Tuesday, November 8, 2011

8th November 2011

What is a Financial Bail-Out ? To a simple mind, this is it.

It is a slow day in a damp little Irish town. The rain is beating down harshly, and all the streets are deserted. Times are tough, everybody is in debt and everybody lives on credit.
... ...
...On this particular day a rich German tourist is driving through the town, stops at the local hotel and lays a €100 note on the desk, telling the hotel owner he wants to inspect the rooms upstairs in order to pick one to spend the night.

The owner gives him some room-keys and, as soon as the visitor has walked upstairs, the hotelier grabs the €100 note and runs next door to pay his debt to the butcher.

The butcher takes the €100 note and rushes down the street to repay his debt to the pig farmer. The pig farmer takes the €100 note and heads off to pay his bill at the supplier of animal feed and fuel.

The guy at the Farmers' Co-op takes the €100 note and runs to pay his drinks bill at the friendly neighborhood pub. The pub owner slips the money along to the local prostitute drinking at the bar - who, in spite of facing hard times, has always gladly offered him her 'services' on credit.

The hooker then rushes over to the hotel and pays off her room bill to the hotel owner with the €100 note.

The hotel proprietor quietly replaces the €100 note back on the counter, so that the rich traveller will not suspect anything.

At that moment the traveller comes down the stairs, states that none of the rooms are satisfactory, picks up the €100 note, pockets it and leaves town.

No one has produced anything. No one has earned anything. However, the whole town is now out of debt and looking to the future with a lot more optimism.

And that, dear ladies and gentlemen, is how a basic financial bailout package works :)

30 comments:

john bain said...

Brilliant! Can I borrow this explanation?

Sutz said...

of course you can :) ....

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Ellie K said...

I don't think a financial bailout package is as beneficial as this. In your example, money is used to facilitate all sorts of exchanges of goods and services that help people in the town.

In a financial bailout, I'm not convinced that anything nearly as useful as this goes on. More like money goes from government agencies to ? Who knows, beyond that?

Good post. And a nice clean blog design. Thank you!

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kris goodbody said...

Good God man you hit the nail on the head there. It's lucky that this happened to us Irish, we're a miserable bunch of bastards (in the best possible sense of the term) and we love an excuse for a good complain. mind yourself and keep it up.

Anonymous said...

That sort of bailout only benefits those who have others that are equally as in-debted to them. When banks get bailed out with money borrowed from China and given to the banks to use as loans by the govt., that debt goes to the tax payers not to the banks. So when the banks get bailed out, they still get to keep the property and real-estate to re-sell (that cost them nothing) after foreclosure, along with the money given to them by common tax payers footing the bill as a bail-out with more loans from China. Win for bank investors. Loss for average citizens.

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