Summary of the Film “The Smartest Guys in the Room”

Enron The Smartest Guys In The live Frauds and financial scandals in the stemma world were origin in every(prenominal)y an Enrons case and frig around out be after it. Thats in human nature. meticulously a chain of events lead to an enormous shock on the Wall Street and went down in explanation as wizard of the biggest business scandals. For a long time sequence of events was a basis for articles and books, objective films and analytic researches. Specialties were retold and discussed by analytics. It was current human tragedy.The film Enron The Smartest Guys In The Room tries to answer the questions that all spate somehow connected with the business world were interested in How it could happened? What atomic number 18 the reasons and who is responsible for that? The film tries to nip the veil. From the beginning of the film it is clearly stated that the Enron case is exceptional. Working in a field of efficacy and power, having reputation of unsinkable ship and demon strating fascinating financial results, Enron dramatically collapsed almost in a day. But the beginning of this tale is bright and ambitious.Enron represents a company of slap-up promise. The first seconds of the film represent an lay off of it John Cliff Baxter committed a suicide, being heartbroken with what was happened. And it was a conviction of the fraud that was happened. later on this crucial episode, viewers come to the best years of the Enron. It is a seventh largest corporation in America, valued 70 billion $. It is an innovative business with absolutely new-made business model. But how it perishs? It starts with knowingness localise, who comes to the baloney of Enron from humble roots. His father is a Baptist minister and their life is rather poor.Probably, his background plays an integral role in having huge ambitions to make wealth of him. Ken Lay wants to change a market of power and power. He convinces that government is not a solution but a problem to the b usiness. In other words, he involves in the idea of deregulations. Not only he but other participants of a power and energy business shargon this outlook. A tendency to deregulations starts to develop in 1985 and in this very moment the Enron is founded. Kay Lay thinks that it would be beneficial for his new company that gas prices float with the currents of the market.That is the power of deregulations. An important episode of Enron is a contribution to the presidential campaign of George Bush, who lately helps to secure money in government subsidies and to promote Ken Lay with idea of deregulations. Trading in oil market considers as a very bad business. But Enron al bearings wins. Even then an improbable success gives a rise to doubt to the highest degree legality of Enrons business. Illegal actions start with the president of Enron Louis Borget, who takes about 3 billion $ of corporate pecuniary resource in his personal account with the help of a treasurer Mastroeni and his phony books.When the rumors fix too strong, Mastroeni discloses real books and it becomes clear that all reserves of Enron are gambled away. This tremendous news is hidden by the bluffing of the market and that is how Enron stays afloat. But a little later Enron is forced to disclose the information about those manipulations and all immorality is focused on Mastreoni and Borget. Mastreoni receives a suspended sentence, Borget spends 1 year in a prison. So who will make money now? The second period of Enrons history is connected with Skilling, who is a person with the biggest ideas of all. He is a great flockary as a Ken Lay.It is he who comes up with a new idea make energy a financial instrument like carrys and bonds. And it is like an gush in the industry. Enron becomes a genius of the industry. All employees are proud of being working in Enron. It is price mentioning, that it is a moment when SEC approved an implementation of a mark-to-market accounting approach, which allow s estimating assets of the company by a market price and not by a real. It also allows booking potential profit as it is already gained before money comes to Enron. That is the first almost unobservable alarm bell to a means for unethical actions and frauds.If to speak about work environment, it is clearly seen that Skilling is an unconstrained leader. Interesting fact of his power is that when he stuffs wearing glasses, everyone in the company does the same. But the culture that is cultivated is aggressive and tough, like in a wild nature with the basic instincts of survival of the fittest. Skilling is convinced that money is the only thing that motivates people. He wants employees to show him great results, great profit. Therefore, traders are encouraged to gamble. Making money no matter what the methods are used.Skilling also implements a system of evaluation of employees and every employee who does not meet the demand of Skillings wad is fired. As a result of this system, tur nover index is 15% that is really negatively impressive. Skilings vision of people is based on the theory of People with spikes. Only extraordinary and exceptional people merit his attention and respect. The list of people consists of Ken Rice who is a salesman of Enron John Cliff Baxter who is very gifted but prone to depression (as viewers of the film know, that will be a fatal capitulum in his future).The list continued with Lou Pai a key skilling lieutenant, working in one of the business units of Enron Enron goose egg Services (EES). His application is wrapped in a mystery employees even call him Invisible chief executive officer. Lou Pai is highly motivated by money. When he loses interest in his work in Enron, put another(prenominal) way, when he achieves a marginal profit, he leaves or better to say escapes from Enron with 250 million $ and becomes the 2nd largest property owner in Colorado. The nigh stage of Enron is connected with its line of descents that are be ing increased significantly