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on 13 March 2014
Amazing story and assuming it is totally accurate you have to wonder how such a big company and their accountants and the regulators and the press and just about everyone else were able to achieve what they did.
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on 3 March 2007
This is a great book about a truly remarkable part of our economic history. I have a minor physical complaint I might as well get off my chest: In their desire to make sure readers get bang for buck (fear not: you do), the publishers have elected to set this book in miniscule type, meaning firstly that you may need reading glasses if not before then after reading it, and secondly that while this looks like a 400 page book, if it were ordinarily typeset it would have the heft of an MM Kaye novel.

On the other hand, if over-length in a business book is the sort of thing that dissuades you, don't let it: this is one of the most riveting books on the history of finance you'll read, and it gets more and more addictive the further you go on.

As a number of reviewers have noted, it is simply staggering that Enron can have ever got where it got to at all, let alone stayed there for the best part of a decade, with all the ostenisble checks and balances that sophisticated capital markets provide. Staggering. In checks and balances I don't mean regulators, who will always be the last ones to find out where market-based moral turpitude is concerned, but investors, stock analysts, brokers, lenders, rating agencies and fund managers: people who don't just earn huge remuneration, but stake their reputations on being sceptical in the face of unconvincing bluster.

But as McLean and Elkind make clear in chapter after chapter, barely disguised and unconvinving bluster was, in large part, all Enron was. For all the "black box" accounting, it is simply inconceivable that Enron's true internal wiring could be kept anything like properly secret, since far too many people had to know about it. Internal and external to Enron there must have been junior lawyers, accountants, auditors, traders and marketers who all had to know what was going on, and people *do* talk: they gossip, they change jobs, they make inappropriate remarks. What's more, the existence (if not the detail) of many of the more toxic situations - the LJM Partnerships, the prepay contracts - were on the public record, so the burning question to my mind, which McLean and Elkind do not address, isn't so much how people could have been so greedy and deceitful (that's not hard to understand at all), but what sociological and psychological factors caused everyone else, collectively, to entirely suspend the critical faculties which they used to evaluate risks in the market. This is no idle query: accurately calibrating and understanding risk is the very key to making money on Wall Street: it's hardly an incidental oversight.

Making a pejorative moral assessment of the acts of the Skillings and Lays with the benefit of hindsight is futile, self-serving, and actually unjust: our moral view of corporate behaviour *today* is conditioned and informed by the example of Enron; before Enron, our moral view was ipso facto different - if it hadn't been, Enron couldn't have happened.

If we assume that, in the context of the markets, "moral consensus" is aimed at making sure people don't needlessly mislead, deceive or unfairly disadvantage each other, the far more interesting question is *how could the prevailing moral framework have failed so badly*? Why was it so inadequate at dealing with outcomes of actions we can now see (with the benefit of hindsight and our newly adjusted moral binoculars) are transparently odious?

And that prompts a deeper question yet: what could it be about *our* prevailing economic mores which could allow a disaster on a similar scale to happen again?

Had Elkind and MacLean ventured into that territory this would have been an outstanding book (it is still worth 5 stars in my view): as it was - and with an admirable absence of judgmental prurience - the writers stick to pure reportage, to the point where the epilogue ends rather abruptly without so much as a conclusion.

But that's small beer: this is a fascinating, rewarding read.

Olly Buxton
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on 6 April 2010
Enron, once the much favoured and slavered over corporation of the new paradigm economy of the 1990's (remember that?) is the subject of Bethany McLean and Peter Elkind's engrossing book. The chart the story of the company from it's origins as a lowly gas pipeline company, to it's metamorphosis into Enron, riding the wave of the future into deregulated markets, a share price reaching out for the stars, and a corporate strategy to profit where no company dared to profit before. And then, as the share price fell, the whole mass of contradictions that was Enron unravelled in a decidedly unseemly fashion, taking down their co-conspirators the accountants Arthur Anderson with them, and landing of a few of the malefactors in jail.

Full of details, it makes sense of the accounting malpractices, the shady business practices, the deeply dysfunctional corporate culture and the ins-and-outs of gaming the deregulated energy markets in the United States and beyond. Some of what went on is truly astonishing, the Chief Financial Officer is making tens of millions of dollars out of the off balance sheet gymnastics that enabled Enron to "hide" its debt and it's share price to rise quarter after quarter; the destructive wars between divisions of the company; the projects signed, sealed and forgotten about. Of equal interest are the author's accounts of the people who played a part in the story of Enron. "Kenny Boy" Lay, the avuncular visionary, philanthropist who "luckily" sold most of his Enron shares before the final collapse; Jeff Skilling, the former McKinsey consultant, aficionado of "Darwinian Struggle" and organisational chaos as well as CEO of Enron for much of it's time as most hyped corporation; Rebecca Mark of the Enron's international division, deeply involved in the exploitative contract for a mega power station in India that eventually collapsed, who takes her belief in positive thinking to pathologically insane lengths that are as far away from reality as Enron's share price is from the real value of the company.

