Just finished reading, The Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron. This is a good book, and I highly recommend you read it. It basically tells the story of Enron. It seems funny to think about Enron now, since the scandal was such a big deal at the time. Given the current collapse of some of America's larges financial companies, it seems a little quaint in a way. But it definitely serves as a lesson about the dangers of following the crowd in a bull market.
Enron's biggest problem was basically that they didn't have a lot of cash. They were constantly making "deals" that they would immediately book as profit, using mark-to-market accounting, but then those deals often wouldn't pay any actual money for years. They spent tons of money on losing ventures, but were terrified of listing any debt on their balance sheet, so they created all kind of shady, Special Purpose Entities; nominally independent investment partnerships that would take on Enron's debt, with a wink & handshake agreement that they would never lose money. When it became obvious how much debt Enron really had (something like $40 billion) and how little cash was coming in the door, everyone ran for the exits.
I did come away with new new-found respect for short-sellers. Far from the vultures they are often presented as, short-sellers do a valuable job of uncovering the hidden realities buried in quarterly reports. These are often the realities that a stock's "cheerleaders" are entirely unmotivated to find. In this case, it was the short-sellers who started asking the tough questions.