In fact, from a realistic perspective, there is no big difference between Changxin Bank and Enron Company today. Both parties have huge debt problems hidden under the water. The operators of both parties are trying hard to cover up these extremely risky debt problems, thereby making profits for their respective shareholders.
From an economic perspective, there is often a contradiction in the process of company operations, and the emergence of this contradiction will prompt the actual managers of the company to choose high-risk business methods. This contradiction generally occurs in the process of poor management of the company or rapid expansion.
As we all know, when a company is not well-managed or expands rapidly, it is often accompanied by a large amount of debt problems. In other words, in order to maintain operations or raise funds to launch acquisitions, the company basically chooses to borrow or borrow.
When the company's debt is high to a certain proportion, the conflict between the company's shareholders and the company's creditors will be highlighted. The reason is that the holders of corporate bonds and banks that provide loans to the company need the company to ensure sufficient cash payment ability.
At this time, the company's annual profit must first deduct the part of repaying the debt, and the rest is the dividend return of the company's shareholders.
In this way, company shareholders often choose high-risk operation methods for their own interests. Considering that the actual manager of the company, that is, the company's CEO, is responsible for the interests of the company's shareholders, the company's final decision often chooses high-risk operation methods.
For example, the total value of a company's current assets is 100 million yuan, while the amount of debt due one year later is 10.5 billion yuan.
Now, there are two investment options in front of the CEO: one is to invest in one-year treasury bonds, with the interest rate after maturity of 5%. The other is to invest in futures trade, which may make a profit of 200 million yuan in one year, or you may lose nothing, or even have a higher probability of losing nothing.
So in this case, as the manager selected by the company's shareholders, how should we choose between the two options?
If you choose the first one, there is obviously no big risk, so you don’t have to worry about losing money. However, the income obtained after selling the treasury bonds a year later can only meet the part that the creditors need. After deducting this part, the company’s shareholders have nothing, the company’s value is zero, and all assets are used to repay the debt.
There is no doubt that in this way, this CEO is not far from getting out, let alone having a high salary
And choose the second one?
That is a big gamble, what if you lose the bet?
The company's value is also zero, the company's shareholders still have nothing, and the creditors will suffer huge losses
But if the bet wins, even if the income is only a little higher than 10.5 billion, the company can delay it, and shareholders will win the premium brought by the company's high-risk operations and will not have nothing. At the same time, the CEO can also get enough bonuses, which is a joy to everyone
In this way, you can see that for operators, it is obvious that the second option is more suitable, because no matter how small the possibility of winning a bet is, they are worth a fight, because the real risks in the entire link are actually borne by the creditors.
From this example, we can see why Enron Company has to conceal its true financial situation and why Changxin Bank has been dragging it down and refused to go bankrupt
For shareholders of Changxin Bank like Miyashita Kita, as long as the bank exists for one day and the debt status is hidden for one day, they can get profits from it. This income may come from depositors’ deposits or from inflows of public funds. In short, as long as the bank does not go bankrupt for one day, they can make money for one day.
Compared with Changxin Bank, Enron's situation is obviously more serious. They are also in high debt, but as long as the real financial situation is not exposed, and the transition from industry to financial field, with the good profit situation they have made, there is no need to worry about not being able to absorb investment. To be precise, there is no need to worry about not being able to cheat money.
Therefore, this leads to another law in economics: general enterprises tend to expand their debts, and when the debt reaches a certain ratio, they have the motivation to conceal the real debts.
Therefore, the shareholders of Miyashita Kita and Changxin Bank need to conceal the bank's non-performing debt problems, so that all depositors think that everything in the bank is working well and that there is no problem with their savings.
The banking bureau should think that the bank's non-performing debt problem is not that serious, and just inject another public fund can solve the crisis
The same is true for Enron. They need to make false prosperity so that investors, creditors and potential customers believe that the company's profitability is quite good and that everyone can invest their own funds and earn rich returns
After the bankruptcy of Enron in the past life of the Minatoshita Kitani, the US government launched a years-long investigation into Enron's financial fraud crime. However, the core of the investigation was always mainly the company's CEO Jeffrey Skilling, but did not take any action against the founder and former CEO Kenneth Lai. As for Enron's shareholders, they became victims and did not have to bear any responsibility for the crime. They also received large amounts of compensation afterwards.
