Friday, May 1, 2009

The Explanation

(My brother just sent me this in an email ... I couldn't resist posting it here).

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 of the bank -- subsequently, of course, fired due his negativity -- decides that 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 ...


DMLD said...


I may steal this and copy/paste it in an email to my friends - but only if it is OK with you.

Chris said...

Hi! Go ahead and use it wherever you want. :) I cut and pasted it myself from my brother. :)

TexasLauren77 said...

That's actually a pretty accurate analogy! Seems to me that the people getting away with the most are the drinkers, but it's hard to decide who in that group is most at fault. Either way, it stinks that I'm paying for someone else's beer when my fridge has got nothing by diet coke.

intrepidideas said...

That certainly puts it into perspective - doesn't it?

ALF said...

Now I want a beer.

Speedcat Hollydale said...

What about boxed wine?

Hey, guess what??! I just sold all my stalk and bondo, and am investing in big government.

ha haaaaaaaa !!!!!!!

Chris said...

Hi Lauren! Yeah, my fridge has milk and orange juice. NOT FAIR.

Hi intrepidideas - glad you are back! :)

Hey ALF! I bet you know where to find one. :)

Speedy! :) You sold out? Shocking! But, you did the right thing. Big govt is the way to go. Glad you didn't get left out. lol