Guide to Why the United States and Europe Face Economic Woes

The New York Stock Exchange

Ham on Wry rarely forwards e-mail and restricts those that are forwarded to humorous or touching ones.  However, today my close friend PJ sent me a message that compelled me to share it with readers.  Since I don't know who authored the text, I can't give credit to that person.  I have taken license in some of the formatting and in changing the title, but the exact wording remains. Somehow, the Wall Street bull pictured below seems an appropriate symbol for today's post. Please comment, if so moved.

Helga is the proprietor of a bar.
She realizes that virtually all of her customers are unemployed alcoholics
and, as such, can no longer afford to patronize her bar.

To solve this problem, she comes up with a new marketing plan that allows
her customers to drink now, but pay later.
Helga keeps track of the drinks consumed on a ledger (thereby granting the
customers loans).

Word gets around about Helga's "drink now, pay later" marketing strategy
and, as a result, increasing numbers of customers flood into Helga's bar.
Soon she has the largest sales volume for any bar in town.

By providing her customers freedom from immediate payment demands,
Helga gets no resistance when, at regular intervals, she substantially
increases her prices for wine and beer, the most consumed beverages.

                    Consequently, Helga's gross sales margin increases massively.
                    A young and dynamic vice-president at the local bank
                    recognizes that these customer debt constitute valuable future assets and increases.
                    Helga's borrowing limit.

He sees no reason for any undue concern, since he has the debts of the
unemployed alcoholics as collateral!!   

At the bank's corporate headquarters, expert traders figure a way to make huge commissions, and transform these customer loans into DRINKBONDS.  These "securities" then are bundled and traded on international
securities markets.

Naive investors don't really understand that the securities being sold to
them as "AA" "Secured Bonds" really are debts of unemployed alcoholics.
Nevertheless, the bond prices continuously climb!!!, and the securities
soon become the hottest-selling items for some of the nation's leading
brokerage houses.

One day, even though the bond prices still are climbing, a risk manager at
the original local bank decides that the time has come to demand payment
on the debts incurred by the drinkers at Helga's bar. He so informs Helga.
Helga then demands payment from her alcoholic patrons, but being
unemployed alcoholics they cannot pay back their drinking debts.

Since Helga cannot fulfill her loan obligations she is forced into
bankruptcy. The bar closes and Helga's 11 employees lose their jobs.

Her wine supplier also claims bankruptcy, closing the doors on a family
business that had endured for three generations, her beer supplier is
taken over by a competitor, who immediately closes the local plant and
lays off 150 workers. Fortunately though, the bank, the brokerage houses
and their respective executives are saved and bailed out by a multibillion
dollar no-strings attached cash infusion from the government.

The funds required for this bailout are obtained by new taxes levied on
employed, middle-class, non-drinkers who’ve never been in Helga’s bar.

                    Now, do you understand why the economy is the way it is?