day by day.Everyone wants to play in the market because prices go up and up at that place is an illusion that it will neer end. The heading of this time is A new day a new record. By all means, these records tonus a direct impact on a profit of Enron, which gets higher and higher. But how they get these numbers? It is a questionable issue. In the books everything goes perfect but in reality it was quite the opposite. At this time Enron invests in India that is unreasonably risky. And they fails because India could not afford to pay for the power which Enron offers. As it is said in the fim Failure was not an option. Hence, Enron hides nsuccessful results in India, continuing show unsubstantial bright results. Later, a amalgamation with electrical company makes it possible for Enron to come into a new deregulated market of California. The company shows unrealistic results stock price are soared by 34% in 2 days. Analysts were blinded to the doubtful i nformation that is already occurred. It is not an unfortunate occurrence, but it will be disclosed only later. Enron diversifies its activities in particular, it covers a new market of broadband. But it does not work. It is a mark-to-market accounting that helps Enron to book revenues as it is wanted to be.In reality there are not any revenues. And that is the moment when executives of Enron begin to understand a certainty of collapse they start to sale their stocks. In other words, they leave a sinking ship. The end is coming. In 2001 dotcom companies undergo considerable difficulties whereas Enron is a shining star of an American economy. It is named as the most admired corporation by deal magazine. But Enron is a black box. Nobody knows how exactly money is made. Suspicions of falsification of financial statements begin to occur. The next key figure in the Enrons case is Andy Fostow who is a financial officer.He is motivated by a future career. He tries to please Skilling and t herefore he hides debts in artificial companies and handles finance so that stock prices continue to going up. Moreover, he encourages 96 individual banks to put their money in LGM (Andys artificial company) to somehow change Enrons situation. Why respectful banks do not suspect illegality? Analytics suppose that they do suspect, but agree to give money because Andy Fastow plays on their greed. They are useful idiots. Actions cross the line when Skilling responds unethically to one reporter.It is already seeable that Skilling starts to lose his countenance. He does not know how to keep stock prices high. Meanwhile, one more illegal chance to keep Enrons stock prices takes place. It is called California. Enron produces an energy crisis. Blackouts take plays as a result a demand on electricity is soared and so do the prices. Consequently, Enron gets money. These manipulations lead to a lot of domestic problems of citizens of California but nothing changes. During this part, there is a comparison of Enrons activity in California with Milgrams experiment which is quite remarkable.Both experiments are about how people can be convinced to do something morally wrong if a person in authority tells them it is his responsibility and he will not be blamed. As in the Milgrams experiment Enron continues to manipulate with electricity and things become worse and worse. People understand that nothing is left to accident, they blame Enron in this desperate protests take place. In this time George Bush becomes a president of the USA and therefore with the old beneficial relations Enron does have an easy access to the administration.As a consequence, government does not interfere in the Californian difficulties. People stop believe in Enron and its stocks begin to fall. In this moment Skilling suddenly announces that he resigns from Enron. Employees take this is as a betrayal. One of the employees Sherron Watkins becomes aware of the fraud that takes place at Enron. She tries to speak with Ken Lay but he does nothing. Meanwhile Securities and Exchange Commission (SEC) starts an investigation and discovers that in reality millions of assets are millions of debts. And it is Andy Fostow who is blamed by all Enrons executives for falsifications.It is interesting to note that the same situation was with Borget and Mastreoni in the early 1990s. The end comes in 2001 when Enron declares a bankruptcy. Employees feel that they are on the sinking whip without lifeboats. They lose everything. Cliff Baxter commits a suicide 7 months later. Concerning tragic specialities, $ 1,2 billion in retirement funds and $2 billion in pension funds are disappeared in a matter of weeks. 20,000 employees lose their jobs. Ken Lay and Skilling are under a precise look of the Federal Bureau of Investigation. The congressional committees launch court proceedings.It is the end of the film Enron The Smartest Guys In The Room. Enrons tragedy is often compared with Titanic. And that is no t just empty words. In both cases there were a lot of warnings of possible danger but ships continue a full-speed running. In both cases there were great opportunities but then a combination of human errors and hubris lead to a fatal meltdown. The fall of Enron is a story not only about people but about whole system, consisting of government, financial and business institutions, conditions and relations. All participants in fraudulent actions have their share of a pie.That is why this story is called a story of synergetic corruption. I am absolutely fascinated by this film, to be precise, by a scale of greed and addiction to money and power. Understanding that characters of this film are the real people and all actions that were showed really took place makes me fascinated even more. To my mind, Enron case is not an aberration it is a consequence of way of living. It is a dark shadow of the American dream as it is said in the film. Therefore, it can be repeated. And it can be us who would be affected by manipulations. That really boggles the mind.