Why the Operations of the South Sea Company Proved to be Financially Essay

Why the Operations of the South Sea Company Proved to be Financially Unsound - Essay Example The purpose of the essay is to test the ability of the researcher to assimilate information and to order it in support of specific arguments. Students are expected to read the book, entitled A Very English Deceit: The South Seas Bubble and the World’s First Great Financial Scandal, written by Balen, M to answer the essay question. The objective is for students to think out the answer themselves, using general knowledge and plus material from Balen. The essay contains a clear, concise arguments on the subject. Therefore, the researcher concluds that there are similarities between the collapse of the South Sea bubble and the bankruptcy of Enron. Both companies seemed financially more secure than they actually were. They were companies that were attractive to investors, the South Sea Company due to price of it shares at the height of the bubble, Enron because of its size and the diversity investments. Both companies also presented themselves as being sure fire winners for investo rs, the South Sea Company inflated its own share prices, Enron fiddled its accounts to hide its mounting loses. Both companies believed that they bribed the right people in the right places and did not ensure that their books balanced enough to allow survival when times were harder. The South Sea Company had no source of income and no coherent or sustainable strategy; all it had was shares and monopolies that were worthless. In conclusion, Enron had strategies that did not work; the South Sea Company only had confidence amongst its naà ¯ve investors.