Certainly. Are you aware of what led to the Spanish Inquisition?
Yes, but if you think there's a correlation, then I'd like to hear it.
Why? Why did the government have to do this?
Business and enterprise stimulate the economy. Business and enterprise need capital. Public securities are a major source of this capital. Without investor confidence providing a market for these securities, business expansion slows down. Then the economy slows down.
So then why do the investors blame anyone but themselves when the CEO they appoint is a joke?
Do you have a foolproof method of screening potential CEO's?
"Therefore"????? The legal "obligation" you speak of comes from the threat of force by the government. Nothing more.
Exactly. That's what makes it a legal obligation.
If the investors want their CEO to have a true obligation to "fairly and accurately report all financial activities", they need not resort to government. As you aptly stated, investors own the company. Therefore, they have the power to put mechanisms in place within the organization to ensure that such reporting happens and happens correctly.
What mechanisms are those? Do you know of any besides the ones that were already in place?
They did do this. Certainly. They were able to do this because the "obligation" you speak of above in fact does not exist. Enron was structured in such a way such that the upper-echelon was given all the power and all the say and was motivated by the ownership community to increase returns at all cost. They abused that power, but no one cared since everyone was getting rich. Unfortunately, when justice was served on Enron by the market, suddenly the investment community that hired those people became "victims".
This obligation does exist. It is known as the SEC regulation. And again, you're trying to pin the blame on the people who hired these execs. Do you know of a better way to screen for employees? I don't think they had criminal records. I'm sure they came with credentials. What more can they do?
Not to mention, you talk about the pressure to create returns at all costs. This is true. However, Enron's methods for increasing its returns are not the issue. The issue is the deliberate concealment of losses. These losses were hidden from investors.
This is not to suggest that Lay, Skilling et all are the actual victims. They are not. They certainly actively participated in these crimes and much of the blame falls on them. In fact, the vast majority of the blame for Enron's collapse should fall on them. But Enron's collapse and the loss of billions for investors are two different things. And if you or anyone else lost money as an owner of Enron, much of the blame for that falls not on Skilling et al but on you.
This is incorrect. It shouldn't be up to investors to take into consideration possible fraudulent activities when making their investments. This is not an issue of ooops that was a bad investment. This is an issue of investors not being able to make a decision based on accurate information.
I completely agree. Without the SEC our economy would be much more volitaile than it is now. I just don't see why that is, by default, a good thing.
Who said it was a good thing? It's just the way things are.
Yes, but if you think there's a correlation, then I'd like to hear it.
Oppression in the name of stability.
Obviously the Spanish Inquisition was more unjust and much worse than the SEC -- I'm not trying to paint with a brush of moral equivalence. I'm just saying that the motivations were quite similar.
Business and enterprise stimulate the economy. Business and enterprise need capital. Public securities are a major source of this capital. Without investor confidence providing a market for these securities, business expansion slows down. Then the economy slows down.
But do you not understand that it's a lie? It's false confidence and Enron is a great example of that.
Do you have a foolproof method of screening potential CEO's?
No. There isn't one. However, there are good ways to screen for potential CEO's. For example, if all a CEO has to offer is paperwork schemes, that's probably not the guy you want for long-term success. But no one at Enron cared about long-term success. Everyone was making boat loads of money and they wanted more now. Their management team completely reflected that mindset.
A good CEO is not a person who will tell you what your profit will be next quarter. A good CEO is a person who will tell you what your profit will be 10 years from now and how he or she will make that happen. Again, no one involved in Enron seemed to care about that. They simply fixated on 20% quarterly returns and did not give a damn about a CEO who couldn't explain how an energy futures business could survive the fact that energy is not a commodity.
Bad CEOs are glorified accountants. Good CEOs are engineers. If you own stock in a company whose management team could not even explain to you the product they sell, I advise you to sell.
Exactly. That's what makes it a legal obligation.
Yes, but it's only worth that which stands behind it. And guns cannot equal an obligation for a CEO to run a good business. It will only equal an obligation for a CEO to attempt to hide from the guns.
What mechanisms are those? Do you know of any besides the ones that were already in place?
Investors who have enough sense to ask what actually is behind a revenue figure would be a great start. Internal auditors that report to the board, rather than the CEO would have been a great finish.
This obligation does exist. It is known as the SEC regulation. And again, you're trying to pin the blame on the people who hired these execs. Do you know of a better way to screen for employees? I don't think they had criminal records. I'm sure they came with credentials. What more can they do?
The SEC regulation only creates a legal obligation to hand in paperwork and accept the consequences if that paperwork is incorrect. That's what your "confidence" is based on.
What you're attempting to create with such regulation is a synthetic version of a natural obligation wherein all parties of a corporation have a shared interest. The shared interests of all involved parties at Enron from Skilling to the janitor was greed -- the illogical desire to extract more money from an effort than that effort was actually worth. No amount of SEC regulation can prevent human greed. Unfortunately, it pretends to so you now have millions of people actively participating in such greed schemes because of the false confidence you've instilled in them.
Not to mention, you talk about the pressure to create returns at all costs. This is true. However, Enron's methods for increasing its returns are not the issue. The issue is the deliberate concealment of losses. These losses were hidden from investors.
Wait. Enron's methods were the "deliberate concealment of losses". They either are the issue or they are not.
Look, you cannot "conceal losses". All you can do is prevent investors from asking where the money is going. And that's exactly what your confidence game has done.
This is incorrect. It shouldn't be up to investors to take into consideration possible fraudulent activities when making their investments. This is not an issue of ooops that was a bad investment. This is an issue of investors not being able to make a decision based on accurate information.
Hehe. There's your problem. You are trying to create a world where investors bear no risks, which in turn invalidates the concept of investing. You cannot escape the reality of the situation, no matter how much you'd like to. To invest in something is to believe in its potential. You may either believe based on fact or faith. What you're trying to do is make fact and faith the same thing.
