1 00:00:05,400 --> 00:00:08,500 Welcome back. Everyone, I'm Caspian Sea and I 2 00:00:08,500 --> 00:00:11,600 am here as usual with my partner in crime Bennett Tomlin. 3 00:00:11,600 --> 00:00:13,200 How are you buddy? Rude. 4 00:00:13,200 --> 00:00:16,000 Well, Cass, how are you? I'm doing good, thank you. 5 00:00:16,000 --> 00:00:20,900 And we also have a special guest Chief insights columnist at coin 6 00:00:20,900 --> 00:00:24,000 desk, David Z Morris. How are you? 7 00:00:24,800 --> 00:00:27,800 Hey folks, I'm pretty good. How are y'all today? 8 00:00:27,800 --> 00:00:31,700 We're bringing David on to discuss us Enron and what 9 00:00:31,700 --> 00:00:36,700 happened at Enron at the time and how that relates to what's 10 00:00:36,700 --> 00:00:38,600 going on. Now, in finance and 11 00:00:38,600 --> 00:00:42,700 cryptocurrency Bennett, do you or David for that matter? 12 00:00:42,700 --> 00:00:46,400 Either one of you do you want to go over exactly what happened at 13 00:00:46,400 --> 00:00:49,100 Enron I think David's the best to take that. 14 00:00:49,800 --> 00:00:51,400 Okay? Just to get the big picture and 15 00:00:51,400 --> 00:00:55,000 then we'll get into sort of some nuts and bolts, but the big 16 00:00:55,000 --> 00:00:58,100 picture of Enron is is the largest corporate fraud in 17 00:00:58,100 --> 00:01:01,300 American history. It Energy Trading Company, 18 00:01:01,300 --> 00:01:05,500 basically, founded in 1985 by a guy named Ken Lay and was 19 00:01:05,500 --> 00:01:08,800 headquartered in Houston from most of its run at its peak, 20 00:01:09,000 --> 00:01:12,500 which was in 2000. It had a market cap of about 70 21 00:01:12,500 --> 00:01:15,200 billion. And at that time, you know that 22 00:01:15,200 --> 00:01:18,000 doesn't sound necessarily like a ton these days but it was the 23 00:01:18,000 --> 00:01:21,600 seventh largest publicly traded company in the United States. 24 00:01:21,600 --> 00:01:25,300 And then in 2001 Bethany McLean, a journalist at Fortune where I 25 00:01:25,308 --> 00:01:29,400 used to work, published a story called are titled is Enron 26 00:01:29,400 --> 00:01:31,000 stock. Overpriced. 27 00:01:31,000 --> 00:01:33,200 And that was kind of the break in the damn. 28 00:01:33,600 --> 00:01:36,000 It seems weirdly mild by contemporary standards. 29 00:01:36,000 --> 00:01:38,700 But after that, there was a bunch of questions being asked, 30 00:01:38,700 --> 00:01:43,800 and too many questions were asked and by December of 2001 A 31 00:01:43,800 --> 00:01:47,400 year after its peak stock valuation and Ron had declared 32 00:01:47,500 --> 00:01:50,600 chapter 11 bankruptcy because what was revealed was that there 33 00:01:50,600 --> 00:01:54,800 were a series of shell companies hiding debts off the books and 34 00:01:54,800 --> 00:01:59,600 it was essentially entirely fraud and everybody lost 35 00:01:59,600 --> 00:02:02,100 everything. In the executives, went to jail 36 00:02:02,100 --> 00:02:05,600 and or died, that's Enron in a nutshell. 37 00:02:05,900 --> 00:02:09,199 I had want to also touch on the fact that much of the fraud 38 00:02:09,199 --> 00:02:12,500 related to the accounting firm associated with Enron which was 39 00:02:12,500 --> 00:02:15,600 Arthur Andersen, which is no more, they don't exist. 40 00:02:15,600 --> 00:02:19,400 Any longer largely because of the failures at Enron and Arthur 41 00:02:19,400 --> 00:02:22,800 Andersen and because of their failures with Worldcom as well. 42 00:02:23,000 --> 00:02:25,500 They had a series of failures at the time, they were doing a 43 00:02:25,508 --> 00:02:27,700 really bad job that job of being accountants. 44 00:02:27,700 --> 00:02:30,300 Yes, exactly. They played a big role in This. 45 00:02:30,300 --> 00:02:34,900 And now let's let's see if we can determine why this is still 46 00:02:34,900 --> 00:02:39,100 an important story today. And how there could possibly be 47 00:02:39,100 --> 00:02:42,300 some parallels to the crypto currency markets. 48 00:02:43,200 --> 00:02:44,600 Then, do you want to take a shot at it? 49 00:02:44,600 --> 00:02:46,900 Like what's the, what's the point? 50 00:02:47,000 --> 00:02:50,300 Why are we talking about this? For me and run is such an 51 00:02:50,300 --> 00:02:53,300 interesting story for a few different reasons. 52 00:02:53,700 --> 00:02:58,100 One, you have them basically trying to do something novel and 53 00:02:58,100 --> 00:02:59,800 like a lot of their value starts to come. 54 00:03:00,000 --> 00:03:02,000 The fact that they're doing something that hadn't been seen 55 00:03:02,000 --> 00:03:05,200 before in the case of Enron specifically, they were trying 56 00:03:05,200 --> 00:03:08,600 to make financial instruments out of energy, which is a 57 00:03:08,600 --> 00:03:11,200 difficult test to do. But they were able to start 58 00:03:11,200 --> 00:03:13,900 selling this idea of financial izing energy and because of 59 00:03:13,900 --> 00:03:17,100 that, they kept getting more and more interest and investment in 60 00:03:17,100 --> 00:03:20,500 effectively that idea. And so they were parallels 61 00:03:20,500 --> 00:03:24,300 immediately for me with that to how search and cryptocurrency 62 00:03:24,300 --> 00:03:27,100 companies seem to attract investment purely because 63 00:03:27,100 --> 00:03:30,000 they're trying something novel like before the business Been 64 00:03:30,000 --> 00:03:31,900 validated before. The model is proven out there 65 00:03:31,900 --> 00:03:34,300 attracting investment because they're doing something new. 66 00:03:34,300 --> 00:03:38,300 Then Enron obviously was using some interesting accounting 67 00:03:38,300 --> 00:03:42,200 techniques and the way that they were structuring their income 68 00:03:42,200 --> 00:03:44,000 through these different, subsidiaries these different 69 00:03:44,000 --> 00:03:47,400 groups and trying to flow it to maintain a certain appearance of 70 00:03:47,400 --> 00:03:50,200 growth. Also seemed remarkable to me, 71 00:03:50,200 --> 00:03:51,800 not to interrupt here. I'm sorry Bennett. 72 00:03:51,800 --> 00:03:54,200 I just want to bring this up again because you're touching on 73 00:03:54,300 --> 00:03:56,900 the accounting aspects of this and I know, I'm sure David will 74 00:03:56,900 --> 00:03:59,300 dive into this more. But what you're talking about is 75 00:03:59,300 --> 00:04:04,300 mark-to-market Yeah, it's a style of accounting that it's 76 00:04:04,300 --> 00:04:06,300 still used today. It's not like the style itself 77 00:04:06,300 --> 00:04:10,500 is illegal but the way that Enron was doing it and I'll try 78 00:04:10,500 --> 00:04:13,900 to play it now. Enron did a skit. 79 00:04:14,100 --> 00:04:16,899 It was tongue in cheek but it was a skit saying we can book as 80 00:04:16,899 --> 00:04:21,800 many prophets as we want to. But well we've been working hard 81 00:04:21,800 --> 00:04:23,600 on this and we've really pulled out all the stops. 82 00:04:23,600 --> 00:04:26,800 Look, what we got origination we did 20 million last year, I 83 00:04:26,808 --> 00:04:29,000 think we do 120 million dollars this year. 84 00:04:29,100 --> 00:04:30,100 This is the key. Key. 85 00:04:30,300 --> 00:04:33,000 We're going to move from mark-to-market accounting to 86 00:04:33,000 --> 00:04:37,800 something. I call hfv hypothetical future 87 00:04:37,800 --> 00:04:41,900 value accounting. If we do that, we can add a 88 00:04:41,900 --> 00:04:44,400 kazillion dollars to the bottom line. 89 00:04:44,400 --> 00:04:48,600 The thing about Enron at its core and this is Mark to Market 90 00:04:48,600 --> 00:04:51,900 is the accounting term for it, but it's just this idea that 91 00:04:51,900 --> 00:04:54,700 you're betting on the future and and not just betting on the 92 00:04:54,707 --> 00:04:58,200 future that's in a very definite way, but betting on a future, 93 00:04:58,200 --> 00:05:01,800 that's always a little bit. Further away than you think Mark 94 00:05:01,800 --> 00:05:07,300 to Market is we can sign a contract or otherwise have an 95 00:05:07,300 --> 00:05:11,200 agreement for revenues. Let's say 10 years from now. 96 00:05:11,200 --> 00:05:14,300 And you know, anybody with half a brain knows that the energy 97 00:05:14,300 --> 00:05:17,800 Market ten years from now is not going to be the same as it is 98 00:05:17,800 --> 00:05:21,100 right now yet, that's how Enron operated. 99 00:05:21,100 --> 00:05:23,900 That was one part of the shenanigans going on the other 100 00:05:23,900 --> 00:05:26,600 part was about hiding debts off the books, which we'll talk 101 00:05:26,600 --> 00:05:28,600 about. But in terms of the big picture 102 00:05:28,600 --> 00:05:30,900 just to zoom back out. Out from Mark to Market. 103 00:05:30,900 --> 00:05:33,500 I think that future forward in this is one thing is idea that 104 00:05:33,508 --> 00:05:36,900 we're going to financial eyes, everything and therefore be able 105 00:05:36,900 --> 00:05:39,100 to predict the future. Because we have already put a 106 00:05:39,108 --> 00:05:42,400 price on it and Ron really push that to the absolute limit. 