the CAMP ENRON Report


CAMP ENRON:
... gateway to the next Progressive Era?

Some say it's nothing but a train wreck ... roll in the big cranes, clear the track, see what the crew's been smoking. If I thought so, I'd not be writing this ... and if they thought so, they'd not be drumming so hard.


For a brief orientation, see this
Welcome to Camp Enron

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Camp Enron Archives
01/01/2002 - 02/01/2002 02/01/2002 - 03/01/2002 03/01/2002 - 04/01/2002 04/01/2002 - 05/01/2002 05/01/2002 - 06/01/2002 06/01/2002 - 07/01/2002 07/01/2002 - 08/01/2002 08/01/2002 - 09/01/2002 06/01/2003 - 07/01/2003

NOTE to READERS:
(2) All "major" articles of older material have now been imported, some with updates worth perusing. We'll keep it all on the main page for a while, will add a few loose pieces of history, will trim the main page and index the archives for convenience later.


OUR DEPARTMENTS:

the COGENT PROVOCATEUR:
free agent, loose cannon, pointy stick ... taking an imposing analytic toolkit out of the box, over the wall and into the street ... with callous disregard for accepted wisdom and standard English

reading the tea leaves from original angles, we've led with uncannily prescient takes on the federal surplus, the dotcom crash, the "Energy Crisis", the Afghan campaign, the federal deficit.

More where those came from ... stay tuned.


For brief orientation, see this
Welcome to CP


CAMP ENRON:
... gateway to the next Progressive Era?

For a brief orientation, see this
Welcome to Camp Enron

OTHER GOOD STUFF:
Many thanks to Tony Adragna and Will Vehrs, still shouting 'cross the Potomac at QuasiPundit. Early Camp Enron material can be found in QP's Dispatches department.
Saturday, June 29, 2002

 
--- Column of the Year: Profits Without Honour (FT) ---

John Kay's commentary in the weekend Financial Times slices neatly through the topmost layers of the Bad-AppleTorte we've been puking up with regularity here at Camp Enron. Start with the eye-opening "shareholder value has produced distortions reminiscent of Soviet planning". Kay neatly summarizes some of the "impossibility proofs" I've been harping on for years. Snippets below, but the full text is an easy read, and strongly recommended.
When Soviet production units ... fell seriously short of the plan, managers and their advisers responded by making the numbers up. It is a wry paradox that today's failures of capitalism so closely resemble yesterday's failures of socialism.

... the economy does not grow at 10 per cent a year. How could companies ... have continually increased profits more rapidly than the growth of their underlying business? ... the business sector as a whole could not.

... established companies should grow more slowly ... because new businesses are constantly taking share from them. There is always scope for improving efficiency ... but in a competitive economy the benefits ... go to consumers.

... companies achieved impossible earnings growth by cutting the fat ... these actions increased corporate earnings. We do not know what effect they have on the long-run strength of the business, nor ... do the companies themselves ...

Well established businesses ... take short-term profits at the expense of future growth. Newer companies ... have instead employed legitimate accounting wheezes. ... But these devices require rising stock markets. Acquisition accounting is a drug; you need increasing doses ... you need cash, not options, to pay the grocery bills. In this more hostile environment ... the only way to produce the numbers the markets required was to invent them.

The danger now ... companies would react to each disappointing earnings report with further cost cuts and job reductions ... slicing further into muscle and bone. ...
As I suggested above, this cuts only 3 or 4 layers into a maggot-ridden confection at least ten layers thick ... but it's a sharp cut with a clean knife, and not a bad start.