Who said it was a good thing? It's just the way things are.
Your entire argument here seems to be that stability is the ultimate goal of an economy. Is it or is it not?
Before we get any further farfromglorified, I want to ask you if you have any background in financial reporting or public securities investments. Your views tend to border on the surreal, and I'm not sure if it's because you are just not aware of some of the particulares, or if you're just a highly idealistic, yet well-informed individual when it comes to these matters.
Before we get any further farfromglorified, I want to ask you if you have any background in financial reporting or public securities investments. Your views tend to border on the surreal, and I'm not sure if it's because you are just not aware of some of the particulares, or if you're just a highly idealistic, yet well-informed individual when it comes to these matters.
I am neither a professional accountant nor have I passed my series 7, if that's what you're asking.
Is Jeff Skilling a complete and total dirtbag? Yes.
Is Jeff Skilling a threat to society? No.
It says much about us that we would lock this man up.
Hey ffg.....Not sure if you provided an answer at some point during this post but what do you think should be done with a man like this? If you did provide a specific answer, I apologize for asking. I am just curious. Thanks.
Driving in my car, smoking a cigar. The only time I'm happy is when I play my guitar.
Hey ffg.....Not sure if you provided an answer at some point during this post but what do you think should be done with a man like this? If you did provide a specific answer, I apologize for asking. I am just curious. Thanks.
Honestly, I don't really have much of an opinion on that.
Firstly, I do not support imprisonment for Jeff Skilling -- he is not a threat to society. The purpose of a prison is to protect the innocent, not to punish the guilty. At this point, anyone who would enter into a business arrangement with Jeff Skilling does not need protection from Jeff Skilling.....he or she would need protection from themself.
If it can be demonstrated that Jeff Skilling violated any contractual agreements I have no problem with the victims of such situations recovering anything they lost.
Look, don't get me wrong here. Jeff Skilling is the worst of the worst -- he's a greedy man without an apparent shred of ethics. But, in my opinion, he's already been justly punished for his actions. If our society wants to actively deny Jeff Skilling access to any sector of the economy, I have absolutely no problem with that. But if our society wants to actively deny Jeff Skilling the basic freedoms to which all humans are entitled because we demand sacrificial revenge .... I'm sorry but I cannot support that.
Honestly, I don't really have much of an opinion on that.
Firstly, I do not support imprisonment for Jeff Skilling -- he is not a threat to society. The purpose of a prison is to protect the innocent, not to punish the guilty. At this point, anyone who would enter into a business arrangement with Jeff Skilling does not need protection from Jeff Skilling.....he or she would need protection from themself.
If it can be demonstrated that Jeff Skilling violated any contractual agreements I have no problem with the victims of such situations from recovering anything they lost.
Look, don't get me wrong here. Jeff Skilling is the worst of the worst -- he's a greedy man without an apparent shred of ethics. But, in my opinion, he's already been justly punished for his actions. If our society wants to actively deny Jeff Skilling access to any sector of the economy, I have absolutely no problem with that. But if our society wants to actively deny Jeff Skilling the basic freedoms to which all humans are entitled because we demand sacrificial revenge .... I'm sorry but I cannot support that.
Fair enough. I agree with your statement. Thanks for the honest reply.
Driving in my car, smoking a cigar. The only time I'm happy is when I play my guitar.
Firstly, I do not support imprisonment for Jeff Skilling -- he is not a threat to society. The purpose of a prison is to protect the innocent, not to punish the guilty. . . .Look, don't get me wrong here. Jeff Skilling is the worst of the worst -- he's a greedy man without an apparent shred of ethics. But, in my opinion, he's already been justly punished for his actions.
I know I'm going to regret this, but . . .
Do you define threats to society as only including violence?
How, exactly, has he been punished?
"Things will just get better and better even though it
doesn't feel that way right now. That's the hopeful
idea . . . Hope didn't get much applause . . .
Hope! Hope is the underdog!"
It's just that in the case of the spanish inquisition, crimes were invented from thin air; whereas, these crimes really took place. Also, the guidelines that are to be followed were understood and approved by all participants.
Then you say that it's not possible to conceal losses. However, that is what they did. They stuffed their losses into subsidiaries that were not included in the consolidated financial statements. That's called concealing losses. Contrary to what you said, it wasn't a matter of preventing investors from asking where the money was going. There was no money. There were only losses.
But, I will concede to your notion that more could've been done by the board to bring this situation to light before it grew beyond anybody's control. From what I can tell, the Internal Auditors were answering to an independent audit committee that answered to the board, but apparently the board did not put a whole lot of pressure on the committee to be more thorough. Also, the internal auditors shared the same employer with the external auditors, so that created an obvious conflict of interest.
And you do make a great point about the need to have a CEO who holds the industry in a higher regard than the corporate structure.
hmmmm....so maybe this is a big spanish inquisition for the sake of giving investors a false sense of confidence. I never saw it that way. I was always just happy to see rich people burn.
Do you define threats to society as only including violence?
Yes. Violence being defined as the forced overriding of the will of another.
How, exactly, has he been punished?
The same way a parent who kills its child is punished long before a conviction. Enron was Jeff Skilling. The day it died was the day Jeff Skilling's self-image died.
Go back to Skilling's statements as Enron collapsed. You can literally watch a human being fall apart as the company fall apart under him.
Skilling made off with millions, and I suppose that in your world that's all that really matters. But the human value that those millions should represent is not there, and Jeff Skilling will be a miserable waste of a person regardless of what is now done to him by the legal machine. The fraudlent image he created for himself and, much more importantly, to himself, is dead. And that's the justice for his actions. Unfortunately, there are many more that deserve the same punishment but will get to avoid it now that they've sacrificed Skilling to their demons. And that's why we'll all be back here a few years from now talking about a new company, a new CEO, but the same investment community.
