Topic: The financial crisis explained in simple terms
in Forum: Humor
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Sven is the proprietor of a local bar. 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 Sven's bar.
Taking advantage of his customers' freedom from immediate payment constraints, Sven increases the prices for wine and beer, the most-consumed beverages. Sales figures increase massively.
A young and dynamic customer service consultant at the local bank recognizes these customer debts as valuable future assets and increases Sven'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 (who is subsequently fired due to his excessive negativity) decides that the time has come to demand payment of the debts incurred by the drinkers at Sven's bar.
However they cannot pay back the debts.
Sven cannot fulfill his loan obligations and claims bankruptcy.
DRINKBOND and ALKBOND drop in price by 95 %. PUKEBOND perform a little better, stabilizing in price after dropping by 80%.
The suppliers of Sven's bar, having granted him generous payment due dates and having invested in the securities are faced with a new situation.
The wine supplier claims bankruptcy, The 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 !

Word gets around and as a result increasing numbers of customers flood Into Sven's bar.
Taking advantage of his customers' freedom from immediate payment constraints, Sven increases the prices for wine and beer, the most-consumed beverages. Sales figures increase massively.
A young and dynamic customer service consultant at the local bank recognizes these customer debts as valuable future assets and increases Sven'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 (who is subsequently fired due to his excessive negativity) decides that the time has come to demand payment of the debts incurred by the drinkers at Sven's bar.
However they cannot pay back the debts.
Sven cannot fulfill his loan obligations and claims bankruptcy.
DRINKBOND and ALKBOND drop in price by 95 %. PUKEBOND perform a little better, stabilizing in price after dropping by 80%.
The suppliers of Sven's bar, having granted him generous payment due dates and having invested in the securities are faced with a new situation.
The wine supplier claims bankruptcy, The 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 !





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That about sums it all up!
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in Forum: Humor
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