107 00:05:42,500 --> 00:05:46,300 And I wish it had really been like the high Watermark from 108 00:05:46,300 --> 00:05:48,700 which things receive it. But fortunately, it was really 109 00:05:48,700 --> 00:05:52,000 more of a preview of things like the housing crisis. 110 00:05:52,100 --> 00:05:54,700 And the other thing that I think is important to take away from 111 00:05:54,700 --> 00:05:59,200 Enron is the cultural aspect of it, you know, we think about the 112 00:05:59,200 --> 00:06:02,400 regulatory Space and finance has this thing where there are lots 113 00:06:02,400 --> 00:06:05,900 of walls and lots of cops and lots of careful management but 114 00:06:05,900 --> 00:06:08,800 the Enron story really shows that that is just not the case 115 00:06:09,000 --> 00:06:13,000 that if you are somebody who thinks they're doing the right 116 00:06:13,000 --> 00:06:15,500 thing, you can go pretty far over the line. 117 00:06:15,500 --> 00:06:17,900 And that's what's really interesting about Enron is that 118 00:06:17,900 --> 00:06:21,200 everybody thought they were within the letter of the law. 119 00:06:21,200 --> 00:06:24,200 Even though they knew that they were violating the spirit of the 120 00:06:24,200 --> 00:06:27,200 law, they thought that everything that they were doing, 121 00:06:27,200 --> 00:06:29,700 could be defended the culture there. 122 00:06:29,800 --> 00:06:33,400 Are they would like post the stock price stickers everywhere 123 00:06:33,400 --> 00:06:35,300 in the offices. Everybody was obsessed with the 124 00:06:35,300 --> 00:06:37,600 stock price. It was very much a focus on 125 00:06:37,600 --> 00:06:39,200 money above, a lot of other things. 126 00:06:39,200 --> 00:06:41,800 And I think if you're thinking about things as an investor, 127 00:06:41,800 --> 00:06:45,600 that's a red flag that Enron should drive home. 128 00:06:45,600 --> 00:06:47,800 I just want to point out that, that is something that we see to 129 00:06:47,800 --> 00:06:50,100 this day. CZ is a great example of someone 130 00:06:50,100 --> 00:06:54,100 who consistently speaks about the price of the coin that he 131 00:06:54,100 --> 00:06:56,200 started. Probably there's other exchange 132 00:06:56,200 --> 00:06:58,400 owners that do the exact same thing. 133 00:06:58,600 --> 00:07:01,600 I just can't Give them off the top of my head. 134 00:07:02,200 --> 00:07:05,200 Well you know Justin son was Notorious for this back in the 135 00:07:05,200 --> 00:07:08,100 day constantly tweeting about the price of Tron which I 136 00:07:08,100 --> 00:07:10,400 haven't looked but I'm guessing he doesn't do it as much lately 137 00:07:10,400 --> 00:07:13,600 because it's not such good news but another Sterling example of 138 00:07:13,600 --> 00:07:17,200 the correlation between Shenanigans and price Obsession 139 00:07:17,800 --> 00:07:20,900 and it also isn't just I wouldn't suggest it's only in 140 00:07:20,900 --> 00:07:23,800 crypto currency because we see similar Antics go on. 141 00:07:23,900 --> 00:07:28,300 I mean we've seen meme stocks gained a real foothold in the 142 00:07:28,300 --> 00:07:30,500 financial system. It altered the board of 143 00:07:30,508 --> 00:07:33,800 directors for something like GameStop, I mean now Ryan Cohen 144 00:07:33,800 --> 00:07:36,900 is really in control over there and I would suggest that that's 145 00:07:36,900 --> 00:07:39,300 largely a consequence of stock price. 146 00:07:40,100 --> 00:07:42,600 And this is where we get into really sort of almost 147 00:07:42,600 --> 00:07:46,000 philosophical questions about what constitutes fraud, you 148 00:07:46,000 --> 00:07:49,900 know, to take a quote from the documentary that was made out of 149 00:07:49,907 --> 00:07:52,800 the book smartest, guys, in the room about Enron, there's a 150 00:07:52,808 --> 00:07:55,700 talking head in the movie. I forget exactly who, but they 151 00:07:55,700 --> 00:07:58,500 were commenting on skilling's mindset at times a person who I 152 00:07:58,508 --> 00:08:01,000 think knew him. And they said, as long as you 153 00:08:01,000 --> 00:08:04,600 can keep the illusion going, it really isn't a fraud and what 154 00:08:04,600 --> 00:08:08,200 that means. If you unpack, it is even if you 155 00:08:08,200 --> 00:08:11,600 know that you're not telling the truth in the moment. 156 00:08:11,600 --> 00:08:13,600 If you're a person who believes that you're on, like, a 157 00:08:13,608 --> 00:08:17,900 world-changing mission, you can convince yourself that those 158 00:08:18,000 --> 00:08:22,800 lies are not only justified in terms of long-term results, but 159 00:08:22,800 --> 00:08:26,900 are actually helping create those long-term results by 160 00:08:26,900 --> 00:08:30,700 propping up the illusion. So, if he thinks that the hype 161 00:08:30,700 --> 00:08:33,299 actually is the product, this is where you end up. 162 00:08:34,500 --> 00:08:37,200 That brings up something very important that I think Bennett 163 00:08:37,200 --> 00:08:39,200 will know exactly what I'm talking about right now. 164 00:08:39,400 --> 00:08:44,200 Sometime in 2017, 2018, I remember re David Paul 165 00:08:44,900 --> 00:08:50,700 suggesting that if you bootstrap fraud, it is no longer fraud. 166 00:08:50,700 --> 00:08:52,900 I have I have a big problem with that. 167 00:08:52,900 --> 00:08:57,400 It isn't how I think investment should be done and I don't think 168 00:08:57,400 --> 00:09:02,000 that the law reflects on that as being true necessarily. 169 00:09:03,200 --> 00:09:05,800 Knowing re I would be tempted to give him the benefit of the 170 00:09:05,800 --> 00:09:08,600 doubt that he was engaged in a kind of Devil's Advocate thought 171 00:09:08,600 --> 00:09:13,000 experiment there because the thing is unfortunately that 172 00:09:13,000 --> 00:09:15,100 might not be the way things are supposed to work. 173 00:09:15,100 --> 00:09:18,400 But in some cases it does seem increasingly that it's the way 174 00:09:18,400 --> 00:09:21,000 they work out. It's almost built into the 175 00:09:21,000 --> 00:09:24,900 startup mindset right to a certain extent, that some bets 176 00:09:24,900 --> 00:09:28,200 are going to be four things that we're going to try and do by 177 00:09:28,200 --> 00:09:30,300 definition. If you're investing in a startup 178 00:09:30,300 --> 00:09:32,200 that has a proposal, it might not work. 179 00:09:32,600 --> 00:09:35,100 And at that point you start getting increasingly 180 00:09:35,100 --> 00:09:37,900 loosey-goosey in a loose money environment. 181 00:09:37,900 --> 00:09:42,100 Frankly as far as you know what an actual plan is I just wrote a 182 00:09:42,100 --> 00:09:46,500 column today about bullish. The new proposed exchange by 183 00:09:46,700 --> 00:09:49,900 Peter teal and the block one guys which is trying to go 184 00:09:49,900 --> 00:09:54,100 public before its operational at a nine billion dollar valuation. 185 00:09:54,100 --> 00:09:56,200 Is that fraud? I don't think that's the right 186 00:09:56,200 --> 00:09:59,600 word for it, but it certainly is operating on a future forward 187 00:09:59,600 --> 00:10:01,900 basis. That is not about reality at the 188 00:10:01,900 --> 00:10:04,000 present moment. You know, to be clear, the Enron 189 00:10:04,000 --> 00:10:06,300 situation was not that subtle overcomplicated. 190 00:10:06,300 --> 00:10:09,200 It was outright fraud but when you're in a start-up environment 191 00:10:09,200 --> 00:10:13,100 where the future is what you're trading on, then you can 192 00:10:13,100 --> 00:10:15,000 definitely bullshit your way pretty far. 193 00:10:15,300 --> 00:10:18,600 And I think we've seen that. Yeah I mean honestly the example 194 00:10:18,600 --> 00:10:21,000 I thought of wasn't the one guess I did. 195 00:10:21,000 --> 00:10:24,600 I was actually thinking of Tesla and some of Elon musk's promised 196 00:10:24,600 --> 00:10:26,900 like where he thought he was going to have a self-driving car 197 00:10:26,900 --> 00:10:30,700 drive from New York to LA by the end of 2017 and he was able to 198 00:10:30,700 --> 00:10:34,300 fundraise basically on the back of That expectation and it was 199 00:10:34,300 --> 00:10:37,500 during a period when Tesla didn't have a lot of free cash 200 00:10:37,500 --> 00:10:38,400 sitting around. Yeah. 201 00:10:38,400 --> 00:10:42,300 So in effect he made this kind of very future-focused statement 202 00:10:42,400 --> 00:10:44,800 because of that was able to keep the business going in. 203 00:10:44,800 --> 00:10:47,900 Presumably at some point in the future, he may actually achieve 204 00:10:47,900 --> 00:10:50,700 the goal but it's the same kind of thing where your you need to 205 00:10:50,700 --> 00:10:53,600 keep the expectation going. The illusion going for as long 206 00:10:53,600 --> 00:10:56,000 as possible. That the future that all your 207 00:10:56,000 --> 00:10:59,100 current value is derived from is still just around the corner. 