Therefore, Enron's crimes have nothing to do with the shareholders who always monitor the company's operations. All crimes are blamed on the company's operators, that is, executives. With the same logic, if Changxin Bank goes bankrupt in the future, the responsibility will not be the shareholders such as the Minatoshita Kita, but the bank executives will be the ones who belong to the bank's executives.
However, questions like who is responsible are obviously a matter of the later story. For now, Kita Kitani of Miyagi has not planned to let Changxin Bank go bankrupt so soon. He still wants to struggle, or he still wants to wait and see if this bank has room for rescue.
Let’s take a look at the two companies, Anran and Changxin. The former is a borrower. It has huge debts and has caused the capital chain to be tight due to debts. In order to avoid the company going bankrupt due to the breakdown of the capital chain, this giant transnational company chose to commit fraud to cover up debts and report revenue, so as to attract more investors and borrow more debts with eye-catching profit data.
More debts will in turn swallow more profits of the company, causing further deterioration of the company's operations, which makes the debts like snowballs, getting bigger and bigger, and eventually lead to the day when the company's actual benefits are exposed, the entire company went bankrupt overnight and there was no chance of recovery.
The latter, that is, Changxin Bank, is actually a creditor. Its most fundamental problem is that there are too many borrowers like Anron Company under its command. These borrowers are all companies with donkey dung balls that are light on the outside. They seem to have good operating conditions and have sufficient debt repayment capabilities, but in fact, the funds they borrowed are no longer possible to be returned.
Many such unscrupulous loans that cannot be returned have become a burden on Changxin Bank, and at the same time, it is equivalent to the debts that Changxin Bank itself bears.
For the current Changxin Bank, in order to avoid its own bankruptcy, it must cover up the existence of these non-performing loans, and even make outside investors have the illusion that the bank has a good operating condition and customers with borrowing and lending relationships have the ability to repay their debts, thereby attracting more depositors and investors
For the former, it is not difficult to cover up the debt problem now. On the one hand, it is because the company is strong and on the other hand, it is because of its complex background. With its complex relationship with the American Democratic and Republican parties, no one will investigate it before its problems are completely exposed.
For the latter, the troubles have come to the door, because under the promotion of certain American forces, the Bank of International Settlements is checking its accounts. If certain countermeasures are not taken, the problem of Changxin Bank's non-performing loans will not be concealed for long.
Therefore, after recalling the problem of Enron Company through past life memories, the first problem that Kita Kita thought of was that he planned to establish some kind of connection between Changxin Bank and Enron Company to circumvent the current investigation of Changxin Bank by the Bank of International Settlements on Changxin
The Bank for International Settlements is an international financial organization composed of central banks of several countries. The person who really talks is actually Washington.
The fundamental purpose of the Bank of International Settlements to liquidate debts from several Japanese banks is not to rectify the financial order, but to put pressure on Tokyo to force it to make concessions in a series of commercial negotiations
As a shareholder of Changxin Bank, Kita Kita is not able to force the Bank of International Settlements to make any concessions. He does not have that much energy yet
But his lack of that energy does not mean that others do not have this energy either. For example, Anron Company, and Kita Kitaki believe they can definitely do something.
In his previous life, the scandal involved in the Enron bankruptcy case was not just Enron itself. After Worldcom also announced bankruptcy, Enron's creditor group made a comeback and sued ten American banks including Citibank, JPMorgan Chase, Barclays, Merrill Lynch, and two large legal firms, because these banks and law firms were involved in Enron's financial fraud.
In the end, after the protracted court confrontation, these banks made some compensation accordingly, of which the most compensation was Citibank. The bank paid 2 billion yuan, mainly to calm the situation.
So, to put it bluntly, the bankruptcy of Enron Company is actually a feast for Wall Street masters, Jeffrey Skilling?
