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Thread: The global monetary crisis explained in layman's terms

  1. #1
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    The global monetary crisis explained in layman's terms

    Gordon was the proprietor of a bar in Glasgow. He realises that virtually all of his customers are unemployed alcoholics and as such can no longer afford to patronise his bar.

    To solve this problem, he comes up with a new marketing plan that allows his customers to drink now, but pay later. Gordon keeps track of the drinks consumed on a ledger (thereby granting the customers loans).

    Word gets around about Gordon's "drink now, pay later" marketing strategy and, as a result, increasing numbers of customers flood into his bar. Soon he has the largest sales volume for any bar in Glasgow.

    By providing his customers freedom from immediate payment demands, Gordon gets no resistance when, at regular intervals, he substantially increases his prices for wine and beer, the most consumed beverages. Consequently, Gordon's gross sales volume increases massively.

    A young and dynamic president at the local bank recognises that these customer debts constitute valuable future assets and increases Gordon's borrowing limit. He sees no reason for any undue concern because 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' are then bundled and traded on international securities markets. Naive investors don't really understand that the securities being sold to them as "AAA 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 still are 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 Gordon's bar. He so informs Gordon.

    Gordon then demands payment from his alcoholic patrons. But, being unemployed alcoholics - they cannot pay back their drinking debts. Since Gordon cannot fulfil his loan obligations he is forced into bankruptcy. The bar closes and Gordon'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 Gordon's bar had granted him 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 his bad debt and with losing over 90% of the presumed value of the bonds.

    His wine supplier also claims bankruptcy, closing the doors on a family business that had endured for three generations, his 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 pound 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 even been in Gordon's bar.

    Now do you understand?
    Do you realise how many holes there could be if people would just take the time to take the dirt out of them?

  2. #2
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    Very good - I like that!

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    Not too shabby!

    I like it.....I think Einstein or some other super nerd made some comment about how real genius is accurately and effectively explaining super complex sh!t in simple terms.

    unfortunately, this perpetual crisis is not going away anytime soon.

    The resources I use to try and better understand it include:

    itulip.com
    shadowstats.com
    nowandfutures.com
    zerohedge.com

    The mass financial media are like pig dogs....they bail the pig(us) to get shot by the hunter(banks and entrenched special interests).

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    Some time later, Gordon and the all others who lost their investments are now reduced to being unemployed alcoholics. The owner of the bar that they frequent thinks up a cunning plan to extend them credit to ensure they patronise his bar...
    it's not a bad thing till you throw a KLR into the mix.
    those cheap ass bitches can do anything with ductape.
    (PostalDave on ADVrider)

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    I think there is something wrong with that explanation as I am almost certain it didn't start in Glasgow. As such I take umbrage, unless you loan me a pint

    P.S. I'll promise to pay you back, but my mother and father are Glaswegians and therefore...
    You only need two tools in life:
    Duct tape if it moves and it shouldn't.
    WD-40 if it doesn't move and it should.


    Brute force and ignorance always prevails.
    Failure comes from too little brute force, or
    too little ignorance.

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    so.... I can drink for free at gordons?
    directions?

  7. #7
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    Quote Originally Posted by MSTRS View Post
    Gordon was ...SNIP...Now do you understand?
    "You must spread..." Dagnab it! I can't keep up with you!
    You don't get to be an old dog without learning a few tricks.
    Shorai Powersports batteries are very trick!

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    heh, makes sense to me... albeit a really poor example... The Scots Free Beer

    Quote Originally Posted by pete376403 View Post
    Some time later, Gordon and the all others who lost their investments are now reduced to being unemployed alcoholics. The owner of the bar that they frequent thinks up a cunning plan to extend them credit to ensure they patronise his bar...
    ha ha ha ha haaaaaaaaaaaaaaaaa... except it isn't a bar, it's now called a bistro
    I didn't think!!! I experimented!!!

  9. #9
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    Quote Originally Posted by mashman View Post
    ... albeit a really poor example... The Scots Free Beer
    Wut? The Scots are amongst the most generous people in the world.
    They'd give you the shirt off their back...especially if they'd just discovered it was made in England...
    Do you realise how many holes there could be if people would just take the time to take the dirt out of them?

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