The Smartest Guys in the Room

The Smartest Guys in the Room is a non-fiction work by Peter Elkind and Bethany McLean. In this book they explore the corruption in Enron which lead to both its grand rise, and equally grand fall. The book centers around three Enron employees: Ken Lay, the CEO of Enron whose role in this scandal is still ambiguous as to whether he was involved or just oblivious. Jeffrey Skilling, who was the main figure in orchestrating the fraud which took place. And finally, Andy Fastow, a math genius who developed many of the financial tricks that were used at Enron. The book does a great job of telling the events as a story rather than just a really long news article. This allows for the 400+ page book to be more easily readable than most non-fiction works because it reads much like a novel. The thing I enjoyed most about reading this book was learning about the different complex and creative economic tricks of Enron. For example, Enron needed someone to absorb their losses in order to keep stocks up, but obviously they couldn't trade with themselves. They then figured out that for a company to be considered an independent company it only has to have 3% unique stock. This means that 97% of the company could be Enron, and even better, the 3% could be made up of another smaller company which is also 97% Enron and 3 percent a smaller company which is also 97% Enron and so on. This meant that on paper Enron could dump their losses on a company that was essentially themselves except for a minute percent. The reason I enjoyed reading about these things is because in a weird way, I kind of admired some of these guys. I am aware that they did some very illegal things and destroyed the life savings of massive numbers of people. However they were also a viciously intelligent group, who came up with incredibly innovative and complex ideas, some of which(the legal ones anyway) are still used by many companies today.