208 00:10:59,600 --> 00:11:03,400 Yeah and and I mean obviously the other contrast Maybe example 209 00:11:03,400 --> 00:11:07,600 would be theranos which, you know, they actively pretended 210 00:11:07,600 --> 00:11:10,000 that they had a working thing when they did, which actually 211 00:11:10,000 --> 00:11:12,800 maybe that's a that's a useful distinction, right? 212 00:11:12,800 --> 00:11:16,300 Where if you're saying we're going to do this by X date and 213 00:11:16,300 --> 00:11:18,500 then it doesn't happen. That's where there's a clear 214 00:11:18,500 --> 00:11:20,300 bright line between that and saying. 215 00:11:20,300 --> 00:11:22,400 Yes this thing works right now and we're going to sell it to 216 00:11:22,400 --> 00:11:24,700 you tomorrow and lying about that. 217 00:11:24,700 --> 00:11:28,600 So maybe that's one way to make the distinction in terms of Hope 218 00:11:28,600 --> 00:11:33,500 versus actual deception. Another That I think is very 219 00:11:33,500 --> 00:11:36,700 poignant and related to the cryptocurrency space in 220 00:11:36,700 --> 00:11:40,500 particular, especially right now with a so much going on about by 221 00:11:40,500 --> 00:11:43,600 Nance is that when I was listening to there was a 222 00:11:43,600 --> 00:11:48,400 podcast, I listened to FBI retired case file review and it 223 00:11:48,400 --> 00:11:52,600 featured, someone named Michael Lee Anderson, the FBI agent in 224 00:11:52,600 --> 00:11:55,100 charge, in charge of the Enron case File. 225 00:11:55,300 --> 00:11:58,200 One of the really interesting things that he discusses is 226 00:11:58,200 --> 00:12:01,200 twofold. One that the FBI was not really 227 00:12:01,200 --> 00:12:04,000 looking into Enron. At all until the collapse 228 00:12:04,100 --> 00:12:06,200 happened already. It was not something they 229 00:12:06,200 --> 00:12:09,800 thought necessarily in any way, shape, or form was fraud. 230 00:12:10,000 --> 00:12:12,500 Now, here's the second part that I thought was very fascinating 231 00:12:12,900 --> 00:12:16,500 and that is that it wasn't only the FBI that was looking into 232 00:12:16,500 --> 00:12:20,700 Enron, it was the SEC, it was the FDNY, it was the Houston 233 00:12:20,700 --> 00:12:22,200 jurisdiction. It was the district. 234 00:12:22,900 --> 00:12:27,200 Northern District of California like everyone wanted to claim 235 00:12:27,200 --> 00:12:30,400 jurisdictional rights over Enron. 236 00:12:30,800 --> 00:12:33,600 They all wanted to prosecute the With largest company in the 237 00:12:33,600 --> 00:12:37,200 United States but they all wanted to stake their their flag 238 00:12:37,200 --> 00:12:40,900 is the ones who really nailed this home but this was all I 239 00:12:40,908 --> 00:12:43,700 think after The Whistleblower came forward of course of 240 00:12:43,700 --> 00:12:45,300 course. Yeah Sherron Watkins. 241 00:12:45,300 --> 00:12:47,700 And so it's not like they were really on the watch. 242 00:12:47,900 --> 00:12:51,500 No no not at all but they all wanted a piece of it. 243 00:12:51,600 --> 00:12:55,100 So I think about that and I go man, I wonder how the 244 00:12:55,100 --> 00:12:58,500 jurisdictional issues are going to play out in crypto currency 245 00:12:58,500 --> 00:13:02,300 because it still feels like they don't have any idea. 246 00:13:02,600 --> 00:13:06,000 Who and what? And when prosecutes who and 247 00:13:06,000 --> 00:13:06,700 what? And why. 248 00:13:07,100 --> 00:13:09,100 Yeah, I mean that's an interesting question but I think 249 00:13:09,100 --> 00:13:11,600 that it'll work itself out. I don't think it's going to be 250 00:13:11,600 --> 00:13:14,700 an insoluble situation. It's all going to be about this 251 00:13:14,700 --> 00:13:16,500 to be a lot of extradition going on. 252 00:13:16,500 --> 00:13:19,600 I'll say that but the fraud element because I think from an 253 00:13:19,608 --> 00:13:23,200 accounting perspective which is one of your primary interests, 254 00:13:23,200 --> 00:13:26,100 it's it is worth going into the kind of guts, right? 255 00:13:26,200 --> 00:13:30,000 Yeah, and TM TM J or whatever tjm or whatever it was called 256 00:13:30,400 --> 00:13:34,900 ljm but it gave people TMJ I am sure, so just very, very 257 00:13:34,900 --> 00:13:38,000 broadly. The trick that Enron learn how 258 00:13:38,000 --> 00:13:40,000 to do, I guess. The first thing to be aware of 259 00:13:40,000 --> 00:13:42,500 is that like, they're really padded their actual business. 260 00:13:42,500 --> 00:13:45,300 So they would invest unreasonable amounts of money 261 00:13:45,300 --> 00:13:49,700 into unprofitable energy plants in India, and they could not 262 00:13:49,700 --> 00:13:52,700 build their actual customers effectively in. 263 00:13:52,700 --> 00:13:57,000 Right at one point was spending, I think it was 50 million a year 264 00:13:57,000 --> 00:14:01,600 in float on payments that they were owed by their own 265 00:14:01,600 --> 00:14:04,000 customers. Because they couldn't build them 266 00:14:04,000 --> 00:14:06,900 in a timely manner. So in order to create a 267 00:14:06,900 --> 00:14:10,100 continually upward pointed profit curve, they figured out 268 00:14:10,100 --> 00:14:14,300 how to do basically some hiding of debt and they would create 269 00:14:14,400 --> 00:14:17,600 spin off companies that would by Enron assets that were 270 00:14:17,600 --> 00:14:21,700 underperforming to take them off the books and then you know that 271 00:14:21,700 --> 00:14:24,500 would allow them to book other kinds of Revenue as well. 272 00:14:24,500 --> 00:14:26,500 They did all kinds of moving on and off book. 273 00:14:26,600 --> 00:14:30,100 And we talk about the over fraud part of this, you know, it's 274 00:14:30,100 --> 00:14:33,600 obviously perfectly legitimate for an ization to create a 275 00:14:33,600 --> 00:14:35,200 spin-off company or a shell company. 276 00:14:35,200 --> 00:14:38,400 For financial reasons, there are lots of different purposes that 277 00:14:38,400 --> 00:14:40,200 those can have. But in this case, they were 278 00:14:40,200 --> 00:14:43,900 supposedly independent entities for accounting purposes. 279 00:14:43,900 --> 00:14:46,500 And in order to qualify for accounting purposes as an 280 00:14:46,500 --> 00:14:49,500 independent entity, you had to have and this is hilarious in 281 00:14:49,500 --> 00:14:53,000 itself. But you had to have 3% outside 282 00:14:53,000 --> 00:14:55,400 Equity if you were doing a spin-off from an existing 283 00:14:55,400 --> 00:14:57,900 company. Now, that's nominally because 284 00:14:57,900 --> 00:15:00,800 you want to have some sort of due diligence, from a third 285 00:15:00,800 --> 00:15:05,000 party that actually sets The price of the deal and some kind 286 00:15:05,000 --> 00:15:08,000 of reasonable way. Obviously, you know, whether 3%, 287 00:15:08,000 --> 00:15:10,500 actually accomplishes that goal, it's hard to say. 288 00:15:10,500 --> 00:15:14,100 But what Enron ultimately wound up having to do because they 289 00:15:14,100 --> 00:15:19,100 were unloading such Bad Assets, was to a use a lot of people who 290 00:15:19,100 --> 00:15:22,000 are actually within the Enron organization as the quote 291 00:15:22,000 --> 00:15:26,300 unquote, outside investors on those three percent shares of 292 00:15:26,300 --> 00:15:29,800 the spin-off corporations that were designed to hold debt and 293 00:15:29,800 --> 00:15:31,700 be. They also often either 294 00:15:31,700 --> 00:15:35,700 implicitly or Or explicitly gave outside investors, which did 295 00:15:35,700 --> 00:15:39,000 include major investment Banks. They gave outside investors. 296 00:15:39,300 --> 00:15:42,600 Guarantees of the safety of their investment in these 297 00:15:42,600 --> 00:15:46,100 entities which effectively made the Investments loans. 298 00:15:46,300 --> 00:15:49,000 So those are the two clear. I mean they're not the only 299 00:15:49,000 --> 00:15:52,100 clear ways, but there are two big clear accounting, fraud 300 00:15:52,100 --> 00:15:55,300 practices that we're going on. I need to push back on this a 301 00:15:55,308 --> 00:15:58,200 little bit because I do think that it's easy to assume that 302 00:15:58,200 --> 00:15:59,700 people just won't understand a lot of this. 303 00:15:59,700 --> 00:16:02,300 And really accounting fraud is like incredibly complex. 