Sunday, September 16, 2018

The Smartest Guys in the Room - The Amazing Rise and Scandalous Fall of Enron

The Smartest Guys in the Room – The Amazing Rise and Scandalous Fall of Enron – by Bethany McLean and Peter Elkind.

I found the title of this book to be quite ironic, yet appropriate.  Only ‘smart guys’ could pull off such a scandal such as the Enron fiasco, but you then have to ask yourself “How can SMART guys also be so blindly stupid?” If one were to truly believe CEO Jeff Skilling when he said that he never felt he was doing anything immoral, yet always thought he was acting in the best interests of Enron, how could that same person believe him when he abruptly resigns from the company months before its epic bankruptcy while cashing in $60 million of his stock options?

As authors McLean and Elkind tell us, the simple answer is greed. Even if you don’t believe in God nor the Bible, you have to give the author of the Good Book credit when he tells us that the love of money is the root of all evil.
The ironic thing is that the Enron story is so complex, that even the most prudent financial experts in the industry had a hard time deciphering the deception.   Let’s be honest, the average layman gets a bit lost when reading things such as a company’s balance sheet or a 10k report, so when the financial experts kept telling everyone how great Enron was and that they were the visionary for the future, why would anyone doubt it?  Even the employees (sadly) were so convinced of the positive spin, that they had the bulk of their 401k savings invested in their own company.

It was ironic that the co-author of the book (Bethany McLean) first started the ripples by throwing a small stone in the pond with an article in Fortune Magazine titled “Is Enron Overpriced?”  It was all downhill for the energy mogul from there.

Unfortunately, the same reason why people never could (nor can now) really understand the complex financial irregularities of the company, is the same reason why this book falters a bit.  The authors spend well over half of this book going over the ill-gotten deals that Enron procured in immense financial detail.  Many of the chapters read like a 30-page financial statement.  In other words, if you have a PhD in Finance, you might find the bulk of the material in the book readable, but for the rest of us, it’s just too much, and we get lost. I found myself skimming over many of the chapters describing the many endeavors that the company embarked on with the simple task of masquerading the fact that they weren’t actually making any money.

The chapters I found more interesting were the ones where the authors were describing some of the key players at the top of the Enron food chain, and how their misguided morals influenced not only how they did business, but how they lived their personal lives as well.  It’s seems as though most of the senior players had gotten a divorce at some point while they were raking in millions, and I lost track of all of the illicit romantic affairs going on between the key players.   It’s also fascinating (yet not surprising) to read about how most of the top-level employees hated each other, and the immeasurable amount of backstabbing that went on amongst the leaders. 

The book I read was a ’10-year anniversary’ edition, and the authors discuss in the coda that, sadly, things in the business world haven’t changed as much as they probably should in lieu of the Enron scandal.  As long as there is greed, there will always be corruption. In that sense, the Enron story should be a model for companies everywhere.  Fortunately, I would say that more and more companies are embracing a culture of teamwork and truly being more philanthropic, but there are still companies out there that advocate that, in order to be successful, you have to step on everyone else’s neck to get to the top – even if that neck belongs to someone else in the company.  Such was the culture that Skilling and his minions encouraged.

A fascinating, yet depressing story.  Good, but overall, I would have liked more personability and less minutia around the many complex financial dealings.

The Worst President - The Story of James Buchanan

The Worst President – The Story of James Buchanan by Garry Boulard

Anytime I read a biography of a president, or any political figure, I try to find one that’s fairly objective.  I don’t like reading authors who fawn over their subjects because of their unwavering loyalty as they constantly excuse their subject from any wrongdoing they may have committed. Nor do I enjoy mud-slinging books that take the opposite approach. With a title that contains the wording ‘The Worst President’ in describing its subject, it might lead one to believe that this is an example of the latter to the extreme. Therefore, I was a bit cautious and skeptical.  History, however, tells us that Buchanan is constantly ranked near the bottom of the barrel, so I went into this one with an open mind.  Fortunately, I didn’t find this book littered with nastiness and vitriol towards the subject matter.  It seemed a very fair account of…..well… the worst president ever.

This book was fairly brief – under 200 pages of actual reading material.  I’m fairly convinced, though, that the ‘lesser’ presidents don’t necessarily need long tomes. For presidents who were somewhat inconsequential that served in a time where resource material is harder to accumulate, such a reflection serves as more of an assistance than a hindrance.  This book was well written and kept my attention.

History tells us that the period of U.S. History from about 1840-1860 was at its most turbulent. The main issue was slavery. It’s pointless to go into all of the different arguments and legislation that was passed during the time, but the times were so tempestuous, that new political parties seemed to be being birthed and dying on a regular basis because of all the infighting (example: Google ‘Whig Party’).  The leaders of the country knew that without constant haggling back and forth, the country was destined to split in two and lead to war. Therefore, the main goals of most of the presidents during this time was to keep compromising and therefore avoid war.  

