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all your eggs
enron and the fifth deadly sin
by jonas foster
1.23.02
general


Greed is not good. No matter what Michael Douglas told you, no matter what the fresh-faced stock jocks in lower Manhattan yammer to each other over 5:15 drinks, no matter how many e-trade commercials subtly tell you to quit your job and feed them, greed is not the great motivator, it's the slippery slope.

Now, in the Oliver Stone context, that of illustrating the running joke that was eighties Wall Street, that line deftly sums up the spirit, nay, the very ethos of the times. But take a couple steps closer to reality, my friend, and one finds that greed is not only not good, it's invariably and incredibly stupid.

Enter Enron. Wave hello to all the nice folks. Now, sit down over there for a second, I'll get back to you shortly.

A little exposition. Roughly three years ago, I got out of the business of business for a bright shiny career in the entertainment industry. I had done the nine-to-five, done it to death, and I had reaped a pretty tight reward in doing so. I was beginning to dislike the business world, in fact, I was beginning to loathe it. Again.

The catalysts of my egress were the events of one particular week in 1998. "The Week," I like to call it, in which my model girlfriend dumped me during a photo shoot in South America, the guys I bought my apartment from went to jail, and I watched one of my co-workers pillage a small successful company while merging it into a bigger company, dissolving 80% of the positions of the former and chuckling, almost snickering, when that company's CEO broke down into tears on a conference call some six weeks later.

I quit. That day. And, legally, I'm not supposed to mention I allegedly broke that co-worker's nose on or about the next day when my company sent him over to bring me back in.

I had an ace in my pocket. Having published a novel back in the early '90s (under another name, don't ask, I'm not thrilled about it), I had all the necessary trappings; the agent, the network, some cred, and a screenplay that was 90% finished. And since my building was under investigation anyway, I took the loss on the place to get out from under, left my stuff in a tiny bedroom in a friend's apartment, and took off for LA with, literally, the screenplay, a shaving kit, and a new haircut.

Hooray for Hollywood.

I also cashed out. And my timing, you might say, was excellent, if not luckily dumb. Things were gonna be different for me. Rather than spend my days swimming with sharks and trying to maintain a clean soul while getting my hands dirty, I was going to make... people... happy.

Three years later, my actress girlfriend leaves me because of commitment issues, the building next to mine burns down, and I stand by as my agent, whom I'm legally not supposed to refer to as a mouth-breathing idiot, negotiates the option of my screenplay for six-figures, then five, then practically gives it away while deftly assuring the movie never gets made.

Six months ago, I returned to New York. I found a new place, and, going back to my roots, as it were, used the last of my moderate fortune and contacts to start a management consultancy, Again, my timing was excellent.

I chalk the whole ugly experience up to art imitating business imitating Michael Douglas. Avarice, it seems, is not limited to Wall Street.

But then, well, let's get back to our little friend Enron.

You morons. How could you?

How could a management team so quickly and without conscience screw over so many people? And we're not just talking about boning faceless fund managers and oil big shots, we're talking about the little people, YOUR OWN LITTLE PEOPLE.

Furthermore, the whole mess, as far as I can tell, was almost, almost legal. Not ethical, mind you, or moral, but nearly legal. Had they not played a little too loosely with the facts, and had they not made a couple of gargantuan blunders in laundering it, they would have gone down like Webvan. A case with a lot of fanfare, for sure, but a kind of wink-wink, nudge-nudge, we-saw-that-one-coming fanfare.

The Enron implosion has a damage quotient far greater than some dot-com blowout. A lot of people are going to jail. A lot of people are losing their jobs. It's a political hot potato served up with a stewed scorpion main course and a glass of hemlock. And rightfully so.

However, the most fascinating and camera worthy aspect of the fiasco is the number of investors, mostly Enron employees, who are being brought to ruin with the collapse of the stock. Life savings washed out, retirement plans decimated, nest eggs scrambled. The testimony from the people who got crushed, people like you and me, was both heart and gut-wrenching.

But, at the same time...

You morons. How could you?

What, WHAT, would prompt anyone to invest an entire portfolio in a single stock, especially in the company that provides for one's livelihood? Enron couldn't have mandated that. It's way too illegal (yes, I understand that may be neither here nor there for those boys, but it's also way too difficult to cover up).

Don't put all your eggs in one basket. How difficult is that to follow? It's one of the known truisms, an assured way to derail one's life. Never have unprotected sex, don't smoke crack, stay away from the car if you've had a few.

DON'T STICK YOUR FACE IN THE FAN.

Gawd.

What should this episode teach? Well, for me, in terms of greed and evil, there's no business like business. As dirty and sleazy as Hollywood is, you're dealing with Boy Scouts compared to Wall Street.

For you, never forget that there's a higher order, like an exponential equivalent of the laws of physics. Call it nature, morality, karma, maybe even religion. It exists.

So while Hollywood tells you that greed is good, Wall Street will get you to believe it.

And neither will be there when karma comes calling.


ABOUT JONAS FOSTER

Having spent most of the eighties in and out of various colleges, Jonas Foster ducked the 9 to 5, wrote a book, and then made a mint selling the right information to the right people. He once dated a supermodel, although he refuses to offer which one, and now habitually combs Manhattan in search of the next.

more about jonas foster

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COMMENTS

adam kraemer
1.23.02 @ 9:41a

Actually, my company has been reporting on Enron from before the scandal straight through to yesterday's exclusive that Enron's shady bookkeeping has been going on for nearly 10 years. And for only $2000 a year, you can read all about it. Or just ask me in 6 months when I'm finally legally allowed to talk about it.

matt morin
1.23.02 @ 1:41p

I'm glad someone said it. My jaw drops every time I hear that individual investors want the government to recoup their Enron losses.

