How To Run a Bar at No Cost & Allow Patrons to Drink For Free

Modern American Economics
How To Run a Bar at No Cost
&
Allow Patrons to Drink For Free

Heidi is the proprietor of a bar in Austin, Texas.  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 in a ledger (thereby granting her customers loans).


Word gets around and as a result new customers flood into Heidi's bar.  Taking advantage of her customers' freedom from immediate payment constraints, Heidi increases her prices on the most-consumed beverages, beer and wine. Her profit margin, on paper, instantly skyrockets.

A young and dynamic customer service consultant at the local bank recognizes these customer debts as highly valuable future assets and increases Heidi'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 of the bank decides that the time has come to demand payment of the debts incurred by the drinkers at Heidi's bar.  He is subsequently fired having such a negative outlook, but the bank moves forward on collections.


Heidi's customers, of course, cannot pay back their tabs.  Therefore, Heidi cannot fulfill her loan obligations to the bank and immediately claims bankruptcy.


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


The suppliers of Heidi's bar, having granted her generous due dates for payments and having also invested heavily in the securities, are faced with a new situation. Subsequently, her wine supplier claims bankruptcy and her beer supplier is taken over by a competitor.


Following dramatic round-the-clock negotiations and lobbying by the banks, the Government reimburses all of their bad debt investments.

The money needed by the government to purchase all the bank's terrible debt investments is then acquired through levying a heavy tax on non-drinkers.




I'm not paranoid -- just a student of history...

          
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