Enron #1

1. How did Anne Beliveaux respond to Jeffrey Skilling's claim that he was "innocent of every one of these charges." What were the charges?

She told him he should be ashamed of himself. The charges were that he lied to investors and employees about various aspects of Enron’s business.

2. What was Daniel Petrocelli specifically asking Judge Lake to do? What was the response of the judge?

He asked the judge to reduce Skilling’s sentence by ten months. The judge answered no.

3. What is the difference between a Puzzle and a Mystery? Be as specific as possible! Please consider why Gladwell does not believe the difference to be "trivial."

A puzzle requires the piecing together of missing information and a mystery requires judgments and assessments of uncertainty. He says it is not trivial because depending on the definition of the situation (if it is a puzzle or a mystery) it can be determined how much and what sort of information will help solve it.

4. What does Gladwell mean when he states: "Puzzles come to satisfying conclusions. Mysteries often don't."

He means that puzzles are more straight forward in providing answers by process of elimination whereas mysteries are more of a gray area.

5. Initially, what did most people think of the Enron scandal? Did they think it was a Mystery or a Puzzle? Why would it matter? What does Gladwell think?

They thought it was a puzzle. This is important because of the amount of information they were missing and how that affect the situation, because it would have been much more difficult to solve if it were a mystery. Gladwell believes it was a mystery.

6. Please explain Mark-to-Market Accounting.

Mark-to-Market accounting is when companies predict future profits they may make and put them in their accounts at the time.

7. Gladwell claims that: "When a company using mark-to-market accounting says it has made a profit of ten million dollars on revenues of a hundred million, then, it could mean one of two things..." Please explain the two possibilities. What did Wall Street Journal report Jonathan Weil's source want him to find out?

One option is that that information is true and the company actually has the or the other option is that the company is only assuming it will make that amount of money but it doesn’t actually have it. Jonathan’s source wanted to find out how much of Enron’s money was money they actually had.

8. What is the connection between subprime loans and Mark-to-Market Accounting?

Some companies used Mark-to-Market accounting on subprime loans, or loans made to higher-credit-risk customers, and when the economy declined they realized that there estimated profits were far greater that their actual profits.

9. Why did Weil find Enron's financial statements "sobering?"

He found them sobering because they showed that one of the largest companies in the world had virtually no money.

10. Why was James Chanos interested in Enron?

He was interested because he was a short-seller who made money off of betting when companies’ profits would fall.

11. Who was Bethany McLean?

She was a reporter for Fortune.

12. Why does Gladwell believe Watergate to be a classic puzzle?

He believes this because it was solved with the revelation of certain secrets that were very straight forward.

13. Did Jonathan Weil have a Deep Throat?

No because he could not get straight forward answers.

14. Why was Weil concerned that the officials at Enron weren't concerned about who would win the 2000 election?

He was concerned because it showed that no matter what happened they could interpret anything as success even if it wasn’t.

15. After considering how Weil got his information, why does Gladwell believe Enron to be a mystery?

He believes this because Weil could not get clear information in a straight forward way that could be fit in neatly with the other information he had.