How does Enron have the capital? Because they're not generating a lot of cash flow. They are getting cash from somewhere where they get it from investors, the American public. As their stock starts to run, they do more and more issuances of new stock at these new stratospheric prices. It's actually not that it's used that cash to finance these crappy development deals they're doing all over the world. On the back end, there's actually no cash because Enron is the buyer and seller.
The FTX fraud has dominated headlines now for weeks, during which we’ve debated if and how Acquired could uniquely add to the conversation. Then we realized there was an angle so perfect that we had to drop everything and enter Acquired research overdrive: Enron. Travel back with us to the granddaddy fraud of them all, 2001’s then-largest bankruptcy in US history and the impetus for the famous Sarbanes-Oxley Act. So much of Enron’s history parallels FTX that the uncanniness is almost unbelievable — right down to the same CEO running the two bankruptcies. Sit back and enjoy this crazy tale of villainy, greed, and the nature of humans and money. Maybe just don’t take notes on this one…
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