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altrisk

The financial crisis explained in simple terms

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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 of course fired due 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 against
the non-drinkers.

Finally an explanation I understand . . .

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That is a pretty good analogy. My favorite part is the last sentence about how the non-drinkers end up paying for everything.

Thanks for paying your credit card(s) off each month, making you mortgage payments on time, and generally living within your means while other people tried to outdo the Joneses. As a thank you, the government is going to increase your taxes because, after all, we're all in this mess together.:S
Sorry, maybe this should be in the SC forum.



"Ignorance is bliss" and "Patience is a virtue"... So if you're stupid and don't mind waiting around for a while, I guess you can have a pretty good life!

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Quote

That is a pretty good analogy. My favorite part is the last sentence about how the non-drinkers end up paying for everything.




Hey, I invest, pay my bills, and live within my means. I'm MORE than happy to pay for someone else to live in a house that we all knew they couldn't afford...

=====>SC please :P
=========Shaun ==========


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I don't vouch for the accuracy. This is email stuff.

NFL

Is It NBA Or NFL?

36
have been accused of spousal abuse

7
have been arrested for fraud

19
have been accused of writing bad checks

117
have directly or indirectly bankrupted at least 2 businesses

3
have done time for assault

71,
repeat 71 cannot
get a credit card due to bad credit

14
have been arrested on drug-related charges

8
have been arrested for shoplifting

21
currently are defendants in lawsuits, and

84
have been arrested for drunk driving in the last year


Can you guess which organization this is?


Give up yet? . . Scroll down,


Neither,
it's the 435 members of the United States Congress

The same group of Idiots that crank out hundreds of new laws each year
designed to keep the rest of us in line.
Stupidity if left untreated is self-correcting
If ya can't be good, look good, if that fails, make 'em laugh.

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By simple, I assume you mean little words I can understand, but grouped together in such a way as to still cause my brain to self detonate due to overusage?:P

Some people refrain from beating a dead horse. Personally, I find a myriad of entertainment value when beating it until it becomes a horse-smoothie.

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