Economic Crisis Explained -- the DFWS way!!! - DFWstangs Forums
 
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post #1 of 9 (permalink) Old 03-05-2009, 12:32 PM Thread Starter
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Economic Crisis Explained -- the DFWS way!!!

A simple guide to the financial crisis....

Linda is the proprietor of a bar in Cork. 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 Linda's bar. Taking advantage of her customers' freedom from immediate payment constraints, Linda 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 Linda'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 Linda's bar. However they cannot pay back the debts. Linda 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 Linda'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 (and vested interests). The funds required for this purpose are obtained by a tax levied on the non-drinkers.

Finally an explanation I understand...

Juiceweezl
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post #2 of 9 (permalink) Old 03-05-2009, 12:36 PM
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Originally Posted by Juiceweezl View Post

Finally an explanation I understand...
Sad that you had to have it spoon fed to you, but what ever it takes to get the point I guess.

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post #3 of 9 (permalink) Old 03-05-2009, 12:37 PM
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Sad that you had to have it spoon fed to you, but what ever it takes to get the point I guess.

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post #4 of 9 (permalink) Old 03-05-2009, 12:39 PM Thread Starter
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Sad that you had to have it spoon fed to you, but what ever it takes to get the point I guess.

Stevo
It's a copy and paste e-mail, jackhole. Get over yourself.

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post #5 of 9 (permalink) Old 03-05-2009, 12:41 PM
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Originally Posted by Juiceweezl View Post
It's a copy and paste e-mail, jackhole. Get over yourself.
Oh, okay. I figured it was another Freudian slip.

Stevo

Animal whisperings

Intoxicate the night

Hypnotize the desperate

Slow motion light

Wash away into the rain

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post #6 of 9 (permalink) Old 03-05-2009, 07:53 PM
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The follow up replies are better than the original post. Tear it up Stevo!
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post #7 of 9 (permalink) Old 03-07-2009, 11:18 AM
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The sad part is some folks still dont understand what happened nor do they care.

98 Brokra
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post #8 of 9 (permalink) Old 03-08-2009, 09:37 AM
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So here's the summation of Linda's bar (our economy)

Linda was a moron to let unemployed alcoholics run up drink tabs.

The young service consultant at the branch bank should have had a reprimand for even suggesting the bank back the drink tab line of credit.


The expert bankers at corporate HQ should have been fired for underwriting these loans, and the loans immediately halted & revoked. These same "expert's" should be investigated for securites fraud in connection with the bonds they issued.

The Risk Manager should get a raise & promotion for trying to stop this mess.

The suppliers who granted the credit should rightly loose thier money for not checking out the situation closer.

The FDIC should liquidate the bank, reimburse all the depositors and if any funds are left, distribute them amongst the creditors.

Last edited by White trash wagon; 03-08-2009 at 09:42 AM.
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post #9 of 9 (permalink) Old 03-08-2009, 09:52 AM
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lol nice
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