Except Buchanan.

Not only was Buchanan happy with prolonging slavery, but he came up with ridiculous statements such as “The South can’t secede because it’s unconstitutional, but if they do, the federal government isn’t allowed to do anything to stop it.”    That’s like telling a criminal that murder is wrong, but if they do kill someone, they need not worry about going to jail.  Buchanan’s entire administration seems to indicate that when things got bad, he would simply lock himself in a room filled with accoutrements of the rich and famous and then close his eyes and hope the whole problem would just go away.  I’m reminded of the fable of Nero fiddling while Rome burned.

You know it’s a bad sign when a brand-new political party (the Republicans) manage to knock you out of office after your first term, but also go on to win the presidential race for the next five elections because of the stain you’ve left behind.  I still maintain that it’s a bit of a stretch to say that Buchanan ‘caused’ the U.S. Civil War.  I’m convinced he expedited the process, but, sadly, its event was inevitable. You can only stretch a rubber band so far before it eventually snaps.

Maybe, in a bizarre sense, it was good that Buchanan came along when he did. More compromises and more prolonging of the inevitable really never did much good.  The country was still in a bitter dispute with anger, and mud-slinging was everywhere.  And slavery still went on. So reading a book about the man and the times really isn’t all that surprising. If anything, it gives you hope that the country can prevail in dark times.

Franklin Pierce: The American President Series

Franklin Pierce: The American President Series by Michael F. Holt

In the 24 years between Andrew Jackson and Abraham Lincoln, there were a total of 8 U.S. presidents.  Many, if not all of them were people that most have never heard. Franklin Pierce was one of them.  Why so many unspectacular presidents in such a short time? Well, a lot of reasons, but I would offer the hypothesis that our country was going through such an unbridled time in our young history, that virtually no one was cut out for such a high profile, demanding job.

As I write this review, Donald Trump is the current U.S. president, and many are calling for the 25th amendment to be enacted because they believe Trump is incompetent. I bring this up because as bad as things seem to be, we seem to be in much better shape than the 25 years prior to the U.S. Civil War.  The reason for this divide? Slavery.  It’s as simple as that.  Both sides of the fence are bloodily hostile towards each other, and no one seems to be able to unite the country.  There was even an instance where a Southern Congressman attacked a Northern Congressman with his cane during a congressional session – knocking him unconscious for several days.

Franklin Pierce was a bit of an odd choice back in 1853. We must remember that presidents became candidates for president very differently than they do today.  Nowadays, candidates make it well known before the election year, begin campaigning, debate rivals, and choose their running mate for vice-president long before their respective convention even begins.  Think about this: When was the last time we had a Republican or Democratic convention where we didn’t know who the nominee would be by the time the convention started?

Back then, presidents were chosen by delegates. Vice presidents too. Whoever was selected by the party’s delegates as presidential nominee had no input as to who their ‘running mate’ would be.  So how did delegates choose the candidate for their party?  Well, to answer that question, it would require its own book.  Lots of backroom deals, shady promises, quid pro quo, stabbing of backs, and, of course, the ability to beat the other party (or parties) rival in the general election.  Franklin Pierce was not the Democratic Party’s first choice.  With all of the turmoil between the Democrats, Whigs, and the Northern and Southern factions of these parties, there was simply too much chaos for any kind of clear front-runner.  So Pierce is selected by default, basically.  Not many knew who he was back then either.

The American President’s series of books on the U.S. Presidents is handy when one wants to read about some of the lesser known presidents.  Tomes on these individuals are quite rare and hard to come by, so the American President books make nice, somewhat quick readings.  They’re never as detailed as the more famous ‘legitimate’ bios, but for president’s like Pierce, they really don’t need to be.

In fact, I would argue that there really isn’t much that Franklin Pierce is known for – before, during, or after his presidency. Although he didn’t consider himself pro-slavery, he was a strict constitutionalist, so he therefore believed that abolition of slavery wasn’t constitutional. This made him favorable to many yet deplored by many as well. When he took office, the country was still reeling over The Compromise of 1850 which was designed to placate both sides of the slavery issue.  What the compromise seemed to do, however, is infuriate both sides. It was not a welcome compromise by anyone.  Then, with the Kansas territories leaning towards statehood, the familiar question again arises: slavery or no slavery? Without going into much detail, The Kansas-Nebraska Act essentially had the same repercussions as The Compromise of 1850. Neither side was happy, and it simply pushed the country closer to the brink of war.

So that’s about it. An unspectacular person unexpectantly becomes president during a tumultuous time in our country’s history which leads to a very mediocre, if not unfavorable, rating by most historians.  History tells us not too many good things, but I honestly have to wonder if many could have done much better.  We were simply too akin to a tinderbox at this time. This book provides a nice compact history of the man, and it really seems that such a work is really all that is needed.