Current Event/Epidemic the Enron Case

¶ … Current Event/Epidemic

The Enron case has been one of the most debated and talked about financial scandals from around the world. It has enabled people and societies to grasp the magnitude of bankrupt business at a global state. Despite the fact that Enron represented a worldwide subject, most importantly it affected people at a local level, better said, the citizens of Huston. It was not necessarily an issue of greater impact at the local level but rather a greater impact in the minds and conscience of the common Houstonian to see that such events and histories unfold everyday without anybody being aware.

The Enron success represented one of the most interesting and at the same time American success stories. Started in the 80s it followed tough market and competition rules to become in the 90s one of the most important companies in the world in terms of trading, profit, stock market, and most importantly income revenue. For its share of the market it was one of the most profitable as stocks rose constantly to unimaginable levels. For years in a row the market bloomed (Fusaro and Miller, ).

In this sense, it became a very influential player on the market and in the Congress. Better said, as long as the energy market was not tightly regulated, Enron was able to increase its earnings constantly. Even when attempts were made to introduce tougher rules that would no longer allow Enron to dictate the prices on the market, the power of the lobbying process was decisive in influencing the decisions. Thus, by 2001, Enron was indeed one of the success stories of the American capitalism.

The problems appeared when evidence of the poor accountancy, of poor audit, and especially of the debts the company had surfaced. In this sense, in early 2001, stocks plummeted largely due to the fact that news about the reporting of revenues, cash, and incomes came out. More precisely, "Enron used revenues -- not profits -- as its primary financial objective, performance driver, and measure of success" (Bala and Bufkins, 2004). Better said, it increased the value of the stocks in an artificial manner, leaving the impression of constant improvement and development for shareholders. This in turn maintained and even increased the values of the stocks.

The mechanisms of one of the largest bankrupsy scandals of the modern era are very complex and is would require more in depth analysis. However, it is fair to say that following the decision to file for bankrupsy, the lives of thousands of people changed, many of whom were from Huston.

The trial was a very tiresome process and involved legal expertise, accountancy expertise, and audit expertise. However, the magnitude of the trial pointed out several aspects.

One of the most important effects in the collective minds is related to the issue of trust. In this sense, an article in the Huston Chronicle at that time pointed out that the Enron case had shattered the trust and confidence in the accounting system in the first place. People's confidence was put in question for such an important matter. It showed common people, who are not connected to everyday financial news the way in which money can be made through illicit means under the rules and regulations of the state and of the accountancy system. Moreover it broke the trust of investors, of employees, and of stock owners. This can have a long-term effect as investing companies will be seen with more circumspect eyes by the public and by the authorities.

Another major effect the Enron scandal had on the population of the city was emotional. As stated above, the Enron company was considered to be one of the most important symbols of the American business environment. However, in 2006, its assets were sold worldwide, and thus its name shattered (Thomas, 2006). It was perceived as a shameful deed and one America will probably be identified with for decades to come.