304 00:16:02,500 --> 00:16:04,500 And what they were doing. Oh, for sure what they were 305 00:16:04,500 --> 00:16:08,400 doing at Enron, you know, it took even the FBI like four 306 00:16:08,400 --> 00:16:11,300 years to unravel. Exactly what the hell was 307 00:16:11,300 --> 00:16:15,600 happening inside this company. I just think it's hard to really 308 00:16:15,600 --> 00:16:18,400 understand how it was fraud. They're moving money, they're 309 00:16:18,400 --> 00:16:22,700 cooking the books, they're moving liabilities to assets, 310 00:16:22,900 --> 00:16:25,300 there's mark-to-market. There's all there's all these 311 00:16:25,300 --> 00:16:31,100 things, but how is it fraud? Yeah, well I think maybe, maybe 312 00:16:31,100 --> 00:16:33,100 what you're getting at is definitely true. 313 00:16:33,100 --> 00:16:36,000 All of this is after the fact discovered, I mean, this was 314 00:16:36,100 --> 00:16:38,600 certainly not public information at the time. 315 00:16:38,600 --> 00:16:42,500 This is what's really amazing about the Bethany McLean peace 316 00:16:42,500 --> 00:16:44,300 in 2001. That kind of LED things to 317 00:16:44,300 --> 00:16:49,000 unravel is that it's super mild. There is no allegation of fraud 318 00:16:49,000 --> 00:16:51,200 there. She at the time had no sense 319 00:16:51,200 --> 00:16:54,800 that there was fraud, the headline is just is Enron stock 320 00:16:54,800 --> 00:16:57,100 overvalued, right? And that was enough, just 321 00:16:57,100 --> 00:17:00,100 breathe hard on it and the House of Cards comes falling over. 322 00:17:00,300 --> 00:17:02,600 And I think it also actually in Ways. 323 00:17:02,600 --> 00:17:06,099 It's an optimistic take because I think the financial press has 324 00:17:06,108 --> 00:17:09,099 gotten way more aggressive over the last 20 years for the 325 00:17:09,099 --> 00:17:11,099 better. So for what that's worth. 326 00:17:11,099 --> 00:17:14,500 But the thing from the trying to look at it from the outside and 327 00:17:14,500 --> 00:17:17,500 see fraud like that, it's a super important question. 328 00:17:17,500 --> 00:17:23,500 And I think that the biggest and clearest sign from Enron was 329 00:17:23,500 --> 00:17:26,200 that, you know, I don't know the specific number but they had 330 00:17:26,200 --> 00:17:32,300 something like four or five years if not more of 100%. 331 00:17:32,400 --> 00:17:35,000 A single quarter, they made their numbers. 332 00:17:35,600 --> 00:17:38,600 Both internally and externally they had profits that went up 333 00:17:38,600 --> 00:17:42,000 every single quarter there was never a disappointing quarter. 334 00:17:42,200 --> 00:17:46,700 Really like that's that's such a huge signal and it's such a hard 335 00:17:46,700 --> 00:17:51,200 signal to really here for somebody who is looking for an 336 00:17:51,200 --> 00:17:53,500 investment, for example, because if you look at something where 337 00:17:53,500 --> 00:17:55,600 you're just like they do nothing but win. 338 00:17:55,700 --> 00:18:01,500 Well how ask yourself that and I think in this case it's you know 339 00:18:01,500 --> 00:18:04,500 in retrospect We're just pulling all this stuff in and out but 340 00:18:04,500 --> 00:18:07,100 from the outside you know if you have a business that never has a 341 00:18:07,100 --> 00:18:10,600 disappointing quarter that never misses, then that's actually 342 00:18:10,600 --> 00:18:15,600 something to take as a potential - it's not always a positive 343 00:18:15,600 --> 00:18:17,600 because you don't know what's going on behind the doors. 344 00:18:18,100 --> 00:18:21,600 Last time, we talked you told us a story about this where you 345 00:18:21,600 --> 00:18:25,300 detailed the California pension and how they ended up invested 346 00:18:25,300 --> 00:18:27,700 in Enron. And I thought that was a good 347 00:18:27,700 --> 00:18:30,900 example of the kind of practices they were using to keep this 348 00:18:30,900 --> 00:18:32,300 thing afloat. Could you walk us? 349 00:18:32,300 --> 00:18:35,300 Through that David. Yeah, well first of all the Jig 350 00:18:35,300 --> 00:18:37,200 Is up. Yes, we recording it's because I 351 00:18:37,200 --> 00:18:39,300 forgot to hit record last time. Yeah. 352 00:18:39,300 --> 00:18:42,300 So so what you're talking about is think Caldwell, kind of two 353 00:18:42,300 --> 00:18:45,100 things, one called Jedi, and one called chuco. 354 00:18:45,100 --> 00:18:50,000 And these were early in the lineage of the spin-off, get 355 00:18:50,000 --> 00:18:53,800 hiding structures that Enron had engaged in to try and Juice 356 00:18:53,800 --> 00:18:56,600 numbers. So Calpers is the big 357 00:18:56,600 --> 00:18:59,500 California, public employees, retirement fund. 358 00:18:59,500 --> 00:19:04,400 And in the early 90s Enron had Gotten them into a joint venture 359 00:19:04,400 --> 00:19:07,100 called Jedi that was an investment fund like the later 360 00:19:07,100 --> 00:19:09,200 versions it invested in some Enron assets. 361 00:19:09,200 --> 00:19:14,200 It did some other things as well but by 1997 Jedi had kind of 362 00:19:14,200 --> 00:19:18,100 made all of its Investments and Enron was looking to do another 363 00:19:18,100 --> 00:19:21,300 outside entity. And the next one was called 364 00:19:21,300 --> 00:19:23,100 chuco. The Hitch, was they wanted to 365 00:19:23,100 --> 00:19:26,600 get calipers involved again. But Calpers had not yet managed 366 00:19:26,600 --> 00:19:30,700 to sell all of its stake in Jedi, the original investment 367 00:19:30,700 --> 00:19:34,600 fund and As I mentioned, and I know it's all very fast and very 368 00:19:34,600 --> 00:19:38,600 complicated, but Enron needed an outside investor, so that it 369 00:19:38,600 --> 00:19:40,600 could create this separate entity. 370 00:19:40,600 --> 00:19:44,800 That would then absorb debt, that would hide stuff that it 371 00:19:44,800 --> 00:19:47,200 didn't want to be seen on its quarterly statements. 372 00:19:47,200 --> 00:19:50,200 But in order to get Calpers to join this next round with Tuco, 373 00:19:50,800 --> 00:19:53,900 it had to get it out of it, spaghett Calpers, out of its 374 00:19:53,900 --> 00:19:56,200 position in the other entity called Jedi. 375 00:19:56,200 --> 00:20:01,200 So Enron actually went and tried to find somebody to buy Calpers 376 00:20:01,200 --> 00:20:02,800 stake in this. Fun. 377 00:20:03,300 --> 00:20:07,500 It had discussed a price with the fund that that would be 378 00:20:07,500 --> 00:20:11,000 acceptable to entice them to get into the next round. 379 00:20:11,100 --> 00:20:15,500 It couldn't find any takers at the price that Calpers needed to 380 00:20:15,500 --> 00:20:17,700 make that next investment happen. 381 00:20:17,900 --> 00:20:22,300 So Enron itself actually wound up buying back the entire stake 382 00:20:22,300 --> 00:20:26,300 in Jedi at what worked out for Calpers to a 22 percent annual 383 00:20:26,300 --> 00:20:28,900 return which is pretty good. So this is I think another 384 00:20:28,900 --> 00:20:31,800 example I'm not going to be able to break down the exact nuances 385 00:20:31,800 --> 00:20:34,900 but you to begin to get a sense of some of the issues because 386 00:20:34,900 --> 00:20:40,100 Enron is buying back assets that were mostly its own at a price 387 00:20:40,100 --> 00:20:43,700 that it is setting to please, one of its investors. 388 00:20:43,700 --> 00:20:46,900 And of course, that ultimately costs shareholders money because 389 00:20:46,900 --> 00:20:50,000 you have executive setting prices for their own projects. 390 00:20:50,000 --> 00:20:53,100 So you have this 22 percent return that Calpers gets it 391 00:20:53,100 --> 00:20:54,700 joins into this thing called chuco. 392 00:20:54,700 --> 00:20:58,700 And chuco is interesting because you get an example of some of 393 00:20:58,708 --> 00:21:01,800 the other levels of self-dealing that are going on within this 394 00:21:01,800 --> 00:21:06,100 organization, So chuco, for example, Enron when it creates 395 00:21:06,100 --> 00:21:09,000 chuco which is again an off-balance sheet and see for 396 00:21:09,000 --> 00:21:12,000 hiding debt in the process of doing that, it also charges 397 00:21:12,000 --> 00:21:14,900 chuco 10 million dollars in a structuring fee. 398 00:21:15,100 --> 00:21:18,900 That becomes revenue for Enron it also ends up making 399 00:21:18,900 --> 00:21:24,000 individuals within in Ron stupid Rich because people who invested 400 00:21:24,000 --> 00:21:25,900 their personal money into these things. 401 00:21:25,900 --> 00:21:30,300 Also got guaranteed returns illegal and this one guy, 402 00:21:30,500 --> 00:21:33,600 Michael copper who was involved chuco Ooh, got five hundred 403 00:21:33,600 --> 00:21:37,100 thousand dollars a year to manage and off-balance-sheet 404 00:21:37,100 --> 00:21:40,800 entity while also keeping his job at Enron, which I don't 405 00:21:40,800 --> 00:21:42,600 think he was. I think he was probably paid 406 00:21:42,600 --> 00:21:45,800 about as much for and as time goes on more and more Enron 407 00:21:45,800 --> 00:21:50,100 employees are either investing in or getting management fees on 408 00:21:50,100 --> 00:21:52,500 a personal basis from the spin-off. 409 00:21:52,500 --> 00:21:55,100 Entity's people were just treating it as a piggy bank, 410 00:21:55,100 --> 00:21:58,200 they're getting all these fees, all these, all these management 411 00:21:58,200 --> 00:22:01,000 fees, and all these insane investment, returns many people 412 00:22:01,000 --> 00:22:04,100 made millions of dollars. On their illegal personal 413 00:22:04,100 --> 00:22:07,500 investments, in these spin-off entities to go a little bit off 414 00:22:07,500 --> 00:22:11,400 of that into the landscape, the Affiliates, who sometimes wind 415 00:22:11,400 --> 00:22:14,200 up making these Investments, we're part of a group called 416 00:22:14,200 --> 00:22:17,700 friends of Enron. So this was a semi-formal list 417 00:22:17,700 --> 00:22:22,200 that the company kept of wealthy affiliate affiliated 418 00:22:22,200 --> 00:22:24,900 individuals, who could be counted on to inject Capital 419 00:22:24,900 --> 00:22:26,500 into these off-balance-sheet books. 