not watching out for us. Here is an abridged look at Enron and the kinds of people that populate Wall Street. The way the men thought at ENRON has continued with others and has given us the current economic woes we are all feeling today. The past ten years have been almost all decline.


The following essay was something I wrote for a class in 2008. I brushed it up a bit for the 10 year anniversary of what I consider the “beginning.” I mean the beginning of what was to come in NY and Washington leading up to our downfall from 2009-2011. The recession did not come from nowhere, and these are some of the minds responsible. This kind of great-risk-great-profit mindset has sent us into the current recession, and will surely continue into 2012. Remember, Enron are just the ones that got caught. You think it was just them doing shady stuff? This recession has already been longer and more painful than most Americans imagined, and that was because no one was paying attention. After bailouts in 2010 and massive stimulus packages in 2010/2011, the citizenry began to climb but then quickly sputtered and faltered once more when the money ran out, maintaining a 9-10% unemployment. In 2001, that was 4.9% unemployment. But how the home mortgage crisis and the $787 Billion dollar bank bailout were handled are for another paper. We are talking about one of the smoking guns here. One of the starters of it all. The freshmen class of disaster. The people with a lot of money, including access to your money, have a lot of power and have been doing stuff like this for decades. Stay informed. And check out the very detailed timeline link at the bottom of this essay to really see how many years this scandal was in the making.


Strippers, dirt biking, insider trading, suicide, and forced Californian blackouts. Sound like money and fun, especially the dirt biking. It’s safe to say the actions of a “good ‘ol boys” club like this would not be suited for or allowed in the business world, but for a while, this was exactly what Enron was. There are more people to blame than just those that will be reference here, but I only have time for the arguable key players in this scandal of biblical proportions. Well, at least the biggest in corporate American history. In the end, I hope to prove why the real reason behind Enron’s collapse was not just a couple cocky guys, but rather a broad and general attitude our corporate culture is spiraling into which needs to stop.

Many, many are to blame, the main guys however, were Skilling, Lay, Fastow, and the banks involved.

The first problem was Ken Lay and his power to appoint who he wished to be his CEO. The problem here was that he picked a very ambitious visionary named Jeffery Skilling. This was a man who wanted to reinvent the whole natural gas industry, and even if his intentions were chivalrous at the start, calamity ensued like Wile E. Coyote in a Looney Tunes short. Let us briefly look at the philosophy of these criminals (read: gentlemen). Many of these men, but specifically Jeff Skilling, were very Darwinian in their approach to business. Skilling was someone who wanted instant gratification for his brilliance. Humility? No thank you. This was something many looked up to in the organization and fueled this dog-eat-dog approach. As long as the guys up top were telling the guys down below like the traders that what they were doing was okay, even if the people down below knew otherwise ethically, they would all continue right along in step. It’s called diffusion of responsibility. They teach it in psychology.

Anyway, these acts were manifested in their frequent trips with business partners and investors to remote locations for dirt biking, jeep mud driving, extreme and dangerous hikes and so on. Lou Pai, who I will mention briefly, was an executive who preferred to take his associates to strip clubs. I wonder whose money he used. He later would be one of the few who cashed out millions early enough to get out clean before the implosion, where he then left his wife to marry and run off with his stripper girlfriend who had his baby. Now that’s America’s finest right there.

Now, back to Jeff Skilling: he signed onto Enron but only under the preface that he be allowed to implement his own accounting method called “mark-to-market” accounting. This was from the very beginning something that could never be accurate in the sense that you cannot hypothesize future projections based on an idea as soon as it comes out of your mouth. The really wild thing was that Arthur Andersen signed off on it and the S.E.C. approved it! It was ridiculous, yet no one questioned it from the very beginning because they arguably knew the benefits of never having to document a cash flow sheet, book its debts, or present a balance sheet with earning statements. Being the power house and financial institution they were, they should have absolutely been made to make one. The problem was even if they did, it may have been falsified. The scent of possible profit blinded hundreds of people who should have had stronger oversight principles for people like me and you, but everyone just played along with they’re hands out and eyes closed.

Enter stage left, Andy Fastow. This was the man who put Skilling’s ideas into action. Though they were all losing money year in and year out in 2000 and first half of 2001, it was Andy Fastow’s job to conceal the 30 billion in debt with various trickery. So he created many companies to fraudulently hide the debt. Of course, these companies only dealt with Enron and it was a clever way to lie about the loans and flow of money. It was confusing to many, so no one asked because they just figured it was too complicated to understand. That’s the mind set they wanted us to have. Bravo.