Look, point taken that Skilling is the scapegoat in all of this. But, but I don't get why you would think only to lock up violent criminals. What about those who commit theft? Car thieves? Jewelry thieves? Used car salesmen? Do you not see these individuals as deserving of punishment other than public humiliation? Where is the deterrent for would-be non-violent criminals?
Yes. Violence being defined as the forced overriding of the will of another.
Okay, well we differ here. I think that "threats to society" come in lots of different forms that won't fit this definition. So, for example, I think there ought to be criminal penalties for industries that dump toxic waste. And I think there ought to be criminal penalties for fraud and deception. And I'm pretty sure that you'll come up with a way to define those things as NOT being the forced overriding of the will of another (because the victims in these cases CHOSE to live near industry or they CHOSE to believe the lies of con artist).
The same way a parent who kills its child is punished long before a conviction. Enron was Jeff Skilling. The day it died was the day Jeff Skilling's self-image died.
Go back to Skilling's statements as Enron collapsed. You can literally watch a human being fall apart as the company fall apart under him.
Skilling made off with millions, and I suppose that in your world that's all that really matters. But the human value that those millions should represent is not there, and Jeff Skilling will be a miserable waste of a person regardless of what is now done to him by the legal machine. The fraudlent image he created for himself and, much more importantly, to himself, is dead. And that's the justice for his actions.
This would make more sense to me but for his defense at his criminal trial where he denied that there was anything wrong with what Enron had done. In fact, he insisted the only problem with Enron was the fact that the press turned on them, and that if that pesky woman over at Fortune Magazine had kept her trap shut, they'd still be doing fine. The judge's sentence was based, in part, on this complete denial of any responsibility for the collapse of the company. According to accounts of the trial, he remained haughty and arrogant through the whole thing -- when he talked to the press, when he was on the witness stand.
So it seems to me his self-image is in tact. If he didn't go to prison or get forced to make restitution, he'd just sit on his millions and mumble to himself about how no one understood him. And that doesn't seem like punishment to me at all.
Unfortunately, there are many more that deserve the same punishment but will get to avoid it now that they've sacrificed Skilling to their demons. And that's why we'll all be back here a few years from now talking about a new company, a new CEO, but the same investment community.
Here's where I agree with you. These prosecutions are basically trials to reassure us that the system is working, when in fact, not much has changed in the way they do business.
"Things will just get better and better even though it
doesn't feel that way right now. That's the hopeful
idea . . . Hope didn't get much applause . . .
Hope! Hope is the underdog!"
It's just that in the case of the spanish inquisition, crimes were invented from thin air; whereas, these crimes really took place. Also, the guidelines that are to be followed were understood and approved by all participants.
The "crimes" of the Spanish Inquisition were quite true. Most of the victims of that Inquisition were convicted of things they actually did, primarily being "bad Christians". The Jews who were expelled were, in fact, Jewish. The censored were, in fact, saying things the censors didn't like. The heretics were, in fact, typically violating some esoteric church doctrine.
The tragedy of the Inquisition is that the "crimes" are not crimes at all. They're simply violations of law. And those two things are not equal.
Then you say that it's not possible to conceal losses. However, that is what they did. They stuffed their losses into subsidiaries that were not included in the consolidated financial statements. That's called concealing losses. Contrary to what you said, it wasn't a matter of preventing investors from asking where the money was going. There was no money. There were only losses.
Everything an investor needed to know about Enron is right here:
"On February 12, 2001, Skilling was named CEO of Enron. Skilling began to behave strangely during this time and in April 2001 verbally attacked Wall Street analyst Richard Grubman, who questioned Enron's unusual accounting practice during a recorded conference call. When Grubman complained that Enron was the only company that could not release a balance sheet along with its earnings statements, Skilling replied "Well, thank you very much, we appreciate that . . . asshole." Though the comment was met with dismay and astonishment by press and public, it became an inside joke among many Enron employees, mocking Grubman for his perceived meddling rather than Skilling's lack of tact."
You cannot conceal a loss from those who demand information. A failure to provide information says everything an investor should have to know. Why would any sane person invest in a company that would not provide such a basic piece of financial information as a balance sheet?
But, I will concede to your notion that more could've been done by the board to bring this situation to light before it grew beyond anybody's control. From what I can tell, the Internal Auditors were answering to an independent audit committee that answered to the board, but apparently the board did not put a whole lot of pressure on the committee to be more thorough. Also, the internal auditors shared the same employer with the external auditors, so that created an obvious conflict of interest.
Yes.
And you do make a great point about the need to have a CEO who holds the industry in a higher regard than the corporate structure.
hmmmm....so maybe this is a big spanish inquisition for the sake of giving investors a false sense of confidence. I never saw it that way. I was always just happy to see rich people burn.
I'm going to assume you're saying that last thing facetiously. Unfortunately, you'd be one of the few.
Okay, well we differ here. I think that "threats to society" come in lots of different forms that won't fit this definition. So, for example, I think there ought to be criminal penalties for industries that dump toxic waste. And I think there ought to be criminal penalties for fraud and deception. And I'm pretty sure that you'll come up with a way to define those things as NOT being the forced overriding of the will of another (because the victims in these cases CHOSE to live near industry or they CHOSE to believe the lies of con artist).
I won't pursue it.
For the record, I don't think we're far off on the concept of violence. A person who dumps toxic waste in your drinking water is a violent person. But a person who dumps toxic waste in your drinking water after you ask him to is not.
