Sunday Fun: The Bartender

March 8, 2009 10:00 am

(This was sent in by client, “Dr. M”)

Ruth is the proprietor of a  bar in Chicago. 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 has the good sense to keep  track of the drinks consumed, with the help of an expensive  point-sale-software program paid for by an SBA loan. These are carried  on the books as “customer loans”.

Word gets around, and new customers flood into  Ruth’s bar.<!–more–>

Taking advantage of her customers’ freedom  from immediate payment constraints, Ruth 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 Ruth’s credit limit.He sees no reason for  undue concern since he has taken an assignment of 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 fired due to his  negativity) decides that the time has come to  demand payment of the debts owed by the patrons of Ruth’s bar.  However, very few are able to pay  back the debts and Ruth becomes  unable to keep up her loan payments. Within a short time she  files bankruptcy.

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

The  suppliers of Ruth’s bar, having granted her generous payment terms, are  now in trouble. Her wine supplier  claims bankruptcy; her beer supplier is taken over by a competitor.

The bank gets saved by the Government  following dramatic round-the-clock consultations between leaders of the governing  political parties.

The funds required for this purpose are  obtained by taxes levied on the non-drinkers.

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