2009/4/29 John Mikes <[email protected]>: > The Financial Crisis Explained > > Heidi is the proprietor of a bar in Berlin . In order to increase sales, she > decides to allow her loyal customers - most of whom are unemployed > alcoholics - to drink now but pay later. She keeps track of the drinks > consumed on a ledger (thereby granting the customers loans). > Word gets around and as a result increasing numbers of customers flood into > Heidi's bar. > Taking advantage of her customers' freedom from immediate payment > constraints, Heidi increases her prices for wine and beer, the most-consumed > beverages. Her sales volume increases massively. > A young and dynamic customer service consultant at the local bank recognizes > these customer debts as valuable future assets and increases Heidi's > borrowing limit. He sees no reason for undue concern since he has the debts > of the alcoholics as collateral. > At the bank's corporate headquarters, expert bankers transform these > customer assets into DRINKBONDS, ALKBONDS and PUKEBONDS. These securities > are then traded on markets worldwide. No one really understands what these > abbreviations mean and how the securities are guaranteed. > Nevertheless, as their prices continuously climb, the securities become > top-selling items. > One day, although the prices are still climbing, a risk manager of the bank > -- subsequently, of course, fired due his negativity -- decides that the > time has come to demand payment of the debts incurred by > the drinkers at Heidi's bar. > However they cannot pay back the debts. > Heidi cannot fulfill her loan obligations and claims bankruptcy. > DRINKBOND and ALKBOND drop in price by 95%. PUKEBOND performs better, > stabilizing in price after dropping by 80%. > The suppliers of Heidi's bar, having granted her generous payment due dates > and having invested in the securities are faced with a new situation. > Her wine supplier claims bankruptcy, her beer supplier is taken over by a > competitor. > The bank is saved by the government following dramatic round-the-clock > consultations by leaders from the governing political parties. > The funds required for this purpose are obtained by a tax levied against the > non-drinkers. > > Finally an explanation I understand ... > > JohnM
Excellent story, worth the brief deviation from the thread topic! -- Stathis Papaioannou --~--~---------~--~----~------------~-------~--~----~ You received this message because you are subscribed to the Google Groups "Everything List" group. To post to this group, send email to [email protected] To unsubscribe from this group, send email to [email protected] For more options, visit this group at http://groups.google.com/group/everything-list?hl=en -~----------~----~----~----~------~----~------~--~---