If you bought Enron stock, you are not the victim of violence unless you had no other choice. I'm not aware of anyone who was physically forced to buy Enron stock. If, a month before Enron's collapse, you would have polled those who had invested their 401ks in Enron stock, I doubt a single one would have told you that they did not want that money invested in Enron.
This would make more sense to me but for his defense at his criminal trial where he denied that there was anything wrong with what Enron had done. In fact, he insisted the only problem with Enron was the fact that the press turned on them, and that if that pesky woman over at Fortune Magazine had kept her trap shut, they'd still be doing fine. The judge's sentence was based, in part, on this complete denial of any responsibility for the collapse of the company. According to accounts of the trial, he remained haughty and arrogant through the whole thing -- when he talked to the press, when he was on the witness stand.
He certainly did deny wrongdoing and he certainly was arrogant on the stand.
So it seems to me his self-image is in tact. If he didn't go to prison or get forced to make restitution, he'd just sit on his millions and mumble to himself about how no one understood him. And that doesn't seem like punishment to me at all.
An understanding of self-worth and repentence require a standard of self-worth and morality, respectively. A man with no self-image can have neither. Therefore, it is no surprise that Skilling was unrepentant and arrogant.
Here's where I agree with you. These prosecutions are basically trials to reassure us that the system is working, when in fact, not much has changed in the way they do business.
Things have changed. Companies now have extra hoops to jump through. But I agree -- the real cause here hasn't changed a bit: false confidence.
Look, point taken that Skilling is the scapegoat in all of this.
Don't forget dirtbag scapegoat. To be a scapegoat requires that you're primarily a victim. Jeff Skilling is still primarily a dirtbag, not a victim.
But, but I don't get why you would think only to lock up violent criminals. What about those who commit theft? Car thieves? Jewelry thieves? Used car salesmen? Do you not see these individuals as deserving of punishment other than public humiliation? Where is the deterrent for would-be non-violent criminals?
Is there anyone on this board who's like 100 years old? I'd like to know when our justice system became about "deterrence" or "punishment". Perhaps it's always been that way.
Anyway, here's the deal. You can either have justice or you can have revenge. You can't have both. So if you're going to use your justice system for punishing people or for deterring the innocent, please at least change the name of your system.
"On February 12, 2001, Skilling was named CEO of Enron. Skilling began to behave strangely during this time and in April 2001 verbally attacked Wall Street analyst Richard Grubman, who questioned Enron's unusual accounting practice during a recorded conference call. When Grubman complained that Enron was the only company that could not release a balance sheet along with its earnings statements, Skilling replied "Well, thank you very much, we appreciate that . . . asshole." Though the comment was met with dismay and astonishment by press and public, it became an inside joke among many Enron employees, mocking Grubman for his perceived meddling rather than Skilling's lack of tact."
You cannot conceal a loss from those who demand information. A failure to provide information says everything an investor should have to know. Why would any sane person invest in a company that would not provide such a basic piece of financial information as a balance sheet?
A balance due in the year 2001 would reflect year 2000 activity. Enron had been overstating their income since 1997. So, in effect, those losses were concealed during those years leading up to 2000.
Anyway, here's the deal. You can either have justice or you can have revenge. You can't have both. So if you're going to use your justice system for punishing people or for deterring the innocent, please at least change the name of your system.
The question still stands: Would you not see to it that non-violent be locked up? What would you do then with thieves and used car salesmen?
Is there anyone on this board who's like 100 years old? I'd like to know when our justice system became about "deterrence" or "punishment". Perhaps it's always been that way.
I think I'm as close as you're gonna get on this board It has always been that way, and every move in the opposite direction meets with howls of protest.
Anyway, here's the deal. You can either have justice or you can have revenge. You can't have both. So if you're going to use your justice system for punishing people or for deterring the innocent, please at least change the name of your system.
Mr. Webster would differ with you.
Main Entry: jus·tice
Pronunciation: 'j&s-t&s
Function: noun
Etymology: Middle English, from Anglo-French justise, from Latin justitia, from justus
1 a : the maintenance or administration of what is just especially by the impartial adjustment of conflicting claims or the assignment of merited rewards or punishments
"Nothing in the world is more dangerous than sincere ignorance and conscientious stupidity." ~ MLK, 1963
For the record, I don't think we're far off on the concept of violence. A person who dumps toxic waste in your drinking water is a violent person. But a person who dumps toxic waste in your drinking water after you ask him to is not.
Okay, you've lost me. I don't follow this at all . . . (and after we were doing so well )
And a few more questions -- do you believe that there are things called "crimes" (or "laws" for that matter) outside of those we define in our legal codes? How do we know what those "real" crimes are, as opposed to those we define?
And what is "justice"?
"Things will just get better and better even though it
doesn't feel that way right now. That's the hopeful
idea . . . Hope didn't get much applause . . .
Hope! Hope is the underdog!"
A balance due in the year 2001 would reflect year 2000 activity. Enron had been overstating their income since 1997. So, in effect, those losses were concealed during those years leading up to 2000.
*Sigh*
You don't know if I'm straight or gay. Am I concealing my sexual preference from you?
Okay, you've lost me. I don't follow this at all . . . (and after we were doing so well )
Take an action comitted by another that harms you, like a person dumping toxic waste in your water. If they do it against your will, they are violent. If they do it consistent with your will, they are not.
An Enron investor willingly purchased a risk-based vehicle. They willingly linked their own money with the fate of Enron. Therefore, there was no violence in the case of Enron.
There was, however, unethical conduct by both Enron management and Enron investors.
And a few more questions -- do you believe that there are things called "crimes" (or "laws" for that matter) outside of those we define in our legal codes? How do we know what those "real" crimes are, as opposed to those we define?
Good question. My answer...most certainly.
Anything can be a crime in the common sense since a common crime has only one prerequisite: a law. Therefore, if I pass a law that forces a black person to sit at the back of the bus any black person who sits at the front of a bus is has committed a crime.
