Sunday, May 17, 2009

Enron nostalgia

I've been re-reading the Washington Post Enron series: The Fall of Enron.

A couple of things strike me.

First: the $$$ involved was tiny compared to what we're seeing today: less than $10Bn.
The deal with Dynergy that was to save the company was scuttled because of an undisclosed $690 million obligation.

[snide aside: Once-upon-a-time, the $670Bn that's been wasted in Iraq sounded like real money, too.]

That same day, Robert E. Rubin, the former Treasury secretary now with Citigroup Inc., called Peter R. Fisher, an undersecretary of the Treasury. Rubin asked what Fisher thought of the idea of calling the rating agencies to encourage them to work with Enron's bankers to see if there was an alternative to an immediate credit downgrade. Fisher responded, the Treasury said later, that he didn't think that was a good idea. He didn't make a call.
[THE FALL OF ENRON: Catastrophe, WaPo, 1 Aug 2002]
That's right: W's Treasury Department declined to help Enron.
Good for W! (It's seldom I have the opportunity to praise W.)

Enron's collapse was followed shortly by that of WorldComm.
We learned nothing from these - as it turns out - minor catastrophes, with all concerned continuing to assert the self-correcting miracle mechanisms of the free market.

Perhaps if we'd taken these so-called aberrations as signals that all was not well in the unregulated, laissez-faire marketplace, we'd not be where we are today.

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