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Non-Tech : Derivatives: Darth Vader's Revenge -- Ignore unavailable to you. Want to Upgrade?

To: JBTFD who wrote (1074)	3/30/2002 2:01:06 PM
From: Henry Volquardsen	Read Replies (1) \| Respond to of 2794

I read it and its wrong. Enron lost money because they invested in a series of ill advised diversifications. Particualarly in telecoms and water. They funded this with a mountain of debt. They had little to no revenue to service this debt. It was this bleeding ulcer that killed Enron. The author points to the derivatives transactions between Enron and the partnerships as a cause. Nonsense. Those derivatives transactions were the means by which Enron HID the debt and resultant losses and the means by which they committed fraud. But they had little to do with why they lost the money. That was just plain old fashioned bad business practice and excessive debt. Thats what got them into the mess. The self engineered derivatives were merely a mechanism to delay it becoming public.