Subject: Economic explanation
Seanie is the proprietor of a bar in Dublin.
In order to increase sales, he decides to allow his loyal customers –
most of whom are unemployed alcoholics – to drink now but pay later. He
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 Seanie’s bar. Taking advantage of his customers’ freedom from
immediate payment constraints, Seanie increases his prices for wine and
beer, the most-consumed beverages. His sales volume increases massively.
A young and dynamic customer service consultant at the local bank
(Angola Irish Bank) recognizes these customer debts as valuable future
assets and increases Seanie’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 to his negativity), of the bank
decides that slowly the time has come to demand payment of the debts
incurred by the drinkers at Seanie’s bar.
However they cannot pay back the debts. Seanie cannot fulfill his
loan obligations and claims bankruptcy. DRINKBOND and ALKBOND drop in
price by 99%. PUKEBOND performs better, stabilizing in price after
dropping by 95%.
The suppliers of Seanie’s bar, having granted him generous payment
due dates and having invested in the securities are faced with a new
situation. His wine supplier claims bankruptcy, his 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 I understand!..
Kim,
I LOVED this post! As someone who doesn’t really understand how we got into this mess that we’re in today, this was an explanation that I could easily understand.
Thanks!
I love analogies – they have such an effective way of getting REAL ideas across to people who may otherwise dazzled and beguiled by smiling smooth-talkers.
(And people still accuse NM of being a scam!)
There’s plenty of responsibility/blame to go around for this whole mess, and volumes will be written about it. But will anybody bother to read and learn from them?
I’ve long maintained that attorneys should not ever be placed in a position to create laws – it’s clearly conflict of interest!
Thanks for a great post, Kim!
Excellent explanation, anyone sent this up to the Hill yet?
Thanks for that explanation. Makes more sense to me now…..
Crap layered onto more crap is still crap no matter what you call it.
A blind boy sat on the steps of a building with a hat by his feet. He
held up a sign which said: “I am blind, please help.” There were only a
few coins in the hat.
A man was walking by. He took a few coins from his pocket and dropped
them into the hat. He then took the sign, turned it around, and wrote
some words. He put the sign back so that everyone who walked by would
see the new words.
Soon the hat began to fill up. A lot more people were giving money to the blind boy.
That afternoon the man who had changed the sign came to see how things were.
The boy recognized his footsteps and asked, “Were you the one who changed my
sign this morning? What did you write?”
The man said, “I only wrote the truth. I said what you said but in a
different way.”
What he had written was: “Today is a beautiful day and I cannot see it.”
Do you think the first sign and the second sign were saying the same thing?
Of course both signs told people the boy was blind. But the first sign
simply said the boy was blind. The second sign told people they were so
lucky that they were not blind. Should we be surprised that the second
sign was more effective?
Moral of the Story: Be thankful for what you have. Be creative. Be innovative.
Think differently and positively. Invite others towards good with wisdom. Live
life with no excuse and love with no regrets. When life gives you a 100
reasons to cry, show life that you have 1000 reasons to smile. Face your
past without regret. Handle your present with confidence. Prepare for the
future without fear. Keep the faith and drop the fear.
Great men say, “Life has to be an incessant process of repair and reconstruction,
of discarding evil and developing goodness In the journey of life, if you want to travel without fear, you must have the ticket of a good conscience.”
The most beautiful thing is to see a person smiling
And even more beautiful is, knowing that you are the reason behind it!!!
Brilliant. Kim, did you write this? If not, who did? I’d like to spread a link to it around.