Faster than a speeding locomotive. Able to leap tall buildings in a single bound. When I grew up, that was Superman. But lately, the Man of Steel seemed to have been supplanted by Ken Lay and Enron. For them, no challenge went unmet. No group was more invincible or more admired. From their laudable civic stewardship to their unfailing business acumen, Lay and Enron seemed to be rewriting the script for the energy industry, and making the world a safer place for us all.
Fortunately, Superman is still with us, despite his untallied encounters with Kryptonite.
The same my not be true with Lay and Enron, who could succumb to a much more lethal element than a green mineral from another planet. Actually, element should be plural since it was not a single element but several working in concert that brought down the superheroes of the energy industry.
Certainly Enron and Lay cannot escape blame. They did, after all, hide far too much debt in off-balance-sheet entities. While that may not be strictly illegal, it sure is cheating. The trouble is, they had accomplices, unfortunately cleverly disguised as the good guys.
As I see it, the financial analysts, the accounting community and the investment banking houses should share the blame for the fall of Enron. While Enron did the deed, the accomplices helped by: covering up or approving questionable accounting practices and alarming debt numbers; touting the company's growth capabilities based on little understanding of the industry and on vested interest in the company's growth; and knowingly extending far too much unsecured credit to a company already heavily leveraged. Calls to exonerate any or all of these groups, based on the allegation that they did not know the true condition of the company or were unaware of questionable practices, are ridiculous. If they did not know, they failed to do their jobs and are just as culpable as if they had known.
But you can't just point a finger at the Enron failure. While others have not yet been caught, these practices are endemic. It used to be that companies were managed for long-term growth. Now they are managed for spectacular growth quarter to quarter, growth that is not sustainable. If I had a dollar for each time I have heard the phrase "there is no next year" in this industry, I would be typing this from my holiday villa in Tahiti. That is the real problem. That and the fact that the sort of quarterly returns now demanded by the investment and analytical community would have been considered usurious not long ago.
It is a case of selling your soul to the devil for instant gratification. And the only ones who get that gratification are the top executives who walk away with millions upon millions in backroom investments, exercised options and outlandish bonuses, not to mention indefensible salaries. Others lose jobs and painstakingly built investments.
This environment has brought out the worst in almost everyone. Analysts regularly overlook clear danger signals based on specious and unproven promises and continue to tout companies long after it is clear they are built of cards on shifting sand. Investment houses continue to underwrite companies long after it is clear there is danger, often having invested so much money and reputation in those companies that they cannot bring themselves to admit to investors that they have made a mistake. Individuals like you and me invest uncritically, hoping for the one big score that will put us on easy street. It is all shameless.
I would like to believe there is a prospect of a return to rational business practices based on long-term growth. But I would like to believe too, as I did long ago, that Superman is real. I just can't.

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