Fastow made 45 million by the way for his own benefit, but he deserved it right? How else are these executives and traders going to retire by the time they reach forty-one years old to their three houses? In selling investors pieces of companies like LJM for example who only buy Enron stock, he’s guaranteeing himself funds. He was working both sides, and was an obvious conflict of interest. Because of these fantastic claims, about 96 banking companies put as much as 25 million in each. Do the math. Yikes.

Then came the deregulation of Californian electricity. Good times there. There free-market idea was a complicated one that I don’t even understand completely, but I do know no one could clearly devise a set of rules for it, which inevitably would lead to foul play – it did.

Enron traders would call the electric plants and tell them to shut off the grid for hours at a time in order to hike up the costs of the utility so they could reach their quarterly goals. That doesn’t really seem ethical. They had more than enough power to run the state by a few dozen gigawatts, I believe. The crazy thing is there are recordings of Enron traders admitting that they shouldn’t be doing what they were doing and that they were making too much money. It made them nervous. Anybody would be. But as long as the guys up top said “carry on, gentlemen, carry on,” they would (see above: diffusion of responsibility reference).

Once these men and women rationalized to themselves that what they were doing was alright, they were a non-stop engine of capital gain, corporate lust, deception, greed, and were just a cheerleader for America’s corporate culture itself. They were not the first company to do this. It’s been going on for a long time—maybe to smaller and less detrimental degrees—but it will continue in America. Boy, has it ever (see current situation, Recession. I saw that one coming).

Who to blame?: Skilling, Lay, the governor of California for not putting his foot down harder, the president and vice president for not helping the millions of their citizens in California, the guy who picked up the phone at the power plant and flicked the switch, Fastow, all the upper level executives, the public (though only slightly) for being so disinterested and indifferent to the world around them, and especially all the banks who put money into Enron and never flinched at the miraculous and continuous climb of profits.

The banks especially knew that the gain occurring couldn’t possibly be real, but as long as they were given money in the end, they were happy and kept their mouths shut. They didn’t want to know, because that would end the ride for them and everyone; which is kind of what happened when Sharron Watkins voiced her concerns and everyone thought she was crazy to take them head on. At least some one did, and David took down Goliath. How could they not “ask why”? I’m not making this up, but that is really the slogan for Enron. “Ask Why.” Ironic as hell.

SO all of them are to blame. This was not the plot of three middle-aged profit mongers, but rather the compliance of HUNDREDS who live with weak ethics, if any at all. They had to pull this off together because it was so elaborate; everyone had to lie as the profits rose. This collapse was the result of a majority of what the American capitalist system has become… and we deserved it.

I’m sad for those who lost jobs and 401K’s, but this is what happens when you sit around eating Big Macs and watching American Idol. Enron simply took it that extra step. They recognized the pre-existing greed on Wall Street and simply took the reigns. Lay, by the way, lied about the stocks going down, all the way to the last day, when he KNEW about the millions in debt. Under oath! Everyone who should have said “no” never did, and many had multiple chances to blow the whistle; including Bush and Cheney who were aware.

Ask Why? Because these big boys with there “smoke-‘em-out, me-or-you, Let’s-get-every-penny-we-can-from-our-own-friends-and-fellow-citizens-then-retire-when-we’re-thirty-five” attitude has the potential to kill us all. Kind of like executive and personal friend to Skilling, J. Cliff Baxter; here was his suicide note when he was found dead on January 25, 2002:                    



I am so sorry for this. I feel I just can’t go on.

I have always tried to do the right thing, but

where there was once great pride now there

is none. I love you and the children so much.

I just can’t be any good to you or myself. The

pain is overwhelming. Please try to forgive me.                                    


At least some one felt bad, because no one else from Enron seemed to take any blame. It’s unfortunate that he had taken his share of the blame and his life. It is tragic. I guess it’s not all bad though; Lou Pai is somewhere with a stripper. Seriously, Ken Lay is dead, and Skilling is in prison right now, but we all know it’s still not enough. We are still living in the wake of their fuck ups, and more people on Wall Street have just made more. It won’t ever be right. Our habits haven’t changed as a people. No amount of legislation on Capitol Hill can fix it. It is us we must fix.



Sources were solely obtained from:

1) My brain, as I personally followed the even for years.

2) ENRON: the smartest guys in the room  (2005)  (DVD film/documentary)

3) Timeline of the Enron Scandal website:

Leave a comment

Filed under Brain Droppings, Politics