$10 Monkeys - Bailout analogy
#1
The sizzle in the Steak
Thread Starter
$10 Monkeys - Bailout analogy
Once upon a time a man appeared in a village and announced
to the villagers that he would buy monkeys for $10 each.
> > The villagers, seeing that there were many monkeys around,
> > went out to the forest and started catching them. The man
> > bought thousands at $10 and, as supply started to diminish,
> > the villagers stopped their effort. He next announced that
> > he would now buy monkeys at $20 each. This renewed the
> > efforts of the villagers and they started catching monkeys again.
> > Soon the supply diminished even further and people started going
> > back to their farms. The offer increased to $25 each and the
> > supply of monkeys became so scarce it was an effort to even
> > find a monkey, let alone catch it!
> > The man now announced that he would buy monkeys at $50 each!
> > However, since he had to go to the city on some business,
> > his assistant would buy on his behalf. In the absence of the man,
> > the assistant told the villagers: "Look at all these monkeys in
the
> > big cage that the man has already collected. I will sell them
> > to you at $35 and when the man returns from the city, you can
> > sell them to him for $50 each." The villagers rounded up all
their
> > savings and bought all the monkeys for 700 billion dollars.
> > They never saw the man or his assistant again,
> > only lots and lots of monkeys!
> > Now you have a better understanding of how the
> > WALL STREET BAILOUT PLAN
> > WILL WORK !!!!
to the villagers that he would buy monkeys for $10 each.
> > The villagers, seeing that there were many monkeys around,
> > went out to the forest and started catching them. The man
> > bought thousands at $10 and, as supply started to diminish,
> > the villagers stopped their effort. He next announced that
> > he would now buy monkeys at $20 each. This renewed the
> > efforts of the villagers and they started catching monkeys again.
> > Soon the supply diminished even further and people started going
> > back to their farms. The offer increased to $25 each and the
> > supply of monkeys became so scarce it was an effort to even
> > find a monkey, let alone catch it!
> > The man now announced that he would buy monkeys at $50 each!
> > However, since he had to go to the city on some business,
> > his assistant would buy on his behalf. In the absence of the man,
> > the assistant told the villagers: "Look at all these monkeys in
the
> > big cage that the man has already collected. I will sell them
> > to you at $35 and when the man returns from the city, you can
> > sell them to him for $50 each." The villagers rounded up all
their
> > savings and bought all the monkeys for 700 billion dollars.
> > They never saw the man or his assistant again,
> > only lots and lots of monkeys!
> > Now you have a better understanding of how the
> > WALL STREET BAILOUT PLAN
> > WILL WORK !!!!
#2
I feel the need...
Greed—and fear
^^ Okay, that was the whiskers version, here's the big boy pants explanation...
The golden age of finance collapsed under its own contradictions.
http://www.economist.com/displayStor...fsrc=nwlgafree
The golden age of finance collapsed under its own contradictions.
THE monument to Soviet central planning was supposed to have been a heap of surplus left boots without any right ones to match them. The great bull market of the past quarter century is commemorated by millions of empty houses without anyone to buy them. Gosplan drafted workers into grim factories even if their talents would have been better suited elsewhere. Finance beguiled the bright and ambitious and put them to work in the trading rooms of Wall Street and the City of London. Much of their effort was wasted. You can only guess at what else they might have achieved.
When the financial system fails, everyone suffers. Over the past 22 months the shock has spread from American housing, sector by sector, economy by economy. Some markets have seized up; others are being pounded by volatility. Everywhere good businesses are going bankrupt and jobs are being destroyed. For the first time since 1991 global average income per head is falling. Even as growth in emerging markets has come to a halt, the rich economies look set to shrink. Alan Greenspan, who as chairman of America’s Federal Reserve oversaw the boom, calls the collapse “a once-in-a-half-century, probably once-in-a-century type of event”. Financial markets promised prosperity; instead they have brought hardship.
