Example research essay topic: Long Term Private Investment - 1,279 words

NOTE: Free essay sample provided on this page should be used for references or sample purposes only. The sample essay is available to anyone, so any direct quoting without mentioning the source will be considered plagiarism by schools, colleges and universities that use plagiarism detection software. To get a completely brand-new, plagiarism-free essay, please use our essay writing service.
One click instant price quote

... l (NSC), Bush's 'nerve center' for international crises and strategy, had a Dabhol Working Group that acted as a 'concierge service' for discussions between Ken Lay and India's national security adviser, Brajesh Mishra. Or that US Trade Representative (USTR) Robert Zoellick, the Bush Administration's negotiator of trade deals through the World Trade Organization (WTO) and the Free Trade Area of the Americas (FTAA) who had also been a paid advisor for Enron before joining Bush, was to go to India on behalf on the NSC's Dabhol Working Group in September 2001. However, the scandal and abuse involved in this case goes much further into the past. When local villagers protested against the original construction of the plant because of its threat to the environment and their livelihood, Enron, among other mistreatment, paid "abusive state forces for the security they provided to the company. " According to Human Rights Watch, "Dabhol Power Corporation benefited directly from an official policy of suppressing dissent through misuse of the law, harassment of anti-Enron protest leaders and prominent environmental activists, and police practices ranging from arbitrary to brutal. The company did not speak out about human rights violations and, when questioned about them, chose to dismiss them altogether. " As well, Enron's bankruptcy leaves the U.

S. Government run Overseas Private Investment Company (OPIC) exposed to more than $ 1 billion in risks related to projects sponsored by Enron, with the Dabhol collapse accounting for $ 340 million of this. OPIC is an agency which offers corporate welfare loans of taxpayer money to companies for overseas projects (especially privatization projects). Thus, U. S. taxpayers are ultimately on the lurch for this money which had been used to sponsor human rights abuses overseas.

Bolivia - The Overseas Private Investment Corporation (OPIC) also gave Enron a $ 200 million loan to construct a very controversial natural gas pipeline right through Bolivia's San Matias Integrated Management Area, which is the only protected area for the world's largest intact dry tropical forest. Enron contends that it is a 'secondary' forest due to some previous logging and should be allowed to work there. " /end of quote/ This excerpt serves as an illustration to the Enron's modus operandi - not free markets, but government assistance, corruption, harassment and physical abuse of its opponents paved the road to Enron's "success" overseas. Add the political sponsorships - Enron's fabulous generosity to Republic candidates in the United States to the above, combine them with the Enron's maze of off-shore partnerships hiding unmanageable debts - and the image of Enron comes to light in its full splendor. This was not the ideal free market corporation, the entity of the kind that the modern free market and the entire world economy is supposedly built upon - transparent, apolitical and honest.

In fact it was exactly the opposite from the ideal, - Enron was a secretive, politicized and fraudulent outfit. Its trumped up success was of illusory nature, as its sordid collapse so well demonstrated. The main question the Enron debacle raises is how free is the free market if its principal participants voluntarily chose to base their operations on government patronage, public subsidy, corruption, abuse of their critics and outright fraud instead of relying on the "mercy" of market forces. Of course, in the case of corruption, one can also argue that official patronage had always been a market commodity.

It can also be claimed that the Enron disaster was an exception and that modern market economy otherwise operates differently. Only time can prove this assumption to be either correct or wrong, are more dramatic failures of Enron's kind to follow in the near future (and we can hardly failures any more dramatic than the collapse of the world's biggest energy company, unless suddenly the government of the United States declares a bankruptcy), the public opinion, not to mention impoverished investors, unpaid suppliers, and jobless employees, will certainly ask for more regulation of the so called free market and more transparency and responsibility on the part of its major participants. What are the lessons of Enron debacle and how can ordinary investors protect themselves from becoming casualties of such disasters? The popularly accepted axiom that there are indeed safe havens in the US marketplace, that there are businesses which are too big too fail or are too intertwined with the interests of the (US) government to allow their failure - is no longer valid.

Now we know that any company of practically any size and any degree of intimacy with American officialdom can suddenly fail. We also know that reports of corporate performance, debts to earning ratios, official earning forecasts, just statistics endorsed by supposedly independent giants of international accounting or by governments - can be false, fraudulent, inaccurate or meaningless. Comprehension of new facts (or rules? ) in their brutal enormity brings an additional element of uncertainty into an already insecure world of investments. In the long term, the logical conclusion drawn from the Enron debacle is the assumption that no publicly listed company in the US is immune to failure, and if we " ll take this kind of reasoning further (if we remember the scandalous degree of intimacy between the government and failed Enron), we can assume that no sovereign entity, including the US government, is immune to financial failure as well. Dramatic and unforeseen events can lead to spectacular disasters - in the case of hapless Enron a few independent "reports" sufficed in toppling the giant. In historic perspective, extraordinary and unexpected calamities can destroy sovereign entities as well.

Less than a century ago, in 1914, Austrian, German and Russian empires were superpowers, all three were experiencing spectacular economic boom, they were prime issuers of sovereign bonds (read Enron shares) and their paper was considered to be as good as gold. By the end of that decade, in a historic instant these three superpowers disappeared from the map of the world, and their financial instruments and bonds, held by millions around the world, became practically worthless. As we live through another turn of the century, in the world which seems to be far less secure than it was 100 years ago, a prudent long term investor might think of setting some of his or her savings aside into something other than just unsecured paper. Investments in gold and property, especially if the property is not overpriced and is located in politically stable areas where it is not a subject to high taxes and bureaucratic entanglements, might not sound financially rewarding in the short term, but can be seen as a way to preserve at least some value in the long term, as opposed to reliance on paper - corporate or sovereign, if the paper is unsecured with anything or is only backed by ethereal substances like statistics or "faith. " Most people would say that this amounts to investment advice for the doomsday.

To a degree it is. However, the spectacular failures of Enron, as well as the somber history of unexpected failures, caused suddenly by unexpected circumstances, do not inspire much confidence. The sensational downfall of the Baring's bank is worth recalling. Baring's was a venerable financial institution that was funded in the 18 th century and which became bankrupted almost overnight by actions of a single person at the end of the 20 th. While the Baring's' case might have been a freak accident, the collapse of Enron was certainly not, and Enron's disastrous finale might foreshadow the taste of things to come, if the Enron's debacle is indicative of hidden systemic faults. This we and the investors do not know until, and if, similar failures occur.

Research essay sample on Long Term Private Investment