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limbo · 6 March 2009, 08:38 PM

Bob is the owner of a bar. In order to increase sales, Bob 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 in effect granting the customers loans).

Word gets around and as a result increasing numbers of customers flood into Bob's bar.

Taking advantage of his customers' freedom from immediate payment constraints, Bob increases his prices for beer and wine, the most-consumed beverages. His 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 Bob'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, ALCOBONDs and PUKEBONDs. These securities are then traded on the share markets. 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 the time has come to demand payment of the debts incurred by the drinkers at Bob's bar.

However, the drinkers cannot pay back the debts.

Bob is unable to fulfill his loan obligations and claims bankruptcy.

DRINKBOND and ALCOBOND drop in price by 95 %. PUKEBOND performs better, stabilizing in price after dropping by 80 %.

The suppliers of Bobs bar, having granted him generous payment due dates and having invested in the securities are faced with a new situation. Bob's 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 (and vested interests).

The funds required for the bailout are obtained by a tax levied on the non-drinkers.

Lion · 6 March 2009, 11:44 PM

Hey, that sounds just like are economy right now. Banking is considered legalized loan-sharking!!!

DSJ · 7 March 2009, 01:34 AM

Wow, so true. "Distilled" to its purest form!

champion5 · 7 March 2009, 01:42 AM

perfect!!!

Rebel · 7 March 2009, 02:34 AM

Thougthful and scary at the same time.

6 March 2009, 08:38 PM	#1
limbo "TRF" Member Join Date: Jul 2007 Location: Sydney Posts: 4,624	Bonds and Securities Bob is the owner of a bar. In order to increase sales, Bob 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 in effect granting the customers loans). Word gets around and as a result increasing numbers of customers flood into Bob's bar. Taking advantage of his customers' freedom from immediate payment constraints, Bob increases his prices for beer and wine, the most-consumed beverages. His 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 Bob'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, ALCOBONDs and PUKEBONDs. These securities are then traded on the share markets. 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 the time has come to demand payment of the debts incurred by the drinkers at Bob's bar. However, the drinkers cannot pay back the debts. Bob is unable to fulfill his loan obligations and claims bankruptcy. DRINKBOND and ALCOBOND drop in price by 95 %. PUKEBOND performs better, stabilizing in price after dropping by 80 %. The suppliers of Bobs bar, having granted him generous payment due dates and having invested in the securities are faced with a new situation. Bob's 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 (and vested interests). The funds required for the bailout are obtained by a tax levied on the non-drinkers.

6 March 2009, 11:44 PM	#2
Lion "TRF" Member Join Date: Jan 2009 Real Name: Leo Location: Midwest Watch: GMT-II 16710 PEPSI Posts: 21,461	Hey, that sounds just like are economy right now. Banking is considered legalized loan-sharking!!! __________________ SS GMT-II 16710 PEPSI(Z-serial#) THE ONLY DIFFERENCE BETWEEN MEN AND BOYS IS THE PRICE OF THE TOYS!!! MontBlanc Meisterstuck Doue Silver Barley MontBlanc Meisterstuck Solitaire Doue Signum Proud Card Carrying Member of the Curmudgeons.....Yikes!!!

7 March 2009, 01:34 AM	#3
DSJ "TRF" Member Join Date: Dec 2007 Real Name: David Location: USA Watch: your step! Posts: 7,882	Wow, so true. "Distilled" to its purest form! __________________ Rolex. The Rolex of watches. 16570 Expy2 Noir, 116710 GMT Master II, 2552.80 SMP

7 March 2009, 02:34 AM	#5
Rebel "TRF" Member Join Date: Jul 2008 Real Name: Dr Mark R Nail Location: New Albany Watch: Tudor Sub 75090 Posts: 8,254	Thougthful and scary at the same time. __________________ ------------------------------- Member of the Nylon Nation

7 March 2009, 01:42 AM	#4
champion5 Member Join Date: May 2008 Real Name: adam Location: erie, pa Watch: ss sub Posts: 187	perfect!!!

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