How to Explain Enron to Your Kids

 

 


Feudalism - You have two cows. Your lord takes some of the milk.

Fascism - You have two cows. The government takes both, hires
you to take care of them, and sells you the milk.

Communism - You have two cows. Your neighbors help take care
of them and you share the milk.

Totalitarianism - You have two cows. The government takes them
both and denies they ever existed and drafts you into the army.
Milk is banned.

Capitalism - You have two cows. You sell one and buy a bull.
Your herd multiplies, and the economy grows. You sell them and
retire on the income.

Enron Venture Capitalism - You have two cows. You sell three of
them to your publicly listed company, using letters of credit opened
by your brother-in-law at the bank, then execute a debt/equity swap
with an associated general offer so that you get all four cows back,
with a tax exemption for five cows. The milk rights of the six cows
are transferred via an intermediary to a Cayman Island company
secretly owned by the majority shareholder who sells the rights to all
seven cows back to your listed company. The annual report says the
company owns eight cows, with an option on one more.