altrisk 0 #1 March 4, 2009 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 . . . Quote Share this post Link to post Share on other sites
freefal 0 #2 March 4, 2009 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.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! Quote Share this post Link to post Share on other sites
Unstable 9 #3 March 4, 2009 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 =========Shaun ========== Quote Share this post Link to post Share on other sites
Bolas 5 #4 March 4, 2009 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. Quote Share this post Link to post Share on other sites
gonzalesna 1 #5 March 5, 2009 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? 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. Quote Share this post Link to post Share on other sites
