Don't Understand the Bail-out? Just Read This.

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[freespirited]

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 fired, of course, due his negativity) decides that slowly 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 on the non-drinkers.

[FreedomNotSafety]

I’m going to blast e-mail this. Who is the author?

[detective]

This a very good metaphor for what really happened and what caused the original financial crisis. You forget the part that the bar owner would never sell drinks that couldn't be paid for. The government decided that drinking was a constitutional right and that enough credit was not being extended to poor people and minorities and demanded that that bar owners provide such credit or they would be prosecuted. The government set up an entity called Fannie Drunk and bought the debt and sold it to banks and provided an implicit (though not real) government guarantee.
The second part of the economic problem is caused by out of control government spending and the expected attack on the private sector. This is what we are going through now.

[detective]

This a very good metaphor for what really happened and what caused the original financial crisis. You forget the part that the bar owner would never sell drinks that couldn't be paid for. The government decided that drinking was a constitutional right and that enough credit was not being extended to poor people and minorities and demanded that that bar owners provide such credit or they would be prosecuted. The government set up an entity called Fannie Drunk and bought the debt and sold it to banks and provided an implicit (though not real) government guarantee.
The second part of the economic problem is caused by out of control government spending and the expected attack on the private sector. This is what we are going through now.

[nesnah]

“Any questions?”

What exactly does Heidi look like?

[george123]

The bar’s board of directors consisted of Chris Von Dodd and Barney Von Frank who still oversee the bar’s operations. They have blamed the problem on the greed of the beer and wine suppliers.

[CharacterCounts]

Obama and the Dems, without a clue as to how the game is played, went “all in” with the economy.

[Cletus.D.Yokel]

GMTA!

This thread is worthless without pics!

Rulz!

[Don Corleone]

“Gee, I could have had a V-8”(Sarah)

[unkus]

ping

[freespirited]

I had no idea, received it from a friend. But look at the post above yours. Sure enough one of our FReepers knew.

[stayathomemom]

This a very good metaphor for what really happened and what caused the original financial crisis.

But real estate does have value, hense "real", urine, not so much.

[NoMarxist2010]

Here is an explanation on the BAIL-OUT...PORK & SOCIALISM!!!

[AuntB]

Good analogy!

Here’s mine:

A trucker planned to buy watermelons in Texas for $1.00, haul them to New York and resell them for $1.00. After a few months, he realized he wasn’t making any money. So...he took out a loan and bought a bigger truck!

This is exactly what the democrat/Obama ‘stimulus’ plan is. We got in this mess by spending more than we had coming in, by loaning money to people who wouldn’t/couldn’t pay it back. And what is their answer? Borrow a couple trillion dollars so we can do it some more!

[longtermmemmory]

the addition I would suggest is that the bonds were seen as secured by the value of the bar. The bank insisted on appraising the bar using one of their special appraisers. The bank planned on lending the most money possible before flipping over and selling the promissory note on the open market.

[mikelets456]

“What exactly does Heidi look like?”

Pig tails, blond and HOT!

[Lazamataz]

Heidi.

[Post Toasties]

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

PUKEBONDs probably did better because you can recycle the recovered alcohol:)

[nesnah]

Like this?

[aShepard]

Did Barney Frank and Chris Dowd belly up to the bar with Franklin Raines and Gorelick in tow???

[mikelets456]

Even though the hair is fake, that’s pretty darn close and exactly what I pictured!