January 29th, 2002


(no subject)

Subject: Enron University - Economics 101

Traditional Capitalism:

You have two cows. You sell one and buy a bull. Your herd multiplies, and
the economy grows. You sell them and retire on the income.

Enron Venture Capitalism:

You have two cows. You sell three of them to your publicly listed company,
using letters of credit opened by your brother-in-law at the bank, then
execute a debt/equity swap with an associated general offer so that you get
all four cows back, with a tax exemption for five cows.

The milk rights of the six cows are transferred via an intermediary to a
Cayman Island company secretly owned by the majority shareholder who
sells the rights to all seven cows back to your listed company.

The annual report says the company owns eight cows, with an option on one
more. Sell one cow to buy a new president of the United States, leaving you
with nine cows. No balance sheet provided with the release.

The public buys your bull.
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