ENRON

ENRON, The Smartest Guys In The Room. is documentary that focuses on the rise of the energy company, along with the rise of the idea that created the company in the first place.
Enron was a corporation that bought and sold stocks in energy as the core of their company, as well as electricity, natural gas, communications, pulp and paper.

Enron made their money using a strategy called mark to market accounting, allowing companies to change values on their balance sheet as market conditions change. Mark to market accounting only shows past transactions, leaving out current ones. Through this they were able to add transactions to their books, from deals that were intended to occur, but were never carried out. This lead to an increase in stock prices, leading to an increase in investments and consumer confidence, allowing them to continue this lie as long as the stock profits could cover the false transactions.

This does not mean that Enron was not making any real profits, because even though they did really sell energy and ect. they were simply manipulating the numbers to make it look like they were much more profitable than in reality.

When company debts started surfacing, Enron hired an economist to manipulate the debt. They did so by creating new companies, which included different branches to "buy the debt". Through this they in turn did not have to book any debts, since the transaction appeared real, and resulted in a "profit" for Enron. Along with this, Enron got real corporations on board to buy off their debts. companies such as JP Morgan, Citi Bank, Deutsche Bank, and many many others.

The downfall of Enron occurred when CEO Ken Lay retired in February, turning the position over to Jeff Skilling, who then resigned as CEO in August of that year- for "personal reasons". That October, Enron reported their first quarterly loss, and closed Raptor so that it would not have to distribute 50 million shares of stock, which would drive profits further down. Next, Enron changed their pension plan, forbidding employees from selling their shares for 30 days, meanwhile the CEO's were able to easily sell theirs. Shortly after, the SEC started investigating and uncovered the many accounting scams.

Enron's collapse had devestating effects for the nation. 4,500 Enron employees lost their jobs, in addition to jobs lost at firms which invested in Enron and lost roughly 60 billion dollars in the span of  days. Pensions were also eliminated, as well as many American's trust in the market and firms obliterated.

The Enron scandal serves as a prime example of the dangers of unregulated capitalism. As in government, if there are no checks and balances power will go to the heads of those in charge and they will abuse their privilege. With no agency or government checking up on Enron and keeping their business practices honest and fair,  it wasn't hard for Enron's CEOs to use the company to take advantage of millions of Americans. In order to ensure that this type of corporate fraud doesn't continue in the future, we must keep a careful eye on large, monopoly-like firms.