However, I believe all human beings have natural rights. A true crime is a violation of those rights. Therefore, since all humans have a right to freedom, the only criminal in the above situation is the lawmaker, not the lawbreaker.
In short, a man-made law cannot override a natural right. Good systems of law are consistent with natural law. Contract law, for example, is (or at least can be) a good system of law consistent with the natural rights we all have.
To tell between a natural law and a common law, one only need to look for the presence of guns. If your law can only be enforced with violence, you are not dealing with a natural law.
And what is "justice"?
Justice is best described by Newton's third law: for each action, there is an equal and opposite reaction. A system of justice constructed by human beings should always use this natural law as a model. If a person violates your rights, your response should be a commensurate response to his crime. That does not mean eye for an eye "justice" wherein two crimes are committed and no justice is served.
If a person violates your rights, what possible justice is served by imprisoning that person? If someone steals your property, you cannot return that property by imprisoning someone. If someone steals your life, you cannot return that life by murderering the murderer. If someone silences your voice, you cannot get back that voice by silencing his.
In order to understand justice, you must let go of the concepts of punishment or revenge (despite Webster's definition). The purpose of a justice system is to right a wrong, not create another wrong.
I think I'm as close as you're gonna get on this board It has always been that way, and every move in the opposite direction meets with howls of protest.
Yes, I have a bad habit of glorifying the past. My bad.
Mr. Webster would differ with you.
Main Entry: jus·tice
Pronunciation: 'j&s-t&s
Function: noun
Etymology: Middle English, from Anglo-French justise, from Latin justitia, from justus
1 a : the maintenance or administration of what is just especially by the impartial adjustment of conflicting claims or the assignment of merited rewards or punishments
Ah yes...that certainly describes justice as we've come to know it. I respectfully disagree. And for the sake of argument, here's what I believe justice is:
1: the assessment of and response to a person's worth wherein the objective measures of both harm and benefit are redressed.
Enron never told you what their losses were. They created a scheme in which they never had to tell you. And few ever asked.
So, to you help you better understand your own analogy:
homosexual: profits
straight: losses
By saying that you're homosexual instead of straight when you are, in fact, straight, you are concealing your losses. And if anyone ever asked, you'd produce your balance sheet. Beyond that is the auditor's responsibility to uncover, which they didn't. Never the less, it's still concealment.
So, to you help you better understand your own analogy:
homosexual: profits
straight: losses
By saying that you're homosexual instead of straight when you are, in fact, straight, you are concealing your losses. And if anyone ever asked, you'd produce your balance sheet. Beyond that is the auditor's responsibility to uncover, which they didn't. Never the less, it's still concealment.
You've misunderstood the analogy. I haven't told that I'm straight or gay at all. Enron did not tell you that they had losses because they were able to place those losses in other firms. That scheme did not require them to report those losses until much later.
Enron collapsed because Enron finally had to report those losses. Regardless, the very fact that they were playing well-known accounting games before the collapse by not providing important accounting materials in the first place was all people should have needed to have zero confidence in Enron.
You've misunderstood the analogy. I haven't told that I'm straight or gay at all. Enron did not tell you that they had losses because they were able to place those losses in other firms. That scheme did not require them to report those losses until much later.
Enron collapsed because Enron finally had to report those losses. Regardless, the very fact that they were playing well-known accounting games before the collapse by not providing important accounting materials in the first place was all people should have needed to have zero confidence in Enron.
But, by inflating their profits, they were essentially saying they did not have those losses. By saying that you are hetero, you are implying that you are not gay because you are either one or the other.
Not providing important accounting materials? What materials are you referring to?
But, by inflating their profits, they were essentially saying they did not have those losses. By saying that you are hetero, you are implying that you are not gay because you are either one or the other.
No, they said they didn't have any losses that year. Their accounting gimmicks were specifically designed to postpone having to report losses. This is no different than amortization and lease schemes used by companies everywhere.
Not providing important accounting materials? What materials are you referring to?
You know, those esoteric accounting documents known as balance sheets. The vast majority of Enron's debt was shouldered onto other firms and Enron was not required to report that as their debt because of the rules regardig off-balance-sheet leases and other arrangements. These same gimmicks were used by Waste Management, EDS, and dozens of other companies to postpone the reporting of debts. I'm yet to hear of any of the management of those companies doing 24 years in prison.
Enron was able to report gains from those arrangements, however, which should lead anyone looking at a balance sheet to ask the very basic question: where are these gains coming from?
No, they said they didn't have any losses that year. Their accounting gimmicks were specifically designed to postpone having to report losses. This is no different than amortization and lease schemes used by companies everywhere.
The failure to report losses has the affect of inflating profits. It's not like profits and losses have their own statements.
You know, those esoteric accounting documents known as balance sheets. The vast majority of Enron's debt was shouldered onto other firms and Enron was not required to report that as their debt because of the rules regardig off-balance-sheet leases and other arrangements. These same gimmicks were used by Waste Management, EDS, and dozens of other companies to postpone the reporting of debts. I'm yet to hear of any of the management of those companies doing 24 years in prison.
Enron was able to report gains from those arrangements, however, which should lead anyone looking at a balance sheet to ask the very basic question: where are these gains coming from?
They were reported as investments. And these off-balance sheet leases and other arrangements were hidden in a special purpose entity, which in turn suffered the losses on Enron's behalf. The point being that Enron misrepresented its balance sheet. The losses you keep referring to were placed on an SPE balance sheet, which was not consolidated with Enron's balance sheet.
So, in terms of Enron's actual losses, a balance was presented -just not the right one.
The failure to report losses has the affect of inflating profits. It's not like profits and losses have their own statements.
