I received this in an e mail today
The financial crisis explained in simple
terms.........................
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 (subsequently
fired, due of
course to his negativity) of the bank decides that slowly 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 on the non-drinkers.
Finally, an explanation that can be understood!...
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