Re: [CANSLIM] Banks helped WCOM cover-up

From: "Tom Worley" <stkguru@bellsouth.net>
Subject: Re: [CANSLIM] Banks helped WCOM cover-up
Date: Wed, 24 Jul 2002 22:58:27 -0400

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my understanding, and it is pretty superficial (and based on normal logic
and money management, so probably doesn't apply at all) is that Enron would
present contracts to sell energy, and on that basis borrow money. What they
were not disclosing was that the banks were funding a shell game in which
the same energy was being traded in a closed loop among a group of energy
companies without ever being sold to an actual consumer.

We could do the same thing here if a hundred members formed up, and one
bought a gizillion shares at say, $1.00, then sold it to the next in line
for $1.02, who sold it to the next in line for $1.0404 (another 2% profit),
and so on. Eventually you would have the stock trading at $5 bucks or so and
you start selling it to someone outside the group. Meanwhile, however, you
have each increased your sales figures, cash flow, apparent profits, etc so
you show your banker how your business is booming with new contracts and
sales, and need more capital to expand, just not telling them the money will
be used to expand a shell game.

- ----- Original Message -----
From: <Spencer48@aol.com>
To: <canslim@lists.xmission.com>
Sent: Wednesday, July 24, 2002 6:00 PM
Subject: Re: [CANSLIM] Banks helped WCOM cover-up


Don and Tom:

     As I understand it, the reason the banks were able to loan Enron credit
was because they used Enron's "energy swaps" as assets.  In other words, the
collateral wasn't tangible, just "pie-in-the-sky" Enron predictions.  Thus,
the bank accountants will probably say:  "Gee.  We thought Enron's assets
were real.  We just made a mistake."

     I have a feeling that if such a mistake were made with an individual,
there would be cries of "Fraud".

jans




In a message dated 7/24/2002 9:11:31 AM Eastern Daylight Time,
stkguru@bellsouth.net writes:

<< The banks (at least two, JP Morgan Chase, and Citigroup) are now revealed
as having marketed the same kinds of energy swapping "loans" that they were
doing with Enron to a number of other companies, and at least three bit on
the deal.

 Combined with them also being the bankers for Worldcon, this mess is a long
way from being over.

 ----- Original Message -----
 From: Donald Wallker
 To: canslim@lists.xmission.com
 Sent: Wednesday, July 24, 2002 7:54 AM
 Subject: [CANSLIM] Banks helped WCOM cover-up


 In case you missed it, today the Washington Post  noted that several big
banks were in  bed with and helping WCOM in its debt cover-up.  Imagine - JP
Morgan  and others
  >>

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