Steve Reed is managing editor of the Empire. He can be reached at email@example.com.
Enron made a nice recovery last week. By Friday's close, an investor had to sell only five shares of Enron stock to buy a 16-ounce mocha. The week before, the exchange rate was 12 shares of Enron for one designer espresso.
I hear people lamenting their failure to have bought Enron when it was at 25 (cents). "If I'd bought a hundred shares, I could have cashed out Friday and bought a couple of large pizzas at Bullwinkle's."
Regardless of what happens politically and in the courts, there is much for the rest of us to take to heart.
Think the Enron scandal doesn't apply because you live closer to Back Loop Road than Wall Street? Do you have a credit card? A 401(k)? A mortgage? An SUV? Do you sometimes feel the need to keep up with the Joneses? To vacation in paradise or acquire the latest gadget "as seen on TV?"
Enron is about greed, temptation and human nature. Is anyone really immune?
Enron's fall is another reminder of the need to live within our means, to keep one's house in order, to support words with deeds - none of which was practiced by the seventh largest business in the United States. Enron seemed too big to fail. Size didn't matter.
What did matter? What exactly was it Enron did to generate revenue? That was a question only a few were willing to ask. When journalists and market analysts put the question to Enron's high-flying execs, the response was some version of: "Our business is too simple for someone not to understand. We won't embarrass you by explaining."
Most scribes and Wall Streeters preferred to be perceived as savvy rather than admit they didn't have the slightest idea what the Houston-based energy trading company did.
OK, not merely what Enron did, but how whatever it did made billions of dollars.
Now we know Enron was a house of cards, dedicated to hyping the price of its stock ever higher because that was easier and faster than actually producing something of value or buying energy low and selling it high.
Enron is this season's Soviet Union. The U.S.S.R. began 1990 as one of two global superpowers. Bigger than Enron or Wal-Mart. Too big to fail. Based on a political system that substituted words for deeds, the U.S.S.R. proclaimed prosperity but failed to fix what was broke. Government officials looted the treasury and kept workers in the dark. The bosses got theirs, but the Soviet Union went out of business.
Enron execs failed to grasp the analogy. Or did they?
Enron CEO Ken Lay is at the center of the biggest business failure in U.S. history. Thousands of employees who trusted him have lost their jobs and their life savings. I wouldn't be surprised if Lay has trouble sleeping.
We hear Enron cited as an example of corporate greed. The Soviet Union's collapse is blamed on corruption. Greed and corruption are variations of the same human failing. Corporations and governments aren't monoliths. They are run by people. Their weaknesses sometimes play out on a grand scale. Our weaknesses may emerge in the soft light of our dens when we try to match our credit- card bills with our checking-account balance.
Do we tune the engine, change the oil, rotate the tires, treat the roof moss, service the furnace, visit the dentist, exercise, eat right (chew our pretzels), find time for family and friends, give to charity and save for our kids' education and for retirement? Or do we live beyond our means, create an image of prosperity, defer every kind of maintenance, sink deeper in credit-card debt, ignore reality and hope for a miracle?
Dunno about you, but I've fallen behind in a few areas. Cabo San Lucas can wait. There are more practical ways to support the economy. If I have trouble sleeping, I'd rather it be because of traffic noise or Taku winds, not a guilty conscience.
Steve Reed is managing editor of the Empire. Contact him at firstname.lastname@example.org.