420 00:22:27,100 --> 00:22:30,500 They included people like friends of Andy fast housewife, 421 00:22:30,500 --> 00:22:35,300 the CFO And a realtor who had sold houses to a lot of Enron 422 00:22:35,300 --> 00:22:37,600 employees. This is essentially, a hawala is 423 00:22:37,600 --> 00:22:39,300 what you're talking about. I'm not sure. 424 00:22:39,300 --> 00:22:44,100 I'm familiar, with hawala hawala is like, it's an informal method 425 00:22:44,100 --> 00:22:47,500 of moving money that is. I think it's largely practiced 426 00:22:47,500 --> 00:22:49,000 in the Middle East. I might be wrong about that, I 427 00:22:49,000 --> 00:22:51,200 don't know. Oh yeah, yeah yeah. 428 00:22:51,200 --> 00:22:53,400 I'm not super familiar. I do know that system has worked 429 00:22:53,400 --> 00:22:55,400 for a long time. I'm not really familiar with the 430 00:22:55,400 --> 00:22:59,500 parallel to it, but it literally translates to trust. 431 00:22:59,500 --> 00:23:02,500 And what you're what you're talking about is basically He 432 00:23:02,700 --> 00:23:06,100 trusted sources within the family that you're using to move 433 00:23:06,100 --> 00:23:07,600 money around. Yeah. 434 00:23:07,600 --> 00:23:10,200 And meanwhile, you know, they're kind of putting up Capital that 435 00:23:10,200 --> 00:23:13,400 allows you to skirt, certain formal regulations. 436 00:23:13,600 --> 00:23:15,600 And in exchange you're guaranteeing that they're going 437 00:23:15,600 --> 00:23:19,300 to make an exorbitant amount of money off of their smallish 438 00:23:19,400 --> 00:23:21,700 shares. So and you know, that's one part 439 00:23:21,700 --> 00:23:25,600 of the the operation, I think that you guys might be more 440 00:23:25,600 --> 00:23:27,000 familiar with the other big fraud. 441 00:23:27,000 --> 00:23:30,500 Of course is the California energy trading Scandal, my 442 00:23:30,500 --> 00:23:32,500 throat's getting dry. And if one of you guys Wants to 443 00:23:32,500 --> 00:23:36,100 take a shot at that one. I mean I am a Californian so I 444 00:23:36,100 --> 00:23:40,400 can take a shot at that. I remember it distinctly because 445 00:23:40,400 --> 00:23:44,000 what ended up happening, not to spoil the story here, but our 446 00:23:44,000 --> 00:23:47,900 governor ended up being recalled and our governor was when he was 447 00:23:47,900 --> 00:23:50,500 elected, he was wildly popular. His name was Gray Davis. 448 00:23:50,600 --> 00:23:53,600 And what ended up happening that year and I will never forget 449 00:23:53,600 --> 00:23:55,500 this because those Blackout's affected. 450 00:23:55,500 --> 00:23:58,400 Literally, everybody it is not something anyone in California. 451 00:23:58,400 --> 00:24:00,800 At the time will tell you, they weren't affected by. 452 00:24:00,800 --> 00:24:03,200 I was affected by it. My He was affected by it. 453 00:24:03,200 --> 00:24:06,700 So yeah. What Enron basically did is they 454 00:24:06,700 --> 00:24:09,700 started controlling in some sense of the word, the power 455 00:24:09,700 --> 00:24:14,500 grid for California and what they purposely did was stop 456 00:24:14,500 --> 00:24:17,800 giving them electricity and they would do that by just upping the 457 00:24:17,800 --> 00:24:20,600 price, upping the price until people couldn't afford it or 458 00:24:20,600 --> 00:24:25,600 whatever it became this very crazy combination of the Traders 459 00:24:25,600 --> 00:24:27,800 making money off of Californians, not having 460 00:24:27,800 --> 00:24:31,600 electricity but also the Traders being in control of whether or 461 00:24:31,600 --> 00:24:33,600 not those Before nians had electricity. 462 00:24:33,700 --> 00:24:35,800 So we had rolling blackouts throughout the state. 463 00:24:35,800 --> 00:24:37,800 They called them rolling blackouts and they would just 464 00:24:38,000 --> 00:24:38,600 hope. Sorry. 465 00:24:38,600 --> 00:24:40,800 Today, there's going to be six hours without electricity. 466 00:24:40,800 --> 00:24:43,600 I mean, it was literally, like, living in a third world country. 467 00:24:43,600 --> 00:24:44,800 As we used to call it. Yeah. 468 00:24:44,800 --> 00:24:47,800 And I think people even died. I mean, there were like, you 469 00:24:47,800 --> 00:24:50,600 know, hospitals, obviously, we're faced with the same 470 00:24:50,600 --> 00:24:51,800 situation. Yep. 471 00:24:51,800 --> 00:24:53,600 And at the end of this gray, Davis, got recalled. 472 00:24:53,600 --> 00:24:56,000 An Arnold Schwarzenegger became our new governor. 473 00:24:56,000 --> 00:24:58,200 So that that's the, the, long story short. 474 00:24:58,200 --> 00:25:01,800 They're I remember from watching the documentary, they had this 475 00:25:01,800 --> 00:25:03,600 audio. From to of the traders who are 476 00:25:03,600 --> 00:25:06,400 discussing the energy situation in California, one of the 477 00:25:06,400 --> 00:25:09,300 Traders goes, yeah, I can deal 122 and the other Trader 478 00:25:09,300 --> 00:25:12,000 interrupts and goes not steal and the first Trader goes back. 479 00:25:12,000 --> 00:25:15,400 He goes, oh yeah I can Arbitrage 122 million a day off the 480 00:25:15,400 --> 00:25:17,600 California energy market, right? Right. 481 00:25:17,608 --> 00:25:21,400 And runs a striking example of like these Traders whose entire 482 00:25:21,400 --> 00:25:25,500 job is to be solely focused on making as much money as humanly 483 00:25:25,500 --> 00:25:26,400 possible. Yeah. 484 00:25:26,400 --> 00:25:29,500 Being in charge of making decisions that should perhaps 485 00:25:29,500 --> 00:25:32,100 not be exclusively motivated by making as much. 486 00:25:32,200 --> 00:25:36,200 Money as humanly possible and to sort of roll that back to the 487 00:25:36,200 --> 00:25:39,400 broader context, right? It's important understand why 488 00:25:39,400 --> 00:25:42,900 this happened at this particular moment because Enron was founded 489 00:25:42,900 --> 00:25:49,600 in 1985 on a kind of long-term regulatory bet that the energy 490 00:25:49,600 --> 00:25:53,200 markets would become deregulated that the concept of trading 491 00:25:53,200 --> 00:25:56,600 would become a sustainable business, but by the early to 492 00:25:56,600 --> 00:26:00,000 mid 90s, they were really starting to run up against some 493 00:26:00,000 --> 00:26:03,200 hard walls because of the exact thing that I said, which is 494 00:26:03,500 --> 00:26:07,400 people basically understand that energy is essential to Modern 495 00:26:07,400 --> 00:26:11,300 Life and maybe you should just make it boring, but California. 496 00:26:11,300 --> 00:26:17,100 Bye-bye, I think this was was this like 98 99, but they had, 497 00:26:17,100 --> 00:26:19,500 they had decided they were going to go ahead with deregulating 498 00:26:19,500 --> 00:26:23,400 electricity markets and they had actually designed their market 499 00:26:23,400 --> 00:26:27,700 system with a lot of participation from Enron and so 500 00:26:27,700 --> 00:26:30,000 surprise, surprise, it worked out in a way that the Traders 501 00:26:30,000 --> 00:26:32,700 were able to make money. And one of the The, you know, 502 00:26:32,700 --> 00:26:35,000 Cassie mentioned, like they raising the price and they were 503 00:26:35,000 --> 00:26:39,200 raising the price in a really, like crazy way, which is they 504 00:26:39,200 --> 00:26:42,100 would actually, well, there were two things kind of happening and 505 00:26:42,100 --> 00:26:45,300 one was just naked the illegal, but the trading side was, they 506 00:26:45,300 --> 00:26:49,600 would actually export energy to nearby States. 507 00:26:49,600 --> 00:26:53,700 So, Nevada, Oregon. And you know, I'm pretty sure 508 00:26:53,700 --> 00:26:56,500 that this would have been sort of a nominal exportation they 509 00:26:56,500 --> 00:26:57,900 weren't actually moving the energy. 510 00:26:57,900 --> 00:27:01,800 They were just selling blocks of energy to outside customers. 511 00:27:02,300 --> 00:27:04,200 By doing so. They then constrain the supply 512 00:27:04,200 --> 00:27:07,600 with in California and then they would then re-import in a matter 513 00:27:07,600 --> 00:27:11,300 of hours or even less. Re quote-unquote, re-import that 514 00:27:11,300 --> 00:27:15,000 energy to California that they had sold out of state despite 515 00:27:15,000 --> 00:27:16,900 knowing that the demand would be higher. 516 00:27:17,200 --> 00:27:19,500 So this is just a trading maneuver, they were able because 517 00:27:19,500 --> 00:27:22,600 of the way the market was designed to Arbitrage. 518 00:27:22,600 --> 00:27:26,800 But in fact, that resulted in just raising people's rates and 519 00:27:26,800 --> 00:27:28,900 essentially stealing, I mean there were a lot of I think 520 00:27:28,900 --> 00:27:34,100 Enron made nine billion dollars. From California, utility 521 00:27:34,100 --> 00:27:38,500 customers in the space of about a year and a half, which is 522 00:27:38,600 --> 00:27:40,700 Criminal Criminal on its face, right? 