Where have all of Enron’s intangibles gone?

On December 31, 2000, Enron’s market value was $75.2 billion, while its book value (balance sheet equity) was $11.5 billion. The market-to-book gap of almost $64 billion, while not equal to the value of intangibles (it reflects, among other things, differences between current and historical-cost values of physical assets), appears to indicate that Enron had substantial intangibles just half a year before it started its quick slide to extinction. This naturally raises the questions: Where are Enron’s intangibles now? And even more troubling: Why did not those intangibles––a hallmark of modem corporations––prevent the firm’s implosion? If intangibles are ‘‘so good’’, as many believe, why is Enron’s situation ‘‘so bad’’? Federal Reserve Board chairman Alan Greenspan in his recent Semiannual Monetary Policy Report to the Congress (February 27, 2002) chipped in with an answer: