'History is repeating': Michael Burry says it's time to read about Enron

Michael Burry from The Big Short has declared it's time to revisit the book The Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron. He posted a link to the Amazon listing for the book on X, stating that history is repeating and urging readers to read it again or for the first time. The book, authored by Bethany McLean and Peter Elkind, chronicles the fraudulent rise and fall of Enron, the energy titan that declared bankruptcy in 2001, becoming the largest in US history.

According to Burry, Enron employed aggressive accounting, special vehicles, and circular financing to inflate its stock price. The book details how Enron used mark-to-market accounting to book projected long-term contract values as immediate profit, utilized special-purpose entities and circular financing to conceal debts and manipulate earnings, and ultimately inflated its stock price through fraudulent means.

Former Goldman Sachs CEO Lloyd Blankfein admitted in his memoir that Enron was the bane of his existence, as the company was making enormous profits in energy and commodity markets while trading bandwidth profitably, but Enron was systematically underreporting its risks and risks were not marked accurately. Burry, who famously bet against the 2000s housing bubble and is now shorting major AI companies like Nvidia, Palantir, and Oracle, suggested that history may be repeating as AI companies are overspending on microchips and data centers, using circular financing to fund their ventures, and employing off-balance-sheet structures to disguise their leverage and risk.