523 00:27:40,800 --> 00:27:43,200 The other way. That they raised the prices 524 00:27:43,200 --> 00:27:45,500 though, which, you know, maybe you guys can enlighten me a 525 00:27:45,508 --> 00:27:48,200 little bit here because I maybe missed a step, but it sounded 526 00:27:48,200 --> 00:27:51,900 like they really just had inside relationships with the operators 527 00:27:51,900 --> 00:27:55,500 of power plants who they could call Up On Cue and have them 528 00:27:55,500 --> 00:27:59,100 just shut down for maintenance. So I mean that was one of the 529 00:27:59,300 --> 00:28:03,100 really overt parts of the fraud. Although I Say that it didn't 530 00:28:03,100 --> 00:28:06,200 seem like those operators were necessarily from what I could 531 00:28:06,200 --> 00:28:08,600 tell it didn't seem like those operators were necessarily like 532 00:28:08,600 --> 00:28:10,500 in on the take, you know, it's not like they were making money 533 00:28:10,500 --> 00:28:12,600 off of it. They weren't participating it 534 00:28:12,600 --> 00:28:15,500 other than to think, like, okay, we're going down for 535 00:28:15,500 --> 00:28:18,400 maintenance, like I'm not sure they fully understood what was 536 00:28:18,400 --> 00:28:21,600 going on and that they were yeah, a part of the fraud. 537 00:28:21,700 --> 00:28:23,700 I'm giving them the benefit of the doubt, I have no idea. 538 00:28:23,800 --> 00:28:26,700 Just one other thing that I want to ask you about an, I'm going 539 00:28:26,700 --> 00:28:29,000 to pretty much hand over the reins to Bennett for any other 540 00:28:29,000 --> 00:28:31,600 questions, but this was the seventh largest company in the 541 00:28:31,600 --> 00:28:33,900 US. It's in the energy sector which 542 00:28:33,900 --> 00:28:37,500 you would hope would be regulated to a large extent and 543 00:28:37,500 --> 00:28:40,300 it's on the NYSE. So you also hope that would be 544 00:28:40,300 --> 00:28:43,100 largely regulated. It ended up being the largest 545 00:28:43,100 --> 00:28:45,300 fraud in corporate history. It happened at the exact same 546 00:28:45,300 --> 00:28:48,300 time as Worldcom which one's one of the largest corporate frauds 547 00:28:48,300 --> 00:28:51,100 in US history. We're dealing with markets that 548 00:28:51,100 --> 00:28:54,600 are far more opaque when it comes to cryptocurrency. 549 00:28:54,600 --> 00:28:57,500 I just think they have zero incentive to follow any of the 550 00:28:57,500 --> 00:29:00,000 regulations that Enron was supposed to be following. 551 00:29:00,500 --> 00:29:03,300 Enron ended up blowing up. I'm just wondering if you see 552 00:29:03,300 --> 00:29:06,900 decentralization and cryptocurrency in general as 553 00:29:06,900 --> 00:29:11,200 being a space where that's going to be a problem or if maybe the 554 00:29:11,200 --> 00:29:15,100 that the direction of cryptocurrency will end up being 555 00:29:15,100 --> 00:29:18,300 a net positive. It's interesting because it 556 00:29:18,300 --> 00:29:21,700 really forces you to think about your first principles and 557 00:29:21,700 --> 00:29:26,300 because I'm you know, I'm a relatively Pro regulation guy, I 558 00:29:26,300 --> 00:29:29,900 believe that regulation can can do things when it's, you know, 559 00:29:29,900 --> 00:29:33,800 focused on particular. People who are Bad actors and 560 00:29:33,800 --> 00:29:37,800 particular actions. I am not a fan of restrictions 561 00:29:37,800 --> 00:29:40,600 on choices that people can make but after the fact you need 562 00:29:40,600 --> 00:29:43,500 enforcement and you need some kind of monitoring especially of 563 00:29:43,500 --> 00:29:45,200 large organizations at the same time. 564 00:29:45,200 --> 00:29:48,500 I think the thing that Enron really drives home and 565 00:29:48,500 --> 00:29:51,800 especially for crypto investors, I would almost say it's not 566 00:29:51,800 --> 00:29:54,800 about like regulation literally doesn't matter in the 567 00:29:54,800 --> 00:29:58,000 cryptocurrency space to a huge degree when you're talking about 568 00:29:58,000 --> 00:30:02,000 entities like Finance or B Max and in that kind of space. 569 00:30:02,500 --> 00:30:07,100 I think what Enron drives home is that it really becomes about 570 00:30:07,100 --> 00:30:11,800 character and what is your evaluation of the people who are 571 00:30:11,800 --> 00:30:14,600 in charge. And one of the things that's 572 00:30:14,600 --> 00:30:18,800 really notable about Ken Lay, who's the founder and CEO is 573 00:30:18,800 --> 00:30:24,000 that he had somewhat of a folksy image, but he also was a gambler 574 00:30:24,000 --> 00:30:28,500 and loved risk and talked about risk as a positive. 575 00:30:28,600 --> 00:30:31,700 So, you know, that's again, one of those signals where are 576 00:30:31,700 --> 00:30:35,700 people People encouraging risky behavior of in their customers. 577 00:30:35,700 --> 00:30:38,000 Are they encouraging risky Behavior? 578 00:30:38,200 --> 00:30:41,000 Among their employees? And what do you take away from 579 00:30:41,000 --> 00:30:43,600 that? It's almost like you have to be 580 00:30:43,800 --> 00:30:46,300 if not the regulator, at least the skeptic. 581 00:30:46,300 --> 00:30:50,800 And I think that one of the real truth is that there are people 582 00:30:50,800 --> 00:30:54,100 in crypto who I think you can trust, who I trust. 583 00:30:54,100 --> 00:30:57,000 It's hard to know who those people are, if you're not super 584 00:30:57,000 --> 00:30:59,700 engaged in the market and maybe that's the takeaway for a lot of 585 00:30:59,708 --> 00:31:02,000 people is you can't read a white paper. 586 00:31:02,400 --> 00:31:04,700 You can't hope that a regulator is going to do anything to 587 00:31:04,700 --> 00:31:07,600 protect you. You have to actually learn the 588 00:31:07,600 --> 00:31:11,800 landscape if you want to be engaged in a way that is risk. 589 00:31:11,800 --> 00:31:14,700 Controlled Regulators, especially in the United States 590 00:31:14,700 --> 00:31:17,600 are not cops on the beat really across any industry at this 591 00:31:17,600 --> 00:31:19,400 point. And so, if you're expecting 592 00:31:19,400 --> 00:31:21,900 that, it's always going to be disappointing for you. 593 00:31:22,000 --> 00:31:24,700 One thing I do want to touch on, is you talked about how Enron 594 00:31:24,700 --> 00:31:27,200 was founded, is kind of a bet that in the future. 595 00:31:27,200 --> 00:31:29,600 Energy markets would be deregulated in that would best 596 00:31:29,600 --> 00:31:32,000 benefit and run by think one of the important. 597 00:31:32,100 --> 00:31:35,500 Ancient things is that Enron didn't just make that bet. 598 00:31:35,500 --> 00:31:38,500 They took active steps to try and ensure the right. 599 00:31:38,500 --> 00:31:39,800 People were in power to make that happen. 600 00:31:39,800 --> 00:31:43,500 Do you have any thoughts on the relationship between the Bush 601 00:31:43,500 --> 00:31:46,900 family and Enron? Yeah, you know, I mean, there's 602 00:31:46,900 --> 00:31:50,700 I'm sure miles of deep dark stuff there, but I think my, the 603 00:31:50,700 --> 00:31:54,200 thing that I take away is actually how amazing it is that 604 00:31:54,200 --> 00:31:59,000 this actually happened with Ken Lay's good, buddy, George W, 605 00:31:59,000 --> 00:32:01,700 bush in the White House. They actually got criminally 606 00:32:02,200 --> 00:32:06,500 Cuted people went to jail and that was despite lay having I 607 00:32:06,508 --> 00:32:09,800 mean, as the stuff was unfolding, he was calling Alan 608 00:32:09,800 --> 00:32:15,000 Greenspan talking about how Enron was systemically risky and 609 00:32:15,000 --> 00:32:17,800 you know, to their credit, nobody bailed them out and you 610 00:32:17,808 --> 00:32:21,300 know what, everything was fine, everything California has 611 00:32:21,300 --> 00:32:24,300 electricity. Now despite Enron going bankrupt 612 00:32:24,600 --> 00:32:28,200 and, you know, I think that that's a major takeaway because 613 00:32:28,200 --> 00:32:30,500 the same thing I think would have been the case. 614 00:32:30,500 --> 00:32:33,400 Let's say, in 2008. 8, if the financial system had been 615 00:32:33,400 --> 00:32:37,000 treated a little bit less with less of a Velvet Touch. 616 00:32:37,000 --> 00:32:41,600 Let's say maybe there was so much anger afterwards that they 617 00:32:41,600 --> 00:32:44,300 were kind of, taken aback. I mean, I don't know how many 618 00:32:44,300 --> 00:32:47,300 employees worked around Ron out at its peak, but we're talking 619 00:32:47,300 --> 00:32:49,800 about at least 20 or 30,000 people, I think losing their 620 00:32:49,800 --> 00:32:52,700 jobs and about the loss of their, in the documentary. 621 00:32:52,700 --> 00:32:55,600 They talked to a gentleman in Portland, which has absolutely 622 00:32:55,600 --> 00:32:58,700 nothing to do with Houston, Texas and Enron who lost most of 623 00:32:58,708 --> 00:33:02,400 his life savings because he invested in in Enron I was told 624 00:33:02,400 --> 00:33:05,800 to, yeah, well, he was a I think he was like an employee. 