How can he, a CEO, handle such a big deal
And the plan of the Hachimashita Kita is to rely on the influence of Enron to help Changxin Bank avoid this aggressive debt settlement
From an economic perspective, there is often a contradiction in the process of company operations, and the emergence of this contradiction will prompt the actual managers of the company to choose high-risk business methods. This contradiction generally occurs in the process of poor management of the company or rapid expansion.
As we all know, when a company is not well-managed or expands rapidly, it is often accompanied by a large amount of debt problems. In other words, in order to maintain operations or raise funds to launch acquisitions, the company basically chooses to borrow or borrow.
When the company's debt is high to a certain proportion, the conflict between the company's shareholders and the company's creditors will be highlighted. The reason is that the holders of corporate bonds and banks that provide loans to the company need the company to ensure sufficient cash payment ability.
At this time, the company's annual profit must first deduct the part of repaying the debt, and the rest is the dividend return of the company's shareholders.
In this way, company shareholders often choose high-risk operation methods for their own interests. Considering that the actual manager of the company, that is, the company's CEO, is responsible for the interests of the company's shareholders, the company's final decision often chooses high-risk operation methods.
For example, the total value of a company's current assets is 100 million yuan, while the amount of debt due one year later is 10.5 billion yuan.
Now, there are two investment options in front of the CEO: one is to invest in one-year treasury bonds, with the interest rate after maturity of 5%. The other is to invest in futures trade, which may make a profit of 200 million yuan in one year, or you may lose nothing, or even have a higher probability of losing nothing.
So in this case, as the manager selected by the company's shareholders, how should we choose between the two options?
If you choose the first one, there is obviously no big risk, so you don’t have to worry about losing money. However, the income obtained after selling the treasury bonds a year later can only meet the part that the creditors need. After deducting this part, the company’s shareholders have nothing, the company’s value is zero, and all assets are used to repay the debt.
There is no doubt that in this way, this CEO is not far from getting out, let alone having a high salary
And choose the second one?
That is a big gamble, what if you lose the bet?
The company's value is also zero, the company's shareholders still have nothing, and the creditors will suffer huge losses
But if the bet wins, even if the income is only a little higher than 10.5 billion, the company can delay it, and shareholders will win the premium brought by the company's high-risk operations and will not have nothing. At the same time, the CEO can also get enough bonuses, which is a joy to everyone
In this way, you can see that for operators, it is obvious that the second option is more suitable, because no matter how small the possibility of winning a bet is, they are worth a fight, because the real risks in the entire link are actually borne by the creditors.
From this example, we can see why Enron Company has to conceal its true financial situation and why Changxin Bank has been dragging it down and refused to go bankrupt
For shareholders of Changxin Bank like Miyashita Kita, as long as the bank exists for one day and the debt status is hidden for one day, they can get profits from it. This income may come from depositors’ deposits or from inflows of public funds. In short, as long as the bank does not go bankrupt for one day, they can make money for one day.
Compared with Changxin Bank, Enron's situation is obviously more serious. They are also in high debt, but as long as the real financial situation is not exposed, and the transition from industry to financial field, with the good profit situation they have made, there is no need to worry about not being able to absorb investment. To be precise, there is no need to worry about not being able to cheat money.
Therefore, this leads to another law in economics: general enterprises tend to expand their debts, and when the debt reaches a certain ratio, they have the motivation to conceal the real debts.
Therefore, the shareholders of Miyashita Kita and Changxin Bank need to conceal the bank's non-performing debt problems, so that all depositors think that everything in the bank is working well and that there is no problem with their savings.
The banking bureau should think that the bank's non-performing debt problem is not that serious, and just inject another public fund can solve the crisis
The same is true for Enron. They need to make false prosperity so that investors, creditors and potential customers believe that the company's profitability is quite good and that everyone can invest their own funds and earn rich returns
After the bankruptcy of Enron in the past life of the Minatoshita Kitani, the US government launched a years-long investigation into Enron's financial fraud crime. However, the core of the investigation was always mainly the company's CEO Jeffrey Skilling, but did not take any action against the founder and former CEO Kenneth Lai. As for Enron's shareholders, they became victims and did not have to bear any responsibility for the crime. They also received large amounts of compensation afterwards.
