1. THE WORLD ECONOMY EXPLAINED WITH TWO COWS
Source unknown but received from a friend with thanks for this piece
Alternatively my Blogs explain solutions that are not in the text books - at least not in economists' text books. This Blog, starting at the Home page is what various entities like Regulators and Financial Institutions will need to do to prepare the economy for financial stability. Meantime have a laugh....
Alternatively my Blogs explain solutions that are not in the text books - at least not in economists' text books. This Blog, starting at the Home page is what various entities like Regulators and Financial Institutions will need to do to prepare the economy for financial stability. Meantime have a laugh....
SOCIALISM
You have 2 cows.
You give one to your neighbour.
COMMUNISM
You have 2 cows
The State takes both and gives you some milk.
FASCISM
You have 2 cows.
The State takes both and sells you some milk.
BUREAUCRATISM
You have 2 cows.
The State takes both, shoots one, milks the other and then throws the milk away.
TRADITIONAL CAPITALISM
You have two cows.
You sell one and buy a bull.
Your herd multiplies, and the economy grows.
You sell them and retire on the income.
VENTURE CAPITALISM
You have two cows.
You sell three of them to your publicly listed company, using letters of credit opened by your brother-in-law at the bank, then execute a debt/equity swap with an associated general offer so that you get all four cows back, with a tax exemption for five cows.
The milk rights of the six cows are transferred via an intermediary to a Cayman Island Company secretly owned by the majority shareholder who sells the rights to all seven cows back to your listed company.
The annual report says the company owns eight cows, with an option on one more.
AN AMERICAN CORPORATION
You have two cows.
You sell one, and force the other to produce the milk of four cows.
Later, you hire a consultant to analyse why the cow has died.
A FRENCH CORPORATION
You have two cows.
You go on strike, organize a riot, and block the roads, because you want three cows.
AN ITALIAN CORPORATION
You have two cows, but you do not know where they are.
You decide to have lunch.
A SWISS CORPORATION
You have 5,000 cows. None of them belong to you.
You charge the owners for storing them.
A CHINESE CORPORATION
You have two cows.
You have 300 people milking them.
You claim that you have full employment and high bovine productivity.
You arrest the newsman who reported the real situation.
AN INDIAN CORPORATION
You have two cows.
You worship them.
A BRITISH CORPORATION
You have two cows.
Both are mad.
AN IRAQI CORPORATION
Everyone thinks you have lots of cows.
You tell them that you have none.
Nobody believes you, so they bomb the crap out of you and invade your country.
You still have no cows but at least you are now a Democracy.
AN AUSTRALIAN CORPORATION
You have two cows.
Business seems pretty good.
You close the office and go for a few beers to celebrate.
A NEW ZEALAND CORPORATION
You have two cows.
The one on the left looks very attractive.
A GREEK CORPORATION
You have two cows borrowed from French and German banks.
You eat both of them.
The banks call to collect their milk, but you cannot deliver so you call the IMF.
The IMF loans you two cows.
You eat both of them.
The banks and the IMF call to collect their cows/milk.
You are out getting a haircut.
AN IRISH CORPORATION
You have two cows.
One of them's a horse.
-------------------------------
2.
You have to sympathise about that comment.
---------------------
3. Source unknown but is absolute truth!
Simple guide to what went wrong.
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 volumes and paper profits increase massively. A young and dynamic vice-president at the local bank recognises that these customer debts 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.
He is rewarded with a six figure bonus.
At the bank's corporate headquarters, expert traders figure a way to make huge commissions, and transform these customer loans into DRINKBONDS. These "securities" are then bundled and traded on international securities markets.
Naive investors don't really understand that the securities being sold to them as "AA Secured Bonds" are really 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.
The traders all receive a six figure bonus.
One day, even though the bond prices are still 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.
Overnight, DRINKBOND prices drop by 90%. The collapsed bond asset value destroys the bank's liquidity and prevents it from issuing new loans, thus freezing credit and economic activity in the community.
The suppliers of Helga's bar had granted her generous payment extensions and had invested their firms' pension funds in the BOND securities. They find they are now faced with having to write off her bad debt and with losing over 90% of the presumed value of the bonds. 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.
They all receive a six figure bonus.
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?
------------------------------------------------
|
Original link in full:
http://www.linkedin.com/news?viewArticle=&articleID=5682155012919132209&gid=3860180&type=member&item=193124048&articleURL=http%3A%2F%2Fwww%2Efreakonomics%2Ecom%2F2012%2F12%2F05%2Fhomicide-victims-rarely-talk-to-police-and-other-horrible-headlines%2F%3Futm_source%3Dtwitterfeed%26utm_medium%3Dlinkedin&urlhash=XQlX&goback=%2Egde_3860180_member_193124048
Or if that link fails try this one:
3 RELAX and just watch this video
<iframe src="https://www.facebook.com/video/embed?video_id=556462004366614" width="400" height="300"
I think you ought to put that forward as a sitcom idea - I've got Angela Mercal down as Helga, George W as the young and dynamic vice-president and Rupert Murdoch as the risk manager - he wants to sell newspapers!
ReplyDelete