the CAMP ENRON Report

... 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

(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.


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

... gateway to the next Progressive Era?

For a brief orientation, see this
Welcome to Camp Enron

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.
Sunday, July 07, 2002

--- Junior Woodchuck Jamboree ---

I see a few new campers have signed up ... a little late but never too late -- we're in for a busy week. You'll learn, and you'll sweat ... gathering firewood ... clearing trails ... basic orienteering. We'll do basic first aid ... [True fact: banana-slug slime takes the sting out of stinging nettles!] ... learn to recognize noxious species ... but fercripesakes leave the mushrooms alone ... kids a couple years back started babbling about "new paradigms" and all that.

Remember, you Junior Woodchucks are babes in the woods. About the wood-craftiest thing we'll do this session is toast marshmallows ... maybe a snipe hunt if you're good. But we're laying a foundation here. Keep coming back year after year, and 10-15 years out some of you will be full-fledged snake-eaters ... drop you off in a forest of footnotes with nothing more than a pocketknife and a laptop, and you'll be able to clear ground and find your way out. Of course some of you will end up snake-chow instead.

Regulars know we don't care much for political scandal in the usual sense ... but Camp Enron does have its moments. Who's up for a game of follow-the-leader?

Today the Senate (Governmental Affairs Committee's Permanent Subcommittee on Investigations) released a 60-page report (pdf) scathing Enron's Board of Directors. (See this Houston Chronicle story.) The report makes several specific recommendations for directors -- block high-risk transactions, ban conflicts-of-interest (like Enron's Raptors), prohibit off-book cosmetic devices, shun compensation schemes that move exec's to gimmick the stock price, restrict certain consulting engagements with the outside auditors, insist on true independence for outside directors. Enron attorney William Bennett calls the report "unfair". The Chron also offers an AP rundown of Enron "outside" directors and their conflicts.

Today also, WaPo ran a devastating rip on Congressman Jim Moran (D-VA), who accepted BIG loans, on favorable terms, from big lenders with big agendas in Congress. Don't wait for the election ... GET THE HOOK! Moran's credit-card addiction stems from a deeper problem ... stock-market addiction. He managed to trade himself into dire financial straits even in the prime of the 90's market boom. This can be done! Trading securities without understanding -- trading just for the action -- is gambling. It can be addictive, it tends to snowball, and problem gamblers can run themselves to ruin at any table. The same speculative dynamic -- get lucky, win a little, think you're good, lose a little, double up to catch up, lose a little more, start fooling yourself, start fooling others -- may have driven Enron's boom and crash.

Monday is WorldCom Day on Capitol Hill. Ebbers, Sidgmore, Grubman, et al. Some good TV drama, some lame theatrics, some interminable bombast, some of that ho-hum "plead the 5th" routine at the end of a dozen opening statements.

Tuesday, Bush gives us his new take on corporate wrongdoing. The second coming of Teddy Roosevelt? No. GWB lived through the Sixties without its zeitgeist crossing his path, he'll make it through the Oughts without breaking the code. Expect tough talk on Good and Evil, Crime and Punishment, but expect the unexpected. Bush needs more than outrage. Keynote, an "Axis of Detail"? Pursue the wrongdoers through their gated communities, past their traps and bunkers, and smoke 'em out of their Par 4's? Will he call tax refugees back from Bermuda on a patriotic mission? 18 months, and Bush hasn't fired anybody.
This should be good, as his Harken Energy paper trail is swirling in the whirlwind again. [Major newsmedia this morning persistently described Bush -- incorrectly -- as "cleared of wrongdoing". Is the rally-round-the-flag rule still effect? "Fully vetted"? Nuh-uh. SEC exercised descretion in declining to prosecute, but clearly explained its action was not an exoneration.] In an undisclosed location, Cheney must be sweating bullets over Halliburton. Sec. Army Thomas White, nee VP White of the Enron Virtual Market Rangers is still an attractive sacrificial goat.
Wednesday thru Friday in Milan, the International Corporate Governance Network has its annual conference. Should be an uncommonly lively session, with more than usual media visibility.

Thursday looks like a slack day, but one never knows, does one?

Friday Shields and Brooks and Kudlow and Cramer and Gibbs and Colvin will put it all in context.

On a parallel timeline, Harvey Pitt is rolling his own reform plan. He opposes basically all the initiatives moving in Congress, but believes he can -- on his own say-so -- criminalize false and misleading filings, send key executives to purgatory, create an oversight board in the private sector but with broad powers of taxation, regulation and adjudication. Harvey's as smart a securities lawyer as any, but he seems to have hand-waved over some basic constitutional issues ... and people are paying attention. Other issues: Pitt's proposed executive attestation "to the best of my knowledge" is a weak link, and mossback ideals seem to have flipped from "rule of law good, faceless bureaucratic regulation bad" to "hairy faceless bureaucratic regulation good, legislation bad".

Losers: Phil Gramm, who figured he could stop the world, and figured wrong. Sen. Evan Bayh (D-IN), who slipped too far into the "lets not be hasty" camp, may have missed the bus. Connecticut Democrat Senators Lieberman and Dodd, who have shilled too far for accounting industry interests. Will the Democratic Caucus have the nerve to pull key committee assignments out from under Lieberman, a potential 2004 standard-bearer?

Timely disclosure: Reliant fesses up to $7.8B inflated revenues (round-trip trades), which gets lost under this week's radar.

Intriguing side-effect: Vladmir Putin observes Bush's predicament, develops more nuanced understanding of market systems, hazards of libertarian claptrap, mafia capitalism.

This week's action -- or this year's action -- is only setting the stage. The real problems are deeper than anything we'll hear discussed this week, but there's a common thread linking fictitious filings, outlandish compensation packages, inefficient markets, wealth disparities and make-believe economics. Down the road and down the calendar, we may see major party realignment, major wealth realignment, even fundamental system change.

For now, a question or three: Are outright fraud and outright theft the only things worth getting worked up about? Are they even the biggest things on corporate governance radar? Is punishment the best prevention?

PREDICTION: Regardless of November election outcomes, Trent Lott will not repeat as his party's leader in the Senate.

PREDICTION: The "personal accountability" movement will spur creation of the Chief Accountability Officer, i.e., the designated corporate Fall Guy.

PREDICTION: The existing independent audit system WILL COLLAPSE ... perhaps soon, perhaps not, but rather abruptly when it does. What's our Plan B?