The Tech Bubble to Subprime Meltdown
The key factor sustaining Enron’s ability to secure a low cost of capital was an investment grade credit rating … derivatives enabled Enron to exploit inefficiencies in debt and derivatives rules, thereby artificially (if only temporarily) inflating the value of its residual equity claims.
Enron operated in newly deregulated energy and derivatives markets, where participants were constrained only by the morals of the marketplace. Enron’s officers combined the risky strategies of Wall Street bankers with the deceitful practices of corporate CEOs in ways investors previously had not imagined.
—Frank Partnoy
The biggest fear at the dawn of the 21st century was Y2K, the potential for the world’s computers ...
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