Hey, guess what? I lost a lot of money in the market, too. Why doesn't the government bail us all out?

Answer: because it doesn't work that way. Stocks are a risk. And most people in the mid-late 90s were too lazy to pay attention and diversify.

adam kraemer
1.23.02 @ 2:00p

I still have a problem with Ken Lay knowing that the stock was dropping and announcing to his workers that now was a great time to buy more at a discounted price.

matt morin
1.23.02 @ 2:16p

True. But if the Brady Bunch ever taught me anything it was the episode where Greg buys a car that's a lemon and learns the meaning of caveat emptor.

jason siciliano
1.23.02 @ 2:42p

Goddamnit, who's the model?

joe procopio
1.23.02 @ 2:48p

I totally agree here. It's time, in my humble opinion, for the single/small investor, and that includes these klatchy investor groups, to get out of the stock game and back into mutual funds where they belong. I have fourteen shares of a certain company in my portfolio, and that's where it ends.

Also, I saw am economist on CNBC last night who brought up how shocked he was at the neo-legality of what Enron did. Jon Stewart also made a joke about it last night (Illegal? no. Immoral? Sure. Unethical? Hell yes! But illegal? No.) Good call on that, Jonas.

adam kraemer
1.23.02 @ 2:59p

I actually just got the 1099 for what's left of my portfolio yesterday - it made me a total of $18.29 last year. Let's see the government try to get a piece of that!

michelle von euw
1.23.02 @ 3:25p

But at least you made money, Adam, and didn't lose half of your mutual fund's value.

adam kraemer
1.23.02 @ 3:37p

Maybe I did. Maybe the value last year was $36.

matt morin
1.23.02 @ 4:17p

The funny thing is, a few years back my mutual funds were doing great and the stocks I picked on my own sucked.

But the last year, with basically the same portfolio, my stocks made a big comeback and my mutual funds went to hell.

joe procopio
1.23.02 @ 5:09p

I didn't mention dollar cost averaging and buy and hold. I should have.

russ carr
1.23.02 @ 5:42p

I can talk economics like Tracey can talk football.

So let me offer a related tangent on personal responsibility, ethics, and lawyers:

Whose Fault Is Fat?
Experts Weigh Holding Food Companies Responsible for Obesity


go here.

That's right...the same legal system that told us that it's not the smoker's fault he got cancer now may be gearing up to prosecute the "food industry" for making us eat.

jonas foster
1.23.02 @ 5:58p

I could get going on Andersen, but then nothing makes for a more sexy, controversial story than the accountant's tale.

As for the investing part, it's all in the risk. If you have the risk tolerance to play stocks, play stocks.

p.s. thanks everyone for the critiques. i'm blown away.

tracey kelley
1.23.02 @ 6:50p

In The Onion day calendar about a week ago, it had a thing about a woman suing Hershey's for excessive chocolate consumption.

I am SO on that.

alicia coleman
1.24.02 @ 10:15a

suing the fast food chains is about as asinine as suing your ma for failing to eat enough dairy during her pregnancy (and, trust me, it's happened). only in america ...

adam kraemer
1.24.02 @ 10:17a

Wait - you're saying I have a chance of winning a suit against my mom for smoking while she was pregnant with me, and therefore stunting my growth?

alicia coleman
1.24.02 @ 11:07a

well, the dairy case actually got thrown out. but i'm willing to bet that if you sued her in namby-pamby california, some bleeding heart judge wwould get you millions. your old lady does have millions, right?

tracey kelley
1.24.02 @ 11:38a

Had to laugh at the comic Non Sequitur today, showing a panhandler on the street. Banner: The Coining of a Modern Expletive. Panhandler's sign: "Got Enron'd -please help." That Wiley. He's a funny guy.

matt morin
1.24.02 @ 12:53p

Namby-pamby California? Come on Allegra, we don't want to start pigfighting again...

Tracey, my favorite panhandler sign from back in the day: Spare_change.com

adam kraemer
1.24.02 @ 1:03p

I saw a guy in Harvard Square once wearing a dress and holding a sign that said "I don't want your money; I just like to hold signs."

michelle von euw
1.24.02 @ 1:16p

And that is exactly what is wrong with Harvard Square today: instead of innovative guys in dresses, we have panhandler teenagers dressed in Abercrombie and Fitch.

stella starr
1.24.02 @ 10:56p

It confirms everything I first thought when campaign biggies last year kept yammering on about why little old ladies wanted to be freed from Social Security and allowed to invest all their own retirement savings in the stock market. Or Vegas slot machines.

tracey kelley
1.25.02 @ 9:53a

Stella! Way to weigh in with the news babe view.

juli mccarthy
1.29.02 @ 10:35p

I know NOTHING about financial things, which is why I married someone who does. However, I do know that it's a show of faith to invest in your employer, and Enron abused that. Yeah, everyone SHOULD know better than to put all their eggs in one basket, but the point is, even if the investors weren't sure what they were doing, Enron was. By the way, my husband and I have shown roughly a 400% profit in our investments this year. Our secret? Motley Fool.

michelle von euw
1.30.02 @ 10:04a

Juli, that's awesome. My investment group uses Motley Fool as a resource, but as we haven't begun to invest yet, there's no way to measure our success with it.



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