Financial services are in ruins. Perhaps half of all hedge funds will go out of business. Without government aid, so would many banks. Britain has suffered its first bank-run since Disraeli was prime minister in the 1870s. America has stumbled from one rescue to the next. The Wall Street grandees have been humbled. Hundreds of thousands of people in financial services will lose their jobs; many millions of their clients have lost their savings.....
When the financial system fails, everyone suffers. Over the past 22 months the shock has spread from American housing, sector by sector, economy by economy. Some markets have seized up; others are being pounded by volatility. Everywhere good businesses are going bankrupt and jobs are being destroyed. For the first time since 1991 global average income per head is falling. Even as growth in emerging markets has come to a halt, the rich economies look set to shrink. Alan Greenspan, who as chairman of America’s Federal Reserve oversaw the boom, calls the collapse “a once-in-a-half-century, probably once-in-a-century type of event”. Financial markets promised prosperity; instead they have brought hardship.
Financial services are in ruins. Perhaps half of all hedge funds will go out of business. Without government aid, so would many banks. Britain has suffered its first bank-run since Disraeli was prime minister in the 1870s. America has stumbled from one rescue to the next. The Wall Street grandees have been humbled. Hundreds of thousands of people in financial services will lose their jobs; many millions of their clients have lost their savings.....
#3
AZ Community Team
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I like the $10 monkey version.
#4
I feel the need...
Economic Cures Are Like Booze for an Alcoholic
Someone returning to Earth from a yearlong sojourn in outer space could be excused for feeling disoriented.
After all, when said space traveler departed our fair planet, the U.S. economy was buckling under the weight of the burst housing bubble. The blame game was in full swing, with the villains ranging from Alan Greenspan and his easy money policies to consumers borrowing and spending beyond their means to financial institutions enabling profligate spending to a misallocation of capital to housing.
Fast forward one year, the crisis is still going strong, the villains are still under attack, yet something curious has happened: The policies and actions responsible for the economy’s illness are now being prescribed as cures.....
After all, when said space traveler departed our fair planet, the U.S. economy was buckling under the weight of the burst housing bubble. The blame game was in full swing, with the villains ranging from Alan Greenspan and his easy money policies to consumers borrowing and spending beyond their means to financial institutions enabling profligate spending to a misallocation of capital to housing.
Fast forward one year, the crisis is still going strong, the villains are still under attack, yet something curious has happened: The policies and actions responsible for the economy’s illness are now being prescribed as cures.....
#5
I feel the need...
Fed Calls Consultants to Treat AIG, Stricken Markets
Every Sunday night, New York bankruptcy lawyer Marshall Huebner spends a 13-hour shift on call as an emergency medical technician. His day job involves work on another sort of rescue: The government’s $152.5 billion bailout of American International Group Inc.
“There’s a stronger parallel than you would think,” Huebner, a partner at Davis Polk & Wardwell, said in an interview. Helping resuscitate the insurance giant takes “a lot of the same qualities that I think stand you in very good stead with emergency medicine -- the ability to remain calm in almost any situation, and the ability to assess, triage and treat, even in a crisis.”
Huebner, 41, is part of an army of outside lawyers and consultants the Federal Reserve has called upon to help fight the biggest financial crisis in 70 years. While the central bank won’t disclose how much work it has outsourced, Fed watchers say the institution is relying on Wall Street experts to an unprecedented extent, seeking help from insiders in the very industries where the turmoil originated.....
“There’s a stronger parallel than you would think,” Huebner, a partner at Davis Polk & Wardwell, said in an interview. Helping resuscitate the insurance giant takes “a lot of the same qualities that I think stand you in very good stead with emergency medicine -- the ability to remain calm in almost any situation, and the ability to assess, triage and treat, even in a crisis.”
Huebner, 41, is part of an army of outside lawyers and consultants the Federal Reserve has called upon to help fight the biggest financial crisis in 70 years. While the central bank won’t disclose how much work it has outsourced, Fed watchers say the institution is relying on Wall Street experts to an unprecedented extent, seeking help from insiders in the very industries where the turmoil originated.....
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