Therefore, Enron's crimes have nothing to do with the shareholders who always monitor the company's operations. All crimes are blamed on the company's operators, that is, executives. With the same logic, if Changxin Bank goes bankrupt in the future, the responsibility will not be the shareholders such as the Minatoshita Kita, but the bank executives will be the ones who belong to the bank's executives.
However, questions like who is responsible are obviously a matter of the later story. For now, Kita Kitani of Miyagi has not planned to let Changxin Bank go bankrupt so soon. He still wants to struggle, or he still wants to wait and see if this bank has room for rescue.
Let’s take a look at the two companies, Anran and Changxin. The former is a borrower. It has huge debts and has caused the capital chain to be tight due to debts. In order to avoid the company going bankrupt due to the breakdown of the capital chain, this giant transnational company chose to commit fraud to cover up debts and report revenue, so as to attract more investors and borrow more debts with eye-catching profit data.
More debts will in turn swallow more profits of the company, causing further deterioration of the company's operations, which makes the debts like snowballs, getting bigger and bigger, and eventually lead to the day when the company's actual benefits are exposed, the entire company went bankrupt overnight and there was no chance of recovery.
The latter, that is, Changxin Bank, is actually a creditor. Its most fundamental problem is that there are too many borrowers like Anron Company under its command. These borrowers are all companies with donkey dung balls that are light on the outside. They seem to have good operating conditions and have sufficient debt repayment capabilities, but in fact, the funds they borrowed are no longer possible to be returned.
Many such unscrupulous loans that cannot be returned have become a burden on Changxin Bank, and at the same time, it is equivalent to the debts that Changxin Bank itself bears.
For the current Changxin Bank, in order to avoid its own bankruptcy, it must cover up the existence of these non-performing loans, and even make outside investors have the illusion that the bank has a good operating condition and customers with borrowing and lending relationships have the ability to repay their debts, thereby attracting more depositors and investors
For the former, it is not difficult to cover up the debt problem now. On the one hand, it is because the company is strong and on the other hand, it is because of its complex background. With its complex relationship with the American Democratic and Republican parties, no one will investigate it before its problems are completely exposed.
For the latter, the troubles have come to the door, because under the promotion of certain American forces, the Bank of International Settlements is checking its accounts. If certain countermeasures are not taken, the problem of Changxin Bank's non-performing loans will not be concealed for long.
Therefore, after recalling the problem of Enron Company through past life memories, the first problem that Kita Kita thought of was that he planned to establish some kind of connection between Changxin Bank and Enron Company to circumvent the current investigation of Changxin Bank by the Bank of International Settlements on Changxin
The Bank for International Settlements is an international financial organization composed of central banks of several countries. The person who really talks is actually Washington.
The fundamental purpose of the Bank of International Settlements to liquidate debts from several Japanese banks is not to rectify the financial order, but to put pressure on Tokyo to force it to make concessions in a series of commercial negotiations
As a shareholder of Changxin Bank, Kita Kita is not able to force the Bank of International Settlements to make any concessions. He does not have that much energy yet
But his lack of that energy does not mean that others do not have this energy either. For example, Anron Company, and Kita Kitaki believe they can definitely do something.
In his previous life, the scandal involved in the Enron bankruptcy case was not just Enron itself. After Worldcom also announced bankruptcy, Enron's creditor group made a comeback and sued ten American banks including Citibank, JPMorgan Chase, Barclays, Merrill Lynch, and two large legal firms, because these banks and law firms were involved in Enron's financial fraud.
In the end, after the protracted court confrontation, these banks made some compensation accordingly, of which the most compensation was Citibank. The bank paid 2 billion yuan, mainly to calm the situation.
So, to put it bluntly, the bankruptcy of Enron Company is actually a feast for Wall Street masters, Jeffrey Skilling?
How can he, a CEO, handle such a big deal
And the plan of the Hachimashita Kita is to rely on the influence of Enron to help Changxin Bank avoid this aggressive debt settlement
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