FROM THE MW THREAD TODAY 4/2/09

FROM CISCOKID This puts the current situation around the world in a very > understandable terms. > It all seems clearer now! > > > 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 can not fulfil 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. > > > "There are two sides of a Balance Sheet, Left & Right (Assets and > Liabilities respectively): On the Right side there is nothing right > and on the Left side there is nothing left!!!" > ~ LEHMAN BROTHERS' ANALYST ~