3 ms·

Wut? Enron was literally shutting down energy grids in one location to spike prices in another. Way way way more to Enron story than financing to begin with. N

Wut? Enron was literally shutting down energy grids in one location to spike prices in another. Way way way more to Enron story than financing to begin with. Not everything is an Enron

cmiles8 21d ago
Enron comparisons folks are making is about why they failed, not why they made a lot of money. They ultimately failed for reasons scarily similar to what’s going on now across the industry with special purpose vehicles and off balance sheet liabilities.
- infecto 21d ago
  Just wrong. It’s a superficial comparison at best. Enron was cooking books using entities they controlled but making it look like they did not. You could make an argument that maybe this is similar to oracle (I think?) in the com bubble financing networking gear to customers. I still think that misses the mark since the customers using hardware are have demand for computer by their customers.
  - mrlonglong 21d ago
    Boots. You could cook boots but they still won't be edible.
  - cmiles8 21d ago
    And people were really buying electricity too. The WSJ recently reported that there’s around 3 trillion in off balance sheet liabilities floating around in AI. It’s very unclear where the $3 trillion to pay those bills will come from. Nobody is saying it’s “illegal” but it was news in the WSJ as the companies using creative accounting aren’t exactly going out of their way to make sure everyone knows that this $3 trillion in liabilities exists.
    - infecto 21d ago
      What is your point about electricity? Enron was cooking their books by controlling other companies they said they had no control of to improve their own financial health. I think there questions for the commitments your talking about but they are not due today and I suspect when spread out over the life of the commitment are dwarfed by cash flow.
SecretDreams 21d ago
> Enron was literally shutting down energy grids in one location to spike prices in another. Kind of reminds me of the current lack of supply of GPUs and ram to consumers.
- infecto 21d ago
  How? Two very different things but because we don’t like AI we make bad comparisons?
SpicyLemonZest 21d ago
Enron was doing some bad things in energy markets, but they were profitable bad things and unrelated to the collapse. What brought Enron down was accounting problems, with many of the specific details having clear parallels here. In particular, the "circular financing" agreements look very structurally similar to things like the Merrill Lynch barges. They're not exactly the same, but Nvidia's statements in the source article make me more rather than less concerned; does it just so happen to be the case that their investment targets all want to spend lots of money on Nvidia products, or does an Nvidia investment come with implicit and unaccounted guarantees that the target will spend lots of money on Nvidia products?

Wut? Enron was literally shutting down energy grids in one location to spike prices in another. Way way way more to Enron story than financing to begin with. Not everything is an Enron

cmiles8 21d ago

Enron comparisons folks are making is about why they failed, not why they made a lot of money. They ultimately failed for reasons scarily similar to what’s going on now across the industry with special purpose vehicles and off balance sheet liabilities.

infecto 21d ago
Just wrong. It’s a superficial comparison at best. Enron was cooking books using entities they controlled but making it look like they did not. You could make an argument that maybe this is similar to oracle (I think?) in the com bubble financing networking gear to customers. I still think that misses the mark since the customers using hardware are have demand for computer by their customers.
- mrlonglong 21d ago
  Boots. You could cook boots but they still won't be edible.
- cmiles8 21d ago
  And people were really buying electricity too. The WSJ recently reported that there’s around 3 trillion in off balance sheet liabilities floating around in AI. It’s very unclear where the $3 trillion to pay those bills will come from. Nobody is saying it’s “illegal” but it was news in the WSJ as the companies using creative accounting aren’t exactly going out of their way to make sure everyone knows that this $3 trillion in liabilities exists.
  - infecto 21d ago
    What is your point about electricity? Enron was cooking their books by controlling other companies they said they had no control of to improve their own financial health. I think there questions for the commitments your talking about but they are not due today and I suspect when spread out over the life of the commitment are dwarfed by cash flow.

SecretDreams 21d ago

> Enron was literally shutting down energy grids in one location to spike prices in another. Kind of reminds me of the current lack of supply of GPUs and ram to consumers.

infecto 21d ago
How? Two very different things but because we don’t like AI we make bad comparisons?

SpicyLemonZest 21d ago

Enron was doing some bad things in energy markets, but they were profitable bad things and unrelated to the collapse. What brought Enron down was accounting problems, with many of the specific details having clear parallels here. In particular, the "circular financing" agreements look very structurally similar to things like the Merrill Lynch barges. They're not exactly the same, but Nvidia's statements in the source article make me more rather than less concerned; does it just so happen to be the case that their investment targets all want to spend lots of money on Nvidia products, or does an Nvidia investment come with implicit and unaccounted guarantees that the target will spend lots of money on Nvidia products?