In your Jan. 1, 2002, issue ("A Wrinkle in Time", Frontlines, p. 4), you printed a humorous example of how Enron might have accounted for a portfolio of cows.
In at least one respect, Enron took things further: Enron "made" markets. If a distributor of electricity wanted to buy power for a future period and a seller wanted to sell, Enron bought and resold the power, placing itself on both sides of the transaction. The New York Stock Exchange provides a market, but it does not own the stock that is bought and sold.
A closer analogy to Enron would be that you own no cows. You learn that your neighbor wants milk from two cows so you buy rights to milk from two cows and contract to sell milk to your neighbor perhaps buying an interest in the cows at the same time, profiting on all parts of the transactions. In theory, Enron could not fail because every transaction was covered by a counter-balancing transaction and because all transactions were protected by Enron's large financial reserves.