Enron Thoughts

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The Enron incident has reinforced for all of us the importance of how you structure and position any kind of a deal. I wonder what might have happened (or might yet happen ...) if Enron management and advisors understood and learned from the creativity of the traditional Texas horse trader. Should we raffle off the remnants of Enron ... ?

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Once an old Texas horse trader named Sam was driving down a back country road when he spotted a sign on the side of a barn:

"Mule for Sale."

Turning down the lane toward the barn, he spotted Ben, the owner, standing by the farm house.

"Hey Ben, how much for your mule?" shouted Sam.

"Two hundred dollars" replied Ben.

"Ben, you know ain't no mule worth that price ... I'll give you fifty" countered Sam.

"He's a good mule, Sam ... over at the vet right now getting his shots."

After some dickering, they finally settled on a price of one hundred dollars; Sam gave Ben the money and Ben agreed to deliver the mule the following week.

Next Monday, Sam received a call from Ben.

"Sam, I got a couple pieces of bad news for you" said Ben. "Remember that mule I sold you ... it died over the weekend."

"Sorry to hear that, Ben. But that's OK, you can just give me my money back."

"Well Sam, that's the other piece of bad news ... I already spent the hundred you gave me, so I can't return it" continued Ben.

Sam reflected a minute and said, "Well, why don't you deliver the mule to me anyway. I'm sure I'll think of something ... we can talk about settling up later."

So, later that week, Ben delivered the dead mule to Sam.

Several weeks later, when Ben came to town, he met Sam in the street. Sam smiled and greeted him with a warm handshake. Somewhat puzzled by Sam's greeting, Ben said "Sam, I'm sorry about the mule. How are we going to work this out?"

"Forget about it Ben," replied Sam. "I should thank you ... that mule of yours just made me rich."

"How could that be?" asked Ben.

"Here's what I did" replied Sam. "I went around town and posted a bunch of fliers advertising a raffle: a total of 1,000 chances at $1 each to win a prize mule. Way I figure, I made $899 off of your mule."

"How do you figure that?" asked Ben.

"Well, I sold $1,000 worth of raffle tickets and I paid you $100 for the mule; my only other expense was refunding the $1 ticket of the guy that won the raffle."

----------------A Final Thought ...

"Secrecy is the badge of fraud."

- Sir John Chadwick (b. 1941), British judge