a simple investor

I awoke today to read the chilling news that Freddie Mac acting CFO David Kellermann had hung himself in his basement. This news was very disturbing to me because ironically last night while browsing around Netflix I came across the film, “Enron: The Smartest Guys in the Room“.  Since corporate scandals seem to be the name of the game these days I decided to grab some popcorn and dedicate some time to Enron. The film begins with a reenactment of John C. Baxter sitting in his black Mercedes-where he put a gun to his head and pulled the trigger.

The film is based on Bethany McLean and Peter Elkind’s book, The Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron. It brings you inside the walls of Enron and gives you a behind the scenes look into what was one of the largest bankruptcies in United States history.  What ultimately helped  Enron meet their demise was an accounting standard known as Mark-to-market accounting.  This standard of accounting allows a company to record future anticipated profits on their current books. Basically pulling profits out of thin air. Your profits can be whatever you say they are… The sky is the limit! What public company wouldn’t want the chance to inflate their numbers to unthinkable amounts without needing to actually create any value for anyone but you? This same accounting standard is currently reaking havok once again causing our current financial system to crumble.

Check out these other related clips on YouTube.

• The Smartest Guys in the Room – California and Traders
• The Smartest Guys in the Room – Jeffrey Skilling
• The Smartest Guys in the Room – Enron and Titanic