Enron links dropping like flies

[Zogo]

http://news.yahoo.com/s/ap/20060712/ap_on_re_eu/britain_banker_death must have been an enemy of the state. first ken lay now this guy..who's next?

[ass*assassin]

http://news.yahoo.com/s/ap/20060712/ap_on_re_eu/britain_banker_death must have been an enemy of the state. first ken lay now this guy..who's next?

you don't think that losing billions of dollars, that everyone would get off scott free, do ya? It's amazing how god has a sense of humor when it comes to some of these jokers.. but, then again, it probably wasn't god that got them.. :)

[Aic]

Lay got off easy. Hopefully it's really hot where he is now.

[VeeKaChu]

OMG you fools don't actually think Ken Lay is dead do you? This "bloke" probably procured his new identity for him or something. Think "plastic surgeon" in any comic book film... he was probably on his way to "get paid off".

[agi|e]

What I want to know is where the money went.

[ass*assassin]

it went to investors who went 'short' on enron stocks.. that's where.. other than that, if you owned enron stock, you are truly fucked.. worthless..

[Zogo]

It's amazing how god has a sense of humor when it comes to some of these jokers.. but, then again, it probably wasn't god that got them.. :)

according to this reverend..lay is jesus.

http://money.cnn.com/2006/07/12/news/newsmakers/lay.reut/index.htm?section=cnn_topstories

OMG you fools don't actually think Ken Lay is dead do you?

actually you're right..I don't know if they can do a DNA test on a cremated body.

[agi|e]

it went to investors who went 'short' on enron stocks.. that's where.. other than that, if you owned enron stock, you are truly fucked.. worthless..

This is an area I'm not well versed on so please bear with me here. The investors buy stocks in a company as an investment. This money goes into the corporation's bank account to be used to help grow the company further thus increasing profits for everyone. In this case it's billions of dollars. So the stockholders don't make any money until they sell their stocks to other investors and only if they sell for an amount higher than what they paid. So one day the company announces that they are bankrupt and all the money is gone. You are saying that a few smart or perhaps "in the know" investors knew about potential trouble and cashed out early? And when they did it totally wiped out everyone for BILLIONS of dollars?

[VeeKaChu]

That's not quite what happened. The truth is more that Enron "cooked the books" with lots of creative internal dealing and accounting which led to their stock being way over-valued versus their actual liquidity and ability to earn. Once this was revealed, the value of the stock- which was based on a lot of fallacious potential and projected earing ability- is destroyed, and there is nothing left but actual liquid assets which amounts to a fraction of what was invested by the shareholders. POOF, it's all gone, and the shareholders are left to wrangle over- essentially- pennies.

The devastation comes from mutual and reitrement funds that bought/owned large chunks of what was once a hot, valuable stock that was suddenly worthless. Apparently Enron employees themselves had most of their retirement invested in Ernon stock (which, as Enron employees they got at a discount), so they lost everything, as did any other Fund that bough in.

I don't know if "short-selling" was necessarily a huge factor in the collapse, but I can explain it to you, in laymans terms (I work in the financial industry, but actually know very little about investing, but I do know how shorting works in the main...).

Investors "short" a stock that they believe is going to go down in value. They "borrow" shares of the stock from a broker, then immediately sell it for its current value. Then, when it falls, they buy it for the lower price, then "repay" the original broker back in shares and pocket the difference.

E.G., I think Universal Widgets (UW), worth 10$ a share, is going to tank. I call my broker and say I want to "short" 100 shares. He gives them to me. I don't owe him 1000$, I owe him 100 share of UW.

I immediately sell the shares, making 1000$.

If UW goes up, say to 12$ a share, at the time I'm required to give them back, I've lost 200$ because that's what it will cost me to buy them and "repay" the orginal broker I borrowed them from.

But if I've guessed correctly and it drops to say 8$ a share it only costs me $800 to buy them and "repay" the orginal broker, and I've made 200$.

That's the essence of "short-selling".

[slanty]

when you buy shares of stock the company doesn't get any of it, they only get the money from the intial public offering. anything that goes on after that is just idiots passing them between each other and essentially achieving nothing. it is in the companys best interest though to support the share price because in the event they can get it to rise - by staying competitive, raising earnings, etc, they can issue more shares at the inflated price and get more money in the future.

shorting a stock = borrowing your friends car for the weekend to deliver pizza. if he doesn't find out, you make some cash, and you give the car back. If you crash the car, you're fucked and have to buy him a new one

edit - it's essentially being able to make money without a large initial investment (ie: you don't have to lay down 5,000 to buy the car yourself)