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Thread: Dummies guide to what went wrong with the economy.

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  1. Dummies guide to what went wrong with the economy. 
    #1
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    Helga Funk is the proprietor of a bar.

    She realizes that virtually all of her customers are unemployed alcoholics

    and, as such, can no longer afford to patronize her bar.

    To solve this problem, she comes up with a new marketing plan that allows

    her customers to drink now, but pay later.

    Helga keeps track of the drinks consumed on a ledger (thereby granting the

    customers' loans).



    Word gets around about Helga's "drink now, pay later" marketing strategy

    and, as a result, increasing numbers of customers flood into Helga's bar.

    Soon she has the largest sales volume for any bar in town .



    By providing her customers freedom from immediate payment demands, Helga

    gets no resistance when, at regular intervals, she substantially increases

    her prices for wine and beer, the most consumed beverages.



    Consequently, Helga's gross sales volume increases massively.



    A young and dynamic vice-president at the local bank recognizes that these

    customer debts constitute valuable future assets and increases Helga's

    borrowing limit.



    He sees no reason for any undue concern, since he has the debts of the

    unemployed alcoholics as collateral !

    At the bank's corporate headquarters, expert traders figure a way to make

    huge commissions, and transform these customer loans into DRINKBONDS.



    These "securities" then are bundled and traded on international securities

    markets.



    Naive investors don't really understand that the securities being sold to

    them as "AA" "Secured Bonds" really are debts of unemployed alcoholics.

    Nevertheless, the bond prices continuously climb!, and the securities soon

    become the hottest-selling items for some of the nation's leading brokerage

    houses.



    One day, even though the bond prices are still climbing, a risk manager at

    the original local bank decides that the time has come to demand payment on

    the debts incurred by the drinkers at Helga's bar, so he informs Helga.

    Helga then demands payment from her alcoholic patrons, but being unemployed

    alcoholics they cannot pay back their drinking debts.



    Since Helga cannot fulfil her loan obligations she is forced into

    bankruptcy. The bar closes and Helga's 11 employees lose their jobs.



    Overnight, DRINKBOND prices drop by 90%. The collapsed bond asset value

    destroys the bank's liquidity and prevents it from issuing new loans, thus

    freezing credit and economic activity in the community.



    The suppliers of Helga's bar had granted her generous payment extensions and

    had invested their firms' pension funds in the BOND securities. They find

    they are now faced with having to write off her bad debt and with losing

    over 90% of the presumed value of the bonds.



    Her wine supplier also claims bankruptcy, closing the doors on a family

    business that had endured for three generations, her beer supplier is taken

    over by a competitor, who immediately closes the local plant and lays off

    150 workers. Fortunately though, the bank, the brokerage houses and their

    respective executives are saved and bailed out by a multibillion dollar

    no-strings attached cash infusion from the government.



    The funds required for this bailout are obtained by new taxes levied on

    employed, middle-class, non-drinkers who have never been in Helga’s bar.



    Now do you understand?
     
     

  2. Re: Dummies guide to what went wrong with the economy. 
    #2
    Do they have a pool table?
     
     

  3. Re: Dummies guide to what went wrong with the economy. 
    #3
    Diamond Member R1chie's Avatar
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    Worst bar joke ever!
    Make it idiot proof and someone will make a better idiot.
     
     

  4. Re: Dummies guide to what went wrong with the economy. 
    #4
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    Quote Originally Posted by ninja_richie
    Worst bar joke ever!
    Not sure its the worst but its defo up there with em...
     
     

  5. Re: Dummies guide to what went wrong with the economy. 
    #5
    Chatterbox Jon_W's Avatar
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    Quote Originally Posted by NoYou
    [quote author=ninja_richie link=1319277578/2#2 date=1319283562]Worst bar joke ever!
    Not sure its the worst but its defo up there with em...[/quote]

    +1.....
    "there's no aspect, no facet, no moment in life that can't be improved with pizza"

     
     

  6. Re: Dummies guide to what went wrong with the economy. 
    #6
    Diamond Member
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    'Many a true word spoken in jest'
     
     

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