In amongst this story of Hubris and Nemesis, the authors don't forget that Enron couldn't have been possible without a cast of thousands including Banks, Accountants, offshore havens, Politicians, Regulators, the Media, and Investment Analysts. This part of the analysis isn't particularly deep but at least it puts the whole Enron scam into a broader context. Readers who want an entertaining and systematic analysis of the hype around the 1990's boom, which forms a good deal of the backdrop to the Enron story, will find an excellent account in Thomas Frank's One Market Under God.

A gripping book, that puts into a narrative form the sordid story of the rise and fall of Enron in a form that is comprehensible to the general reader, without compromising on the ins-and-outs of the machinations that went on behind the scenes. Well recommended.
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on 20 March 2012
If Enron hadn't existed we would have had to make it up. The company was founded on amorality and constructed with the all but explicit intention of deceiving investors for management gain. In the classic style, as the project becomes more and more successful, the depth and the extent of the deception becomes greater until finally they run out of lies to tell and there is an immediate collapse.

The book is complex necessarily but the authors do a great job in taking us through the detail without blinding us. As regards the key characters (and there are upwards of a dozen)the authors seem to have adopted something of a formulaic approach to their characterisation. At times it seems like they are working off a table that sets out each characters home town, parental occupation, college and early career. You are left feeling that you know what these people got up to but you don't feel that you know them and you are, largely, left to draw your own conclusions as to why people did what they did.

That said you don't have to be a pyscho-analyst to see that Enron was an exercise in insider greed supported by wrong headed group-think. This allowed a cadre of talented managers, bankers and advisors to convince themselves and others that, in deceiving shareholders and overtly undermining the intention of regulation and in becoming multi-millionaires, they were, in fact "on the side of the angels."

So when you hear Lloyd Blankfein tell us that Goldman Sachs is "doing God's work" - how does that make you feel.
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VINE VOICEon 3 March 2006
When I took delivery of this book I'd already read - and given good reviews to - two other books on Enron. So why a third? To semi-quote Josh Lyman, 'That's not being a fan, that's having a fetish.' So I settled to read this one out of a sense of 'you bought it, you read it.' And, whaddaya know, I couldn't put the darned thing down. Being two books ahead of the curve, I knew the story, knew the players - and yet this account had me glued. Why? well, as they say if you watch the video by the same name (also highly recommended) it's essentially a human tragedy, and the authors here manage to handle a huge cast of tragic characters (that's not meant to invite pity, folks) with extraordinary skill. The inevitable teach-ins about how the various scams were run are managed effortlessly. The style is immaculate. There's a sense of fairness running through it, which makes their moral outrage - when delivered - all the more compelling. The US of A had, for the past couple of generations, produced historians who write like angels; this two stand firmly in that tradition.
So, for once, believe the blurb on the jacket; if you have only one book to read, not just about Enron but about the hubris of the past decade, make it this one.
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on 5 February 2004
This book was recommended to me by a colleague. In brief summary, this book is very good indeed. Chapter by chapter the authors introduce the people responsible for Enron's incredible rise and sadly its ultimate demise. If you want to know how Enron was created and why it ultimately failed this is the book for you. It is easy to criticise Enron with the use of hindsight having seen the news reports over the last two years or so. What scared me is that a large number of people knew (inside and outside Enron) that the house of cards would collapse at some point, but they were making so much money out of Enron that they dared not destroy a lucrative source of income. The smartest guys left the room before the bubble burst. This book leaves no stone unturned in its pursuit of telling the Enron story. A must have for anyone serious about learning how not to run a company!
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TOP 500 REVIEWERon 6 January 2012
This a great book, which covers the rise and spectacular fall of Enron and the people who made up the organisation. The authors paint a brilliant picture of extremely smart people who believed they could do no wrong. Measuring their egos by the value of the share price, they got themselves deeper and deeper into practices which eventually led to gaol time for the main culprits.

The book reads like a thriller, as well as an engrossing psychological study of greed and hubris, and ultimately shows the lengths people are willing to go to in order to deceive even themselves.
One of the very best books on the financial events of the last decade

highly recommended
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on 1 August 2010
This book is a fabulous read. The story is so well written that it propels you along the upward spiral with such energy and drags you down hard with the shocking end (even though one already knows the ending).
Yes it can be complex but it is not unfathomable by any means (I do have a business background but am not an accountant). It is important to understand such a multi-layered build up of 'success' for Enron as it helps to explain the sheer scale of the meltdown, the biggest corporate bankruptcy ever...apart from WorldCom and Lehman Brothers which followed.

I would wholeheartedly recommend this book - if it were fiction it would be unbelievable.
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on 10 July 2006
Not having read any other books about Enron, I came to this one not knowing what it was they were supposed to have done and ignorant of how it had all worked out. The book was published in 2003, so it doesn't cover the recent death of Enron founder Kenneth Lay, or the court verdict on former COO Jeff Skilling (guilty of 19 out of 28 charges). But it does do a fantastic job of explaining how a bunch of arrogant MBAs made a global phenomenon out of a company that didn't earn much cash and wasn't very good at providing the service its customers paid for. The title is bitterly ironic: Enron prided itself on its cleverness, but if stupidity has something to do with consciously walking towards self-destruction when you should absolutely know better, then the architects of Enron were phenomenally stupid.

I came to this book knowing little about corporate finance, and the authors are expert at doling out just enough information so that you can follow the insanely complicated financial transactions that made Enron appear to be far more substantial an entity than it really was. The characters are a fascinating rogues' gallery of people I wouldn't trust to sell fried dough out of a handcart on Boston Common: Skilling, arrogant, aggressive and downright unpleasant; Chief Financial Officer Andrew Fastow, blithely skimming off millions from the deals he oversaw that enabled Enron to borrow money from itself and chalk it up as earnings; Kenneth Lay, endlessly complacent and blissfully untroubled by the fact that his company was built on illusions practically from the start. My favourite moment of high comedy is when, just as the company is beginning to crumble, Lay gives a speech to Enron employees, reassuring them that they'll ride out the current crisis. During the ensuing Q&A, he is handed a question from the audience: "I would like to know if you are on crack. If so, that would explain a lot."

This is a brilliant and shocking book, and a vitally important one because if a company like Enron can become so big so quickly, on the basis of so little actual achievement in the way of providing services, then capitalism is a lot more unhealthy than many of us had begun to suspect.
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TOP 1000 REVIEWERon 7 January 2014
This book is generally acknowledged to be the definitive account on Enron and the creative accounting era. And it is a truly overwhelming piece of research.

In contrast with "Barbarians", "When Genius Failed" or the more recent "Billionaire's Apprentice", it does not read like a narrative, and that's because it really can't. Enron was a lot more complex than a single transaction or a single hedge fund. It was an agglomeration of businesses, each with its own specific character. You can't go over the whole thing linearly.

It starts like a narrative. The authors start by painting a portrait of the main characters of the book, namely Lay and Skilling, weaving their bios and their credos well into the tale of the genesis of Enron through the merger of a couple gas businesses and the adoption of mark-to-market accounting for long-term projects and markets. But then the authors have to branch out.

They do a very commendable job of describing how Enron developed its sundry lines of business, from trading gas, to trading power, to financing power plants across the planet. This comes complete with deep profiles of the Enron managers in charge of these businesses.

Finally, the book homes in on the last three to four years of Enron when an obsessive focus on the share price, combined with a brash get-rich-quick attitude amongst the narrow leadership of Enron (but not necessarily the rank and file) led the company to a series of insane business decisions (like the creation of two enormous new divisions out of nothing) as well as to aggressive and eventually fraudulent business practices. Again, you get complete portraits of Andrew Fastow, who did most of the accounting magic, and his team.

The book is a tremendous source of information. God knows how much digging and how many interviews were distilled into these 400 pages. That said, this is an unfinished book. You find out who did what and when. But the book leaves as many questions open as it provides answers to. Most importantly, you don't get a good idea of whether Enron ca. 1997, before the crazy accounting practices and business schemes became the norm, was a valid business or not.

The authors are incredibly good at digging, less good at interpreting. I personally never figured out if this was Murder on the Orient Express, where everybody shared a bit in the crime, or a single perpetrator or even death from (expedited) natural causes. Was it the arrogance? Was it the pay structure? Was it the massive leverage? Was is the accounting practices? Was it the nature of the business? Which business? Would a sounder company have withstood the revelation of the fraud? Finally, no sense is given for how Enron ranked vis a vis its corporate peers in terms of playing fast and loose with its accounting and if they also shared similar compensation structures, corporate structures etc.

Regardless, there's a lot of food for thought here. And I guess if you want a tight narrative, there's always the movie!
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