Asymmetrical Information

EXCELLENT ARTICLE from NRO explaining

EXCELLENT ARTICLE from NRO explaining the mechanics of Enron's collapse. It points the figure to a common pattern in the development of new financial instruments: high profits for the inventor, then declining profits as competition enters the market. When the firm that enjoyed those windfall profits tries to protect them by leveraging up to expand the scale of their operations, they become exposed to the possibility -- nay, the probability -- of disaster.