Tuesday, March 31, 2009
Thursday, March 26, 2009
THE BAIL OUT\STIMULUS PLAN
Heidi is the proprietor of a bar in Berlin . In order to increase sales, she decided to allow her loyal customers, most of whom are unemployed alcoholics, to drink now but pay later. She kept track of the drinks consumed on a ledger (thereby granting the customers credit or loans).
Word got around. Increasing numbers of unemployed alcoholics flooded into Heidi's bar.
Taking advantage of her customers' freedom from immediate payment constraints and increased consumption, Heidi increased her prices for wine and beer, the most
popular drinks. Her sales increased exponentially.
A young and dynamic customer service consultant at the local bank
recognized these customer debts as valuable future assets and increased
Heidi's borrowing limit. He sawn o reason for undue concern since he had the debts of the alcoholics as collateral.
At the bank's corporate headquarters, expert bankers transformed these
customer debts (and bank assets) into DRINKBONDS, ALKBONDS and PUKEBONDS.
Those new securities were then traded on markets worldwide. No one really
understood what those names meant and how the securities were secured or guaranteed. Nevertheless, the prices continuously climbed. The securities become top-selling items because top financial advisors (who often were getting commissions on the sales) recommended them as good investments.
One day, although the prices were still climbing, the risk manager of Heidi's bank decided that the time has come to demand payment of Heidi's line of credit. So, Heidi tried to collect the debts incurred by the drinkers at her bar.
Of course, the drinkers could not pay the debts.
Heidi could not fulfil her loan obligations to the bank.
Heidi filed for bankruptcy.
The bank defaulted on its obligations with the bonds.
DRINKBONDS and ALKBONDS dropped in price by 95%.
PUKEBOND performed somewhat better,stabilizing in price after dropping by 80%.
The suppliers of Heidi's bar, having granted her generous credit terms due to her large purchases and healthy accounts receivable statement, also filed for bankruptcy when Heidi could not pay them.
The Government realizes the failure of banks and retailers could lead to a recession, decided to intervene.
The Government bought DRINKBONDS and ALKBONDS to prop up the price. It sought foreign investors to help with the purchase.
The Government also loaned money to the bank so that it would have money to loan and meet its bond obligations.
The Government did not have enough money to do all this, so it had to borrow money. It sold Treasury Bonds to foreign countries.
The Government realized it had to generate funds to pay its obligations.
So, after consultation with leading Government economic thinkers, the Government decided to generate the funds by a tax levied on non-drinkers.
Heidi is the proprietor of a bar in Berlin . In order to increase sales, she decided to allow her loyal customers, most of whom are unemployed alcoholics, to drink now but pay later. She kept track of the drinks consumed on a ledger (thereby granting the customers credit or loans).
Word got around. Increasing numbers of unemployed alcoholics flooded into Heidi's bar.
Taking advantage of her customers' freedom from immediate payment constraints and increased consumption, Heidi increased her prices for wine and beer, the most
popular drinks. Her sales increased exponentially.
A young and dynamic customer service consultant at the local bank
recognized these customer debts as valuable future assets and increased
Heidi's borrowing limit. He sawn o reason for undue concern since he had the debts of the alcoholics as collateral.
At the bank's corporate headquarters, expert bankers transformed these
customer debts (and bank assets) into DRINKBONDS, ALKBONDS and PUKEBONDS.
Those new securities were then traded on markets worldwide. No one really
understood what those names meant and how the securities were secured or guaranteed. Nevertheless, the prices continuously climbed. The securities become top-selling items because top financial advisors (who often were getting commissions on the sales) recommended them as good investments.
One day, although the prices were still climbing, the risk manager of Heidi's bank decided that the time has come to demand payment of Heidi's line of credit. So, Heidi tried to collect the debts incurred by the drinkers at her bar.
Of course, the drinkers could not pay the debts.
Heidi could not fulfil her loan obligations to the bank.
Heidi filed for bankruptcy.
The bank defaulted on its obligations with the bonds.
DRINKBONDS and ALKBONDS dropped in price by 95%.
PUKEBOND performed somewhat better,stabilizing in price after dropping by 80%.
The suppliers of Heidi's bar, having granted her generous credit terms due to her large purchases and healthy accounts receivable statement, also filed for bankruptcy when Heidi could not pay them.
The Government realizes the failure of banks and retailers could lead to a recession, decided to intervene.
The Government bought DRINKBONDS and ALKBONDS to prop up the price. It sought foreign investors to help with the purchase.
The Government also loaned money to the bank so that it would have money to loan and meet its bond obligations.
The Government did not have enough money to do all this, so it had to borrow money. It sold Treasury Bonds to foreign countries.
The Government realized it had to generate funds to pay its obligations.
So, after consultation with leading Government economic thinkers, the Government decided to generate the funds by a tax levied on non-drinkers.
Tuesday, March 24, 2009
Monday, March 23, 2009
Monday, March 16, 2009
MAJOR DISAPPOINMENT
Since I have been out of town and have a lot to do today, I got up at 4:30 and came to work. I thought the timing was good because I would go by Starbucks right after they opened and get a big cup of coffeee to take to work. But NO! I went by two different Starbucks and neither opened on time. The second one had opened the door but had no machines turned on. I guess this is the problem when your store is run by kids, but it can't be good for business.
Since I have been out of town and have a lot to do today, I got up at 4:30 and came to work. I thought the timing was good because I would go by Starbucks right after they opened and get a big cup of coffeee to take to work. But NO! I went by two different Starbucks and neither opened on time. The second one had opened the door but had no machines turned on. I guess this is the problem when your store is run by kids, but it can't be good for business.
Tuesday, March 10, 2009
“Jesus knew that the Father had put all things under his power, and that he had come from God and was returning to God; so he got up from the meal took off his outer clothing, and wrapped a towel around his waist. After that, he poured water into a basin and began to wash his disciples’ feet” (John 13:3-5).
When you know God is in control, you are free to serve.
When you know God is in control, you are free to serve.
Wednesday, March 04, 2009
GENEROUSITY, GIVING AND AFFLUENCE
I have been struggling lately with the concept of how much is enough and how much do we give to others. I read many passages on giving in the New Testament and realized that they were mostly about giving to those in need as opposed to giving to the church. For example, Luke 3:11 says "the man with two tunics should share with him who has none, and the one who has food should do the same".
I have more than one tunic.
John Stott had a thought about it. He said:
"What does it mean for the affluent to develop a simple style of living? The truth is that concepts like 'poverty', 'simplicity' and 'generosity' are all relative and are bound to mean different things to different people.
For example, running water, let alone constant hot water, is regarded as a wonderful luxury by those who have to queue up for water at the village well, which sometimes
dries up. But in other parts of the world it can hardly be regarded as incompatible with a simple lifestyle.
Scripture lays down no absolute standards. On the one hand, it give no encouragement to an austere and negative asceticism, for it does not forbid the possession of the good gifts of our Creator. On the other hand, it implies that some measure of equality is more pleasing to God than disparity, and its appeal to believers to be generous is based on the grace of our Lord Jesus Christ, because grace means generosity (2 Cor. 8:8-15)." The Lausanne Covenant: An Exposition and Commentary (Minneapolis: World Wide Publications, 1975), p. 24.
(the painting is Young Beggar by Murillo)
Monday, March 02, 2009
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