Comments on: Saving the Enron Way http://financefreelancelife.com/2008/01/20/saving-the-enron-way/ Tue, 16 Mar 2010 14:53:24 +0000 http://wordpress.org/?v=2.9.1 hourly 1 By: War Gold http://financefreelancelife.com/2008/01/20/saving-the-enron-way/#comment-7113 War Gold Thu, 24 Jan 2008 17:23:59 +0000 http://financefreelancelife.com/2008/01/20/saving-the-enron-way/#comment-7113 I've got to say it's one of the few movies that totally outshines it's literary equivelant. Smartest Guys in the Room is one of the best produced documentaries I've ever seen. I’ve got to say it’s one of the few movies that totally outshines it’s literary equivelant. Smartest Guys in the Room is one of the best produced documentaries I’ve ever seen.

]]> By: When do the savings kick in? | Mrs. Micah: Finance for a Freelance Life http://financefreelancelife.com/2008/01/20/saving-the-enron-way/#comment-6804 When do the savings kick in? | Mrs. Micah: Finance for a Freelance Life Mon, 21 Jan 2008 23:00:48 +0000 http://financefreelancelife.com/2008/01/20/saving-the-enron-way/#comment-6804 [...] Saving the Enron Way [...] [...] Saving the Enron Way [...]

]]> By: Andrew Stevens http://financefreelancelife.com/2008/01/20/saving-the-enron-way/#comment-6794 Andrew Stevens Mon, 21 Jan 2008 20:31:57 +0000 http://financefreelancelife.com/2008/01/20/saving-the-enron-way/#comment-6794 Just to clear up a minor confusion, it was perfectly acceptable for Enron to account for the present value of future cash flows. This is standard practice and completely ethical as long as you're giving your best estimate of what those future cash flows are actually worth. What Enron was doing was valuing their future cash flows at a rate far higher than anyone thought they were worth. Far more serious was hiding its losses by moving assets that were losing money to separate partnerships (not truly separate) and booking the money transferred as a gain, even though they were still on the hook for the losses. It hid a billion dollars in losses that way. To a certain extent, we all have to make decisions about future cash flows. How much I save depends critically on how much I think I'll need in the future, which means I have to make estimates about my future cash flows. (If I assume there won't be any at all, then even saving 100% of my income now won't be enough.) The mistake that people who are not saving yet are making is assuming their future cash flows will be worth more than they have any reason to think they'll be worth. (These are the people who think they don't have to save for retirement until they turn 55.) Just to clear up a minor confusion, it was perfectly acceptable for Enron to account for the present value of future cash flows. This is standard practice and completely ethical as long as you’re giving your best estimate of what those future cash flows are actually worth. What Enron was doing was valuing their future cash flows at a rate far higher than anyone thought they were worth. Far more serious was hiding its losses by moving assets that were losing money to separate partnerships (not truly separate) and booking the money transferred as a gain, even though they were still on the hook for the losses. It hid a billion dollars in losses that way.

To a certain extent, we all have to make decisions about future cash flows. How much I save depends critically on how much I think I’ll need in the future, which means I have to make estimates about my future cash flows. (If I assume there won’t be any at all, then even saving 100% of my income now won’t be enough.) The mistake that people who are not saving yet are making is assuming their future cash flows will be worth more than they have any reason to think they’ll be worth. (These are the people who think they don’t have to save for retirement until they turn 55.)

]]> By: m http://financefreelancelife.com/2008/01/20/saving-the-enron-way/#comment-6783 m Mon, 21 Jan 2008 18:46:40 +0000 http://financefreelancelife.com/2008/01/20/saving-the-enron-way/#comment-6783 Okay it didn't work, here's my link again: http://therebutforthegraceofgodblog.blogspot.com/2008/01/in-her-recent-post-saving-enron-way-mrs.html Your post led to three other posts so far that I know of, mine included--pretty inspiring, I'd say. Okay it didn’t work, here’s my link again: http://therebutforthegraceofgodblog.blogspot.com/2008/01/in-her-recent-post-saving-enron-way-mrs.html

Your post led to three other posts so far that I know of, mine included–pretty inspiring, I’d say.

]]> By: mrsmicah http://financefreelancelife.com/2008/01/20/saving-the-enron-way/#comment-6782 mrsmicah Mon, 21 Jan 2008 18:46:08 +0000 http://financefreelancelife.com/2008/01/20/saving-the-enron-way/#comment-6782 I'm not sure, Hunter. I’m not sure, Hunter.

]]> By: Hunter Nuttall http://financefreelancelife.com/2008/01/20/saving-the-enron-way/#comment-6780 Hunter Nuttall Mon, 21 Jan 2008 18:43:21 +0000 http://financefreelancelife.com/2008/01/20/saving-the-enron-way/#comment-6780 When Enron owed people money, did they count that right away, or wait until the other people actually cashed the check? When Enron owed people money, did they count that right away, or wait until the other people actually cashed the check?

]]> By: m http://financefreelancelife.com/2008/01/20/saving-the-enron-way/#comment-6777 m Mon, 21 Jan 2008 18:20:53 +0000 http://financefreelancelife.com/2008/01/20/saving-the-enron-way/#comment-6777 Mrs Micah Your post inspired a response post from me--my comment got so long I turned it into a post. Hope the link works out, <a>link> here</a> it is. Mrs Micah
Your post inspired a response post from me–my comment got so long I turned it into a post. Hope the link works out, link> here it is.

]]> By: ms. m&p http://financefreelancelife.com/2008/01/20/saving-the-enron-way/#comment-6772 ms. m&p Mon, 21 Jan 2008 16:44:37 +0000 http://financefreelancelife.com/2008/01/20/saving-the-enron-way/#comment-6772 I love this post! It's like "a penny saved a penny earned" Enron-style. I wish that every dollar I saved really did go into my pocket, but sadly it doesn't work that way. I love this post! It’s like “a penny saved a penny earned” Enron-style. I wish that every dollar I saved really did go into my pocket, but sadly it doesn’t work that way.

]]> By: Jim http://financefreelancelife.com/2008/01/20/saving-the-enron-way/#comment-6753 Jim Mon, 21 Jan 2008 12:33:21 +0000 http://financefreelancelife.com/2008/01/20/saving-the-enron-way/#comment-6753 I came to the conclusion that it is how we think about money. And I have a differing thoughts. I can save by not spending and it is not Enron like. mrsmicah inspired me to write about it. http://gettingaheadinlife.blogspot.com/2008/01/thought-change.html Mrs Micah - Thank you for the brain teaser and I gave you backlinks. I came to the conclusion that it is how we think about money. And I have a differing thoughts. I can save by not spending and it is not Enron like.

mrsmicah inspired me to write about it. http://gettingaheadinlife.blogspot.com/2008/01/thought-change.html

Mrs Micah – Thank you for the brain teaser and I gave you backlinks.

]]> By: CatherineL http://financefreelancelife.com/2008/01/20/saving-the-enron-way/#comment-6741 CatherineL Mon, 21 Jan 2008 09:17:28 +0000 http://financefreelancelife.com/2008/01/20/saving-the-enron-way/#comment-6741 Hi Mrs M - great post. Just goes to show there's more we can learn from the Enron fiasco than we ever new. Hi Mrs M – great post. Just goes to show there’s more we can learn from the Enron fiasco than we ever new.

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