They were reported as investments. And these off-balance sheet leases and other arrangements were hidden in a special purpose entity, which in turn suffered the losses on Enron's behalf. The point being that Enron misrepresented its balance sheet. The losses you keep referring to were placed on an SPE balance sheet, which was not consolidated with Enron's balance sheet.
So, in terms of Enron's actual losses, a balance was presented -just not the right one.
The losses were in the SPE balance sheet...which is exactly where they belonged under the scheme that Skilling invented. Enron operated that SPE under the standard rules used by companies who use such vehicles for legitimate investments.
You keep ignoring the essential point: Enron was reporting gains from investments and no one ever bothered to ask where that money was coming from. No one cared because such gimmicks are only "illegal" when people are losing money.
Comments
Yes, but if you think there's a correlation, then I'd like to hear it.
Business and enterprise stimulate the economy. Business and enterprise need capital. Public securities are a major source of this capital. Without investor confidence providing a market for these securities, business expansion slows down. Then the economy slows down.
Do you have a foolproof method of screening potential CEO's?
Exactly. That's what makes it a legal obligation.
What mechanisms are those? Do you know of any besides the ones that were already in place?
This obligation does exist. It is known as the SEC regulation. And again, you're trying to pin the blame on the people who hired these execs. Do you know of a better way to screen for employees? I don't think they had criminal records. I'm sure they came with credentials. What more can they do?
Not to mention, you talk about the pressure to create returns at all costs. This is true. However, Enron's methods for increasing its returns are not the issue. The issue is the deliberate concealment of losses. These losses were hidden from investors.
This is incorrect. It shouldn't be up to investors to take into consideration possible fraudulent activities when making their investments. This is not an issue of ooops that was a bad investment. This is an issue of investors not being able to make a decision based on accurate information.
Who said it was a good thing? It's just the way things are.
http://forums.pearljam.com/showthread.php?t=272825
Oppression in the name of stability.
Obviously the Spanish Inquisition was more unjust and much worse than the SEC -- I'm not trying to paint with a brush of moral equivalence. I'm just saying that the motivations were quite similar.
But do you not understand that it's a lie? It's false confidence and Enron is a great example of that.
No. There isn't one. However, there are good ways to screen for potential CEO's. For example, if all a CEO has to offer is paperwork schemes, that's probably not the guy you want for long-term success. But no one at Enron cared about long-term success. Everyone was making boat loads of money and they wanted more now. Their management team completely reflected that mindset.
A good CEO is not a person who will tell you what your profit will be next quarter. A good CEO is a person who will tell you what your profit will be 10 years from now and how he or she will make that happen. Again, no one involved in Enron seemed to care about that. They simply fixated on 20% quarterly returns and did not give a damn about a CEO who couldn't explain how an energy futures business could survive the fact that energy is not a commodity.
Bad CEOs are glorified accountants. Good CEOs are engineers. If you own stock in a company whose management team could not even explain to you the product they sell, I advise you to sell.
Yes, but it's only worth that which stands behind it. And guns cannot equal an obligation for a CEO to run a good business. It will only equal an obligation for a CEO to attempt to hide from the guns.
Investors who have enough sense to ask what actually is behind a revenue figure would be a great start. Internal auditors that report to the board, rather than the CEO would have been a great finish.
The SEC regulation only creates a legal obligation to hand in paperwork and accept the consequences if that paperwork is incorrect. That's what your "confidence" is based on.
What you're attempting to create with such regulation is a synthetic version of a natural obligation wherein all parties of a corporation have a shared interest. The shared interests of all involved parties at Enron from Skilling to the janitor was greed -- the illogical desire to extract more money from an effort than that effort was actually worth. No amount of SEC regulation can prevent human greed. Unfortunately, it pretends to so you now have millions of people actively participating in such greed schemes because of the false confidence you've instilled in them.
Wait. Enron's methods were the "deliberate concealment of losses". They either are the issue or they are not.
Look, you cannot "conceal losses". All you can do is prevent investors from asking where the money is going. And that's exactly what your confidence game has done.
Hehe. There's your problem. You are trying to create a world where investors bear no risks, which in turn invalidates the concept of investing. You cannot escape the reality of the situation, no matter how much you'd like to. To invest in something is to believe in its potential. You may either believe based on fact or faith. What you're trying to do is make fact and faith the same thing.
Your entire argument here seems to be that stability is the ultimate goal of an economy. Is it or is it not?
http://forums.pearljam.com/showthread.php?t=272825
I am neither a professional accountant nor have I passed my series 7, if that's what you're asking.
Hey ffg.....Not sure if you provided an answer at some point during this post but what do you think should be done with a man like this? If you did provide a specific answer, I apologize for asking. I am just curious. Thanks.
-from "n.s.u." by Cream
Honestly, I don't really have much of an opinion on that.
Firstly, I do not support imprisonment for Jeff Skilling -- he is not a threat to society. The purpose of a prison is to protect the innocent, not to punish the guilty. At this point, anyone who would enter into a business arrangement with Jeff Skilling does not need protection from Jeff Skilling.....he or she would need protection from themself.
If it can be demonstrated that Jeff Skilling violated any contractual agreements I have no problem with the victims of such situations recovering anything they lost.
Look, don't get me wrong here. Jeff Skilling is the worst of the worst -- he's a greedy man without an apparent shred of ethics. But, in my opinion, he's already been justly punished for his actions. If our society wants to actively deny Jeff Skilling access to any sector of the economy, I have absolutely no problem with that. But if our society wants to actively deny Jeff Skilling the basic freedoms to which all humans are entitled because we demand sacrificial revenge .... I'm sorry but I cannot support that.
Fair enough. I agree with your statement. Thanks for the honest reply.
-from "n.s.u." by Cream
Do you define threats to society as only including violence?