625 00:33:05,800 --> 00:33:08,000 That particular guy was an employee of the city of a 626 00:33:08,000 --> 00:33:12,400 subsidiary and a lot of Enron employees had their 401K is 627 00:33:12,400 --> 00:33:15,400 heavily invested in Enron stock. So not only did they lose their 628 00:33:15,400 --> 00:33:18,400 jobs? In most cases, they lost a huge 629 00:33:18,400 --> 00:33:22,600 chunk, if not all of their retirement savings, and there 630 00:33:22,600 --> 00:33:26,900 are videos that are shown of Enron Executives encouraging 631 00:33:26,900 --> 00:33:31,700 employees to invest 100% of their 401ks into. 632 00:33:31,700 --> 00:33:34,600 And In stock which again, if we're talking about like red 633 00:33:34,600 --> 00:33:38,100 flags, like this is one of the makes my mind melt because on 634 00:33:38,100 --> 00:33:40,900 the one hand, yes, if you're a company, you want to convey that 635 00:33:40,900 --> 00:33:43,900 confidence, but it's the kind of thing that seems insane. 636 00:33:43,900 --> 00:33:46,700 If you know anything at all about finance and you hear 637 00:33:46,700 --> 00:33:51,300 somebody say, put your entire 401K in one stock. 638 00:33:51,400 --> 00:33:52,800 We have this term in crypto, right? 639 00:33:52,800 --> 00:33:56,300 Like hope IAM where people are just high on their own Supply. 640 00:33:56,900 --> 00:33:59,200 And I think that's a, that was a big moment. 641 00:33:59,200 --> 00:34:02,500 If I was looking at that moment of Enron, I would be like In 642 00:34:02,500 --> 00:34:06,100 that position is not going to be like, well we think we're doing 643 00:34:06,100 --> 00:34:09,000 really great but you should maybe diversify your portfolio, 644 00:34:09,000 --> 00:34:12,400 like just throw it out there just say it, once not to draw 645 00:34:12,400 --> 00:34:15,400 too many parallels here. Michael sailor just had that 646 00:34:15,400 --> 00:34:19,000 video come out recently where he's yelling telling people 647 00:34:19,000 --> 00:34:22,600 mortgage, your house, invest in Bitcoin, get rid of the business 648 00:34:22,600 --> 00:34:26,300 that you've had for 25 years and put that money into Bitcoin. 649 00:34:26,400 --> 00:34:28,300 If you have a mortgage already, get another mortgage. 650 00:34:28,300 --> 00:34:31,100 And if, if you if you have a car, sell your car and he's 651 00:34:31,100 --> 00:34:35,300 telling people To do everything. Take all of their assets, get 652 00:34:35,300 --> 00:34:38,300 rid of them and buy Bitcoin and like you're talking about, if 653 00:34:38,300 --> 00:34:41,800 that isn't a red flag. I don't know what is, yeah, I 654 00:34:41,800 --> 00:34:43,699 mean, that's very disappointing to hear. 655 00:34:43,699 --> 00:34:45,900 I haven't seen that video. I mean, sailor is in a 656 00:34:45,908 --> 00:34:49,600 particular position because I mean, he's hitched the stock of 657 00:34:49,600 --> 00:34:52,199 this publicly traded company to the value of Bitcoin. 658 00:34:55,100 --> 00:34:59,800 That's not necessarily 100% coming from his faith in the 659 00:34:59,800 --> 00:35:01,400 asset. Let's put it that way. 660 00:35:01,700 --> 00:35:05,200 Yeah, I was actually going to, I was about to describe the exact 661 00:35:05,200 --> 00:35:08,700 same scenario and how that gave me a similar feeling to watching 662 00:35:08,700 --> 00:35:11,700 the documentary because it's these people who are supposed to 663 00:35:11,700 --> 00:35:14,900 be responsible and who you expect to trust giving this 664 00:35:14,900 --> 00:35:18,100 advice that is extraordinarily dangerous. 665 00:35:18,200 --> 00:35:21,800 Yeah, recommending someone go into debt to purchase. 100. 666 00:35:21,800 --> 00:35:25,700 Volatility asset is absurd. I mean, I'm sure Danny 667 00:35:25,700 --> 00:35:27,600 responsible and I don't know. This is where we get into the 668 00:35:27,600 --> 00:35:31,100 big questions, right? Which is what what's happening, 669 00:35:31,100 --> 00:35:33,100 you know, what's happening in these markets, what's happening 670 00:35:33,100 --> 00:35:35,600 in reality? I mean we, this is a bigger 671 00:35:35,600 --> 00:35:39,200 topic, but we've already seen a pretty significant blip and down 672 00:35:39,200 --> 00:35:41,600 turning Bitcoin. And there's a lot of talk about 673 00:35:41,600 --> 00:35:44,500 a broader correction and and all of these things when a 674 00:35:44,500 --> 00:35:47,100 correction does come are going to be on the table for 675 00:35:47,100 --> 00:35:50,600 discussion because yeah, I mean you have to be a responsible 676 00:35:50,600 --> 00:35:54,500 investor and no one thing is a responsible investment. 677 00:35:54,700 --> 00:35:57,000 By itself, no matter how you feel about Bitcoin or anything 678 00:35:57,000 --> 00:36:00,400 else, Enron included, but none of these prods, whether it's 679 00:36:00,400 --> 00:36:03,300 Worldcom and Ron is that Madoff is another great example, it 680 00:36:03,300 --> 00:36:07,500 takes the bubble popping. So for Enron and Worldcom it was 681 00:36:07,500 --> 00:36:12,000 the Telecom bubble and the internet, bubble popping. 682 00:36:12,100 --> 00:36:15,400 And I just wonder if a lot of these cryptocurrency companies 683 00:36:15,400 --> 00:36:18,000 and for that matter like you're saying traditional Finance other 684 00:36:18,000 --> 00:36:21,200 stuff. If what they need to be exposed 685 00:36:21,300 --> 00:36:23,900 is simply a market correction and that's when you have 686 00:36:23,900 --> 00:36:26,600 Regulators come. In swarms and start being like, 687 00:36:26,600 --> 00:36:29,700 oh, I see a lot of problems here, you know, it's not 688 00:36:29,700 --> 00:36:33,500 necessarily like just to be clear, the correction doesn't 689 00:36:33,500 --> 00:36:37,800 necessarily result in Regulators suddenly like strapping on the 690 00:36:37,800 --> 00:36:39,300 armor and going out to do their digging. 691 00:36:39,600 --> 00:36:42,500 I mean, the correction exposes the structural flaws of the 692 00:36:42,500 --> 00:36:45,100 schemes that are happening. So with Enron and this is 693 00:36:45,107 --> 00:36:48,700 actually really important with a lot of these off-book entities. 694 00:36:49,200 --> 00:36:53,300 The reason that they were able to absorb all of this debt That 695 00:36:53,300 --> 00:36:56,700 was supposed to be on a neurons. Actual accounting books is 696 00:36:56,700 --> 00:37:01,700 because they were hedged against Enron Zone stock which was just 697 00:37:01,700 --> 00:37:04,000 like UPS the ante for the Insanity by the way. 698 00:37:04,000 --> 00:37:07,800 Because it's like here by our Bad Assets, give us cash. 699 00:37:07,900 --> 00:37:11,500 And if anything goes wrong, you can have our stock which by the 700 00:37:11,500 --> 00:37:13,900 way, is going to be collapsing in value, if anything goes 701 00:37:13,900 --> 00:37:15,900 wrong. So that's exactly what happened. 702 00:37:16,000 --> 00:37:18,900 And as soon as Enron stock started going down, a lot of 703 00:37:18,900 --> 00:37:23,900 these off-book entities were basically forced to unwind or, 704 00:37:23,900 --> 00:37:27,000 you know, I mean, in essence, it's a margin call, right? 705 00:37:27,000 --> 00:37:31,100 Your you have a bet that goes wrong and your but you know, 706 00:37:31,100 --> 00:37:33,800 that's what happens. And that's why, you know, Madoff 707 00:37:33,800 --> 00:37:36,500 was able to keep going until he couldn't what's the Buffett 708 00:37:36,500 --> 00:37:38,700 quote, anybody can remember it off the top of their head. 709 00:37:39,100 --> 00:37:40,800 No one knows. You're swimming naked until the 710 00:37:40,800 --> 00:37:42,100 tide goes out. Right? 711 00:37:42,100 --> 00:37:44,300 Exactly. That's the other, you know, big 712 00:37:44,300 --> 00:37:47,000 lesson here for everybody. I mean we've been in a bull 713 00:37:47,000 --> 00:37:50,500 market for everything for two and a half years and arguably 714 00:37:50,500 --> 00:37:53,700 for 10 years. So the water hasn't gone out in 715 00:37:53,700 --> 00:37:56,800 a while if Anything crypto has the advantage of having had a 716 00:37:56,800 --> 00:38:01,100 major major chill in, you know, 2018 2019 when people were 717 00:38:01,100 --> 00:38:04,200 really starving but of course it's not that hard to set up a 718 00:38:04,200 --> 00:38:06,800 fresh scam so it's not like you need a lot of lead time. 719 00:38:11,000 --> 00:38:13,900 When you were talking to a specific story is reminded of 720 00:38:14,000 --> 00:38:16,700 specifically the collateralizing with the stock and like that 721 00:38:16,700 --> 00:38:18,900 being treated as making the deal, okay? 722 00:38:19,100 --> 00:38:22,300 Reminded me of the revolving credit agreement that was 723 00:38:22,300 --> 00:38:26,500 negotiated between B and x and together in March of 2019 724 00:38:26,600 --> 00:38:29,500 because they described it as a secured loan, but it was secured 725 00:38:29,500 --> 00:38:32,500 by shares of iPhone x which was one of the companies, obviously 726 00:38:32,500 --> 00:38:35,900 that runs the bitfenix platform. And so in the case, where 727 00:38:35,900 --> 00:38:39,200 bitfenix had not gotten access to this loan facility or where 728 00:38:39,200 --> 00:38:41,800 they in the future. Needed to have really draw upon 729 00:38:41,800 --> 00:38:44,600 it. Those stocks and up not being 730 00:38:44,600 --> 00:38:46,700 valued enough to actually cover the value of the loan. 731 00:38:47,400 --> 00:38:48,500 Right. Right. 