[Robert357]

That "deal" just about bankrupted one of the major combustion turbine manufactures. As with so much of the energy crisis, everything Enron touched lost money. It is hard for me to figure out "where the money went."

I don't think that Key Lay has billions. I don't think Enron has billions. I don't think that Aurthur Anderson has billions. I do think that politicians, plus power plant workers, plus air polution agencies, investment bankers, plus environmental groups, plus companies that manufactured air pollution equipment, plus lawers and lobbyists all shared billions, but considered them valid expenses associated with trying expedite and facilitate what Enron was attempting to accomplish.

I go back to the Wendy's Commercial with a twist....Where's the Money? I would really like someone to tell me where the money went rather than just say Enron stole it, when it is clear that Enron now doesn't have the money.

[snopercod]

Where's the money?

I think most of it was equity in their stock, which simply evaporated. The U.S. stock market in general lost a total of $8 trillion of equity during the clinton crash. I don't know what the market cap of Enron was before the crash, but we know that it's zero now.

The rate at which paper asset wealth, stocks, decreased in value left behind a debt valuation shock. During the 1990's it was increasingly prevalent for companies to borrow against their paper asset valuation. As paper asset values have dropped very quickly companies have been unable to borrow against their stock or even refinance existing debt to lower rates and costs because they lack the collateral to support the loans.

This is exactly what brought down Enron. It's stock price dropped below a bond trigger level that forced a call feature on their bonds. The bonds were called due by the holders. The bonds could not be refinanced and the company had to declare bankruptcy. It was after this fundamental issue that the fraud became apparent, not before. The fraud did not bring down Enron, the economy and their ludicrous leveraging did. They were not prepared for any market consolidation and got hammered when it happened.

--An Explanation of Debt and Why You Need To Understand It by Roger Arnold, Jan. 2003

Do we know who the bondholders were that triggered the demise of Enron?