How, exactly, has he been punished?
doesn't feel that way right now. That's the hopeful
idea . . . Hope didn't get much applause . . .
Hope! Hope is the underdog!"
-- EV, Live at the Showbox
Then you say that it's not possible to conceal losses. However, that is what they did. They stuffed their losses into subsidiaries that were not included in the consolidated financial statements. That's called concealing losses. Contrary to what you said, it wasn't a matter of preventing investors from asking where the money was going. There was no money. There were only losses.
But, I will concede to your notion that more could've been done by the board to bring this situation to light before it grew beyond anybody's control. From what I can tell, the Internal Auditors were answering to an independent audit committee that answered to the board, but apparently the board did not put a whole lot of pressure on the committee to be more thorough. Also, the internal auditors shared the same employer with the external auditors, so that created an obvious conflict of interest.
And you do make a great point about the need to have a CEO who holds the industry in a higher regard than the corporate structure.
hmmmm....so maybe this is a big spanish inquisition for the sake of giving investors a false sense of confidence. I never saw it that way. I was always just happy to see rich people burn.
http://forums.pearljam.com/showthread.php?t=272825
Yes. Violence being defined as the forced overriding of the will of another.
The same way a parent who kills its child is punished long before a conviction. Enron was Jeff Skilling. The day it died was the day Jeff Skilling's self-image died.
Go back to Skilling's statements as Enron collapsed. You can literally watch a human being fall apart as the company fall apart under him.
Skilling made off with millions, and I suppose that in your world that's all that really matters. But the human value that those millions should represent is not there, and Jeff Skilling will be a miserable waste of a person regardless of what is now done to him by the legal machine. The fraudlent image he created for himself and, much more importantly, to himself, is dead. And that's the justice for his actions. Unfortunately, there are many more that deserve the same punishment but will get to avoid it now that they've sacrificed Skilling to their demons. And that's why we'll all be back here a few years from now talking about a new company, a new CEO, but the same investment community.
http://forums.pearljam.com/showthread.php?t=272825
I won't pursue it.
This would make more sense to me but for his defense at his criminal trial where he denied that there was anything wrong with what Enron had done. In fact, he insisted the only problem with Enron was the fact that the press turned on them, and that if that pesky woman over at Fortune Magazine had kept her trap shut, they'd still be doing fine. The judge's sentence was based, in part, on this complete denial of any responsibility for the collapse of the company. According to accounts of the trial, he remained haughty and arrogant through the whole thing -- when he talked to the press, when he was on the witness stand.
So it seems to me his self-image is in tact. If he didn't go to prison or get forced to make restitution, he'd just sit on his millions and mumble to himself about how no one understood him. And that doesn't seem like punishment to me at all.
Here's where I agree with you. These prosecutions are basically trials to reassure us that the system is working, when in fact, not much has changed in the way they do business.
doesn't feel that way right now. That's the hopeful
idea . . . Hope didn't get much applause . . .
Hope! Hope is the underdog!"
-- EV, Live at the Showbox
The "crimes" of the Spanish Inquisition were quite true. Most of the victims of that Inquisition were convicted of things they actually did, primarily being "bad Christians". The Jews who were expelled were, in fact, Jewish. The censored were, in fact, saying things the censors didn't like. The heretics were, in fact, typically violating some esoteric church doctrine.
The tragedy of the Inquisition is that the "crimes" are not crimes at all. They're simply violations of law. And those two things are not equal.
Everything an investor needed to know about Enron is right here:
"On February 12, 2001, Skilling was named CEO of Enron. Skilling began to behave strangely during this time and in April 2001 verbally attacked Wall Street analyst Richard Grubman, who questioned Enron's unusual accounting practice during a recorded conference call. When Grubman complained that Enron was the only company that could not release a balance sheet along with its earnings statements, Skilling replied "Well, thank you very much, we appreciate that . . . asshole." Though the comment was met with dismay and astonishment by press and public, it became an inside joke among many Enron employees, mocking Grubman for his perceived meddling rather than Skilling's lack of tact."
You cannot conceal a loss from those who demand information. A failure to provide information says everything an investor should have to know. Why would any sane person invest in a company that would not provide such a basic piece of financial information as a balance sheet?
Yes.
I'm going to assume you're saying that last thing facetiously. Unfortunately, you'd be one of the few.
For the record, I don't think we're far off on the concept of violence. A person who dumps toxic waste in your drinking water is a violent person. But a person who dumps toxic waste in your drinking water after you ask him to is not.
If you bought Enron stock, you are not the victim of violence unless you had no other choice. I'm not aware of anyone who was physically forced to buy Enron stock. If, a month before Enron's collapse, you would have polled those who had invested their 401ks in Enron stock, I doubt a single one would have told you that they did not want that money invested in Enron.
He certainly did deny wrongdoing and he certainly was arrogant on the stand.
An understanding of self-worth and repentence require a standard of self-worth and morality, respectively. A man with no self-image can have neither. Therefore, it is no surprise that Skilling was unrepentant and arrogant.
Things have changed. Companies now have extra hoops to jump through. But I agree -- the real cause here hasn't changed a bit: false confidence.
Don't forget dirtbag scapegoat. To be a scapegoat requires that you're primarily a victim. Jeff Skilling is still primarily a dirtbag, not a victim.
Is there anyone on this board who's like 100 years old? I'd like to know when our justice system became about "deterrence" or "punishment". Perhaps it's always been that way.
Anyway, here's the deal. You can either have justice or you can have revenge. You can't have both. So if you're going to use your justice system for punishing people or for deterring the innocent, please at least change the name of your system.