732 00:38:48,500 --> 00:38:51,000 Exactly. It's an exact parallel. 733 00:38:51,000 --> 00:38:53,000 Yes. And so that was just a very 734 00:38:53,000 --> 00:38:55,400 striking thing to me. And it's the same way like with 735 00:38:55,400 --> 00:38:57,800 Hollow being one of the directors of Dell chain 736 00:38:57,800 --> 00:39:00,800 obviously being an offshoot of Delta and then also still being 737 00:39:00,800 --> 00:39:04,500 CTO at bitfenix in tether that just strikes in my head is, 738 00:39:04,500 --> 00:39:07,000 remarkably similar to the Enron Executives. 739 00:39:07,100 --> 00:39:10,000 Well, and the thing that we don't know or, you know, we've 740 00:39:10,000 --> 00:39:12,900 talked a Little bit about this. The thing that we don't know, in 741 00:39:12,900 --> 00:39:17,100 some of the tether at this stations, is this, this question 742 00:39:17,100 --> 00:39:20,000 of related entities as the commercial paper that they're 743 00:39:20,000 --> 00:39:22,600 holding, you know, I went through the the trucco thing 744 00:39:22,600 --> 00:39:26,500 where you have Enron setting its own price for assets that it's 745 00:39:26,500 --> 00:39:29,400 buying back from an outside quote-unquote outside entity 746 00:39:29,800 --> 00:39:32,600 that's not really an outside entity and so you can least 747 00:39:32,600 --> 00:39:37,400 hypothetically imagine a similar situation where you know tether 748 00:39:37,400 --> 00:39:40,300 or any other stable coin who knows, is hypothetical. 749 00:39:40,400 --> 00:39:46,000 I can say this commercial paper from our good friends, over at 750 00:39:46,000 --> 00:39:48,700 this exchange, that we don't have a formal relationship with 751 00:39:48,800 --> 00:39:52,600 is worth X and that's what's backing our asset. 752 00:39:52,600 --> 00:39:55,600 It does ultimately become about Bubbles and their deflation 753 00:39:55,600 --> 00:39:58,300 because you can say that and you're safe until somebody 754 00:39:58,300 --> 00:40:00,200 actually asks to see the receipts. 755 00:40:00,200 --> 00:40:02,500 Yeah. We're right back to the as long 756 00:40:02,500 --> 00:40:05,500 as you can continue the illusion as long as you keep convincing 757 00:40:05,500 --> 00:40:07,900 people, that this is going to exist into the future and be 758 00:40:07,908 --> 00:40:11,900 valuable in the future. You can Jane, the fraud itself. 759 00:40:11,900 --> 00:40:13,400 And so I think that's really good. 760 00:40:13,400 --> 00:40:15,600 Parallel. And a good example of how, 761 00:40:15,700 --> 00:40:20,000 without transparency into how a business is valuing its assets 762 00:40:20,000 --> 00:40:23,200 and it's lines of business. It can be easy to get taken in 763 00:40:23,300 --> 00:40:27,100 by the narrative, they construct around it, Simplicity itself. 764 00:40:27,100 --> 00:40:30,400 I mean, it's just made up, there's, there's nothing to stop 765 00:40:30,400 --> 00:40:33,500 them from Doing It. Ultimately, the illusion versus 766 00:40:33,500 --> 00:40:35,600 character is where I end up. I don't know. 767 00:40:36,000 --> 00:40:38,400 I mean, what do you guys think? Like, in this space, maybe, I 768 00:40:38,400 --> 00:40:40,900 don't know if your total Tactics. 769 00:40:40,900 --> 00:40:45,000 But like, are there, what are your metrics for? 770 00:40:45,000 --> 00:40:47,100 Trying to figure out if something is legit or not? 771 00:40:47,500 --> 00:40:52,300 I can tell you that, I like to look into the corporate 772 00:40:52,300 --> 00:40:54,800 structure. So I like to see how transparent 773 00:40:54,800 --> 00:40:57,200 the corporate structure is who they're registered with. 774 00:40:57,200 --> 00:40:59,500 I like to know who the executive leadership is. 775 00:40:59,500 --> 00:41:02,500 I think the executive leadership is actually quite telling what 776 00:41:02,500 --> 00:41:06,200 we've been talking about here at Enron Jeffrey Skilling, was 777 00:41:06,200 --> 00:41:10,200 tantamount to everything. All of them more. 778 00:41:10,400 --> 00:41:13,700 And ethical issues at Enron Jeffrey Skilling was all of 779 00:41:13,707 --> 00:41:15,500 that. And then you have Ken Lay, who 780 00:41:15,500 --> 00:41:19,100 was like endorsing all of that and then you have Andy fast out, 781 00:41:19,107 --> 00:41:21,200 who was like, I'm just following orders. 782 00:41:21,200 --> 00:41:24,400 I the entire executive leadership there was perfect for 783 00:41:24,400 --> 00:41:27,500 fraud and so I think that's very important that it. 784 00:41:27,500 --> 00:41:29,900 What other what other kind of metrics are good for this? 785 00:41:30,300 --> 00:41:32,900 Well, I think one of the things that can be valuable in the 786 00:41:32,908 --> 00:41:36,100 cryptocurrency space is, I generally tend to have more 787 00:41:36,100 --> 00:41:40,200 trust for the companies that have been around for a while. 788 00:41:40,400 --> 00:41:44,100 Because that means they've been able to survive a couple major 789 00:41:44,100 --> 00:41:46,300 draw Downs at this point. So they weren't like so 790 00:41:46,300 --> 00:41:50,200 structurally insolvent, whenever that the drawdown exposed their 791 00:41:50,200 --> 00:41:53,500 problems. And I think the vast majority of 792 00:41:53,500 --> 00:41:57,900 cryptocurrency businesses have had issues at some point at this 793 00:41:57,900 --> 00:41:59,800 point. So often seeing how they 794 00:41:59,800 --> 00:42:01,600 responded to those can be telling. 795 00:42:02,000 --> 00:42:05,900 And so the ones who are honest and forthright or will detail 796 00:42:05,900 --> 00:42:08,900 what went wrong, and what they had to do to fix, it are 797 00:42:08,900 --> 00:42:13,300 generally going to To Garner more trust from me than other 798 00:42:13,300 --> 00:42:15,200 ones. Yeah, it's really unfortunate. 799 00:42:15,200 --> 00:42:18,300 Its largest crypto company. Coinbase is actually a pretty 800 00:42:18,300 --> 00:42:21,700 bad actor in terms of transparency, but that's a topic 801 00:42:21,700 --> 00:42:24,800 for another day. So are there any parting words 802 00:42:24,800 --> 00:42:29,000 that you would like to leave us with or any issues or concerns 803 00:42:29,000 --> 00:42:33,200 or just contemplations in regard to Enron, I don't have to have 804 00:42:33,200 --> 00:42:36,700 anything extra to add about Enron specifically, but I will 805 00:42:36,700 --> 00:42:40,100 say because I think we touched on it and it Bears repeating 806 00:42:40,100 --> 00:42:41,700 that. You know, there's a lot of scary 807 00:42:41,700 --> 00:42:44,700 stuff out there and there are another Warren Buffett quote. 808 00:42:44,700 --> 00:42:47,800 I mean I hate it's so trite, but it's so true. 809 00:42:48,200 --> 00:42:51,700 Which is be fearful, when others are greedy, they be greedy when 810 00:42:51,700 --> 00:42:55,000 others are fearful and right now, people are greedy and that 811 00:42:55,000 --> 00:42:58,300 makes me fearful so. I mean that would be maybe the 812 00:42:58,300 --> 00:43:01,200 last thing I would say because people at Enron were very greedy 813 00:43:01,600 --> 00:43:05,400 and it ended where it ended and we're in an era where there's a 814 00:43:05,408 --> 00:43:08,600 lot of greed to go around and it's going to end eventually 815 00:43:08,600 --> 00:43:10,200 somehow. Thank you very much. 816 00:43:10,300 --> 00:43:13,300 For coming on David everyone. Make sure you check out David's 817 00:43:13,300 --> 00:43:15,700 book. Bitcoin is Magic internet moist. 818 00:43:15,700 --> 00:43:20,400 Memetic Warfare in the end of me reality and I enjoyed talking 819 00:43:20,400 --> 00:43:24,900 about invented a awesome and I'm on Twitter at just at David's e 820 00:43:24,900 --> 00:43:29,500 Morris so that's going to do it for a conversation on Enron with 821 00:43:29,500 --> 00:43:31,600 David Morris. Hopefully you enjoyed listening 822 00:43:31,600 --> 00:43:34,200 to that as much as we enjoyed discussing it. 823 00:43:34,300 --> 00:43:37,500 I'm looking forward to a couple other interviews that we're 824 00:43:37,500 --> 00:43:40,000 releasing this week. It's going to be a really busy 825 00:43:40,000 --> 00:43:41,500 week. For us next. 826 00:43:41,500 --> 00:43:43,700 We're having Rohan gray. And after that, we're going to 827 00:43:43,707 --> 00:43:47,600 be doing an interview with Preston, burn diametrically 828 00:43:47,600 --> 00:43:50,600 opposed to one another completely different and yet 829 00:43:50,600 --> 00:43:53,600 both appearing on our show. So I'm very, very excited about 830 00:43:53,600 --> 00:43:55,400 this and I hope you guys join us next time. 831 00:43:55,400 --> 00:43:55,900 Thanks.