A balance due in the year 2001 would reflect year 2000 activity. Enron had been overstating their income since 1997. So, in effect, those losses were concealed during those years leading up to 2000.
http://forums.pearljam.com/showthread.php?t=272825
The question still stands: Would you not see to it that non-violent be locked up? What would you do then with thieves and used car salesmen?
http://forums.pearljam.com/showthread.php?t=272825
Mr. Webster would differ with you.
Main Entry: jus·tice
Pronunciation: 'j&s-t&s
Function: noun
Etymology: Middle English, from Anglo-French justise, from Latin justitia, from justus
1 a : the maintenance or administration of what is just especially by the impartial adjustment of conflicting claims or the assignment of merited rewards or punishments
And a few more questions -- do you believe that there are things called "crimes" (or "laws" for that matter) outside of those we define in our legal codes? How do we know what those "real" crimes are, as opposed to those we define?
And what is "justice"?
doesn't feel that way right now. That's the hopeful
idea . . . Hope didn't get much applause . . .
Hope! Hope is the underdog!"
-- EV, Live at the Showbox
*Sigh*
You don't know if I'm straight or gay. Am I concealing my sexual preference from you?
Take an action comitted by another that harms you, like a person dumping toxic waste in your water. If they do it against your will, they are violent. If they do it consistent with your will, they are not.
An Enron investor willingly purchased a risk-based vehicle. They willingly linked their own money with the fate of Enron. Therefore, there was no violence in the case of Enron.
There was, however, unethical conduct by both Enron management and Enron investors.
Good question. My answer...most certainly.
Anything can be a crime in the common sense since a common crime has only one prerequisite: a law. Therefore, if I pass a law that forces a black person to sit at the back of the bus any black person who sits at the front of a bus is has committed a crime.
However, I believe all human beings have natural rights. A true crime is a violation of those rights. Therefore, since all humans have a right to freedom, the only criminal in the above situation is the lawmaker, not the lawbreaker.
In short, a man-made law cannot override a natural right. Good systems of law are consistent with natural law. Contract law, for example, is (or at least can be) a good system of law consistent with the natural rights we all have.
To tell between a natural law and a common law, one only need to look for the presence of guns. If your law can only be enforced with violence, you are not dealing with a natural law.
Justice is best described by Newton's third law: for each action, there is an equal and opposite reaction. A system of justice constructed by human beings should always use this natural law as a model. If a person violates your rights, your response should be a commensurate response to his crime. That does not mean eye for an eye "justice" wherein two crimes are committed and no justice is served.
If a person violates your rights, what possible justice is served by imprisoning that person? If someone steals your property, you cannot return that property by imprisoning someone. If someone steals your life, you cannot return that life by murderering the murderer. If someone silences your voice, you cannot get back that voice by silencing his.
In order to understand justice, you must let go of the concepts of punishment or revenge (despite Webster's definition). The purpose of a justice system is to right a wrong, not create another wrong.
If you were to give me the incorrect preference, then yes, you would be concealing that preference.
http://forums.pearljam.com/showthread.php?t=272825
Yes, I have a bad habit of glorifying the past. My bad.
Ah yes...that certainly describes justice as we've come to know it. I respectfully disagree. And for the sake of argument, here's what I believe justice is:
1: the assessment of and response to a person's worth wherein the objective measures of both harm and benefit are redressed.
Enron never told you what their losses were. They created a scheme in which they never had to tell you. And few ever asked.
So, to you help you better understand your own analogy:
homosexual: profits
straight: losses
By saying that you're homosexual instead of straight when you are, in fact, straight, you are concealing your losses. And if anyone ever asked, you'd produce your balance sheet. Beyond that is the auditor's responsibility to uncover, which they didn't. Never the less, it's still concealment.
http://forums.pearljam.com/showthread.php?t=272825
You've misunderstood the analogy. I haven't told that I'm straight or gay at all. Enron did not tell you that they had losses because they were able to place those losses in other firms. That scheme did not require them to report those losses until much later.
Enron collapsed because Enron finally had to report those losses. Regardless, the very fact that they were playing well-known accounting games before the collapse by not providing important accounting materials in the first place was all people should have needed to have zero confidence in Enron.
But, by inflating their profits, they were essentially saying they did not have those losses. By saying that you are hetero, you are implying that you are not gay because you are either one or the other.
Not providing important accounting materials? What materials are you referring to?
http://forums.pearljam.com/showthread.php?t=272825
No, they said they didn't have any losses that year. Their accounting gimmicks were specifically designed to postpone having to report losses. This is no different than amortization and lease schemes used by companies everywhere.
You know, those esoteric accounting documents known as balance sheets. The vast majority of Enron's debt was shouldered onto other firms and Enron was not required to report that as their debt because of the rules regardig off-balance-sheet leases and other arrangements. These same gimmicks were used by Waste Management, EDS, and dozens of other companies to postpone the reporting of debts. I'm yet to hear of any of the management of those companies doing 24 years in prison.
Enron was able to report gains from those arrangements, however, which should lead anyone looking at a balance sheet to ask the very basic question: where are these gains coming from?
The failure to report losses has the affect of inflating profits. It's not like profits and losses have their own statements.
They were reported as investments. And these off-balance sheet leases and other arrangements were hidden in a special purpose entity, which in turn suffered the losses on Enron's behalf. The point being that Enron misrepresented its balance sheet. The losses you keep referring to were placed on an SPE balance sheet, which was not consolidated with Enron's balance sheet.
So, in terms of Enron's actual losses, a balance was presented -just not the right one.
http://forums.pearljam.com/showthread.php?t=272825
The losses were in the SPE balance sheet...which is exactly where they belonged under the scheme that Skilling invented. Enron operated that SPE under the standard rules used by companies who use such vehicles for legitimate investments.
You keep ignoring the essential point: Enron was reporting gains from investments and no one ever bothered to ask where that money was coming from. No one cared because such